Strategic Supremacy: How Industry Leaders Create Growth, Wealth, and Power through Spheres of Influence

324 Pages·2001·4.37 MB·English

by  Richard A. D’aveni

Advance praise for
STRATEGIC SUPREMACY
“Provides insights into how companies grow and decline within their spheres
of influence…. Will make Wall Street analysts, investment bankers, and M&A
experts rethink how they evaluate the diversification strategies undertaken by
CEOs.”
—JEROME P. KENNEY, Executive Vice President, Corporate Strategy and
Research, Merrill Lynch & Co.
“D’Aveni has once again raised the bar in the area of strategic leadership….
He provides new strategies for creating order from the chaos created by
aggressive and omnipresent competition.”
—ALEXANDER M. CUTLER, Chairman and CEO, Eaton Corporation
“Offers a holistic, pragmatic, and highly effective strategy for competition
management, while revolutionizing the entire paradigm of corporate strategy.”
—VINAY RAI, Chairman & CEO, USHA India Ltd.
“A unique contribution to the corporate strategy literature and a major
advance in understanding the dynamics of competition at the global level.”
—IAN MACMILLAN, D.B.A., Fred R. Sullivan Professor of Management,
The Wharton School, University of Pennsylvania, and co-author of Corporate
Venturing
“Through intriguing parallels, D’Aveni demonstrates that now, as throughout
history, anticipating, creating, interfacing, and reinventing markets, while
managing risk, is the ticket to leading and succeeding.”
—JEFFREY SKILLING, former President and CEO, Enron Corp.
“A pathbreaking contribution. ‘Spheres of Influence’ will prove as powerful
as ‘Hypercompetition’ in improving the quality of strategic thinking and analysis
in companies. A tour de force!”
—SUMANTRA GHOSHAL, Ph.D., D.B.A., Professor of Strategic &
International Management, London Business School, and author of Managing
Across Borders: The Transnational Solution
“Very timely! Tells us how to succeed in this crazy new environment, without
betting the ranch at every turn. Must reading!”
—DAVID R. HOLMES, Chairman of the Board, The Reynolds & Reynolds
Company
“Nobody thinks about strategy like D’Aveni. Provides innovative ways for
companies to create spheres of influence to tip the balance of power in their
favor. Read it and learn how to gain an edge and defend your position.”
—BRUCE A. PASTERNACK, Senior Vice President and Member of the
Executive Committee, Booz•Allen & Hamilton, and Managing Partner, Strategic
Leadership Practice
“Stimulates reexamination of one’s business assumptions and strategies…. A
practitioner’s roadmap to evolving strategy…. A lively dialogue between reality
and theory, reflecting on which can make a huge difference to your strategy.”
—RAHUL BAJAJ, Chairman and Managing Director, Bajaj Auto Ltd., India
“Finally … powerful tools for building and defending a global enterprise. A
rich toolkit for the corporate leaders charged with this complex and challenging
task.”
—JAMES HAYMAKER, Corporate Vice President, Strategy and Business
Development, Cargill, Inc.
“Provides for a mindset that will trigger change in your strategic thinking and
create a dynamic vision for leadership in your industry.”
—HADDO MEIJER, Chairman Executive Committee, P&O Nedlloyd, The
Netherlands/UK
STRATEGIC
SUPREMACY®
How Industry Leaders Create Growth,
Wealth, and Power through
Spheres of Influence
Richard A. D’Aveni
With Robert Gunther and Joni Cole
THE FREE PRESS
NEW YORK LONDON TORONTO SYDNEY SINGAPORE
THE FREE PRESS
A Division of Simon & Schuster, Inc.
1230 Avenue of the Americas
New York, NY 10020
www.SimonandSchuster.com
Copyright © 2001 by Richard D’Aveni
All rights reserved, including the right of reproduction in whole or in part in any
form.
THE FREE PRESS and colophon are trademarks of Simon & Schuster, Inc.
Strategic Supremacy is a registered trademark.
For information about special discounts for bulk purchases, please contact
Simon & Schuster Special Sales: 1-800-456-6798 or
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DESIGNED BY LISA CHOVNICK
Manufactured in the United States of America
10 9 8 7 6 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
D’Aveni, Richard A.
Strategic supremacy: how industry leaders create growth, wealth, and power
through spheres of influence / Richard A. D’Aveni with Robert Gunther and Joni
Cole.
p. cm.
Includes bibliographical references and index.
1. Strategic planning.
2. Competition.
3. Wealth.
4. Power (Social sciences)
5. Spheres of influence.
I. Gunther, Robert E.
II. Cole, Joni.
III. Title.
HD30.28.D376 2001
658.4′12—dc21 2001051068
ISBN 0-684-87180-7 (alk. paper)
ISBN-13: 978-0-684-87180-6
eISBN-13: 978-0-743-21763-7
The author gratefully acknowledges permission from the following sources to
reprint material in their control:
Academy of Management Review for a figure from Volume/Edition 16.1 by
Christine Oliver that appears as exhibit 4.4 in this book. Copyright © 1991 by
Academy of Management. Reprinted by permission of the publisher via
Copyright Clearance Center.
Academy of Management Review for a figure from Volume/Edition 16.1 by
Christine Oliver that appears as exhibit 4.5 in this book. Copyright © 1991 by
Academy of Management. Reprinted by permission of the publisher via
Copyright Clearance Center.
Academy of Management Review for a figure from Volume/Edition 21.1 by
Ming-Jer Chen that appears as exhibit 6.1 in this book. Copyright © 1991 by
Academy of Management. Reprinted by permission of the publisher via
Copyright Clearance Center.
EC Media Group for table “Preemptive Strategies” from Journal of Business
Strategy, 1983, Vol. 4, that appears as exhibit 3.2 in this book. Copyright ©
1983 by EC Media Group, Eleven Penn Plaza, New York, NY 10001.
Oxford University Press for a graph located in Contemporary Economic Policy,
Vol. 18, No. 3, July 2000, page 312, by Joseph A. Clougherty, that appears as
exhibit 6.10 in this book. Copyright © 2000 by Oxford University Press.
Prentice-Hall, Inc., for an excerpt by Ian MacMillan titled “Seizing Competitive
Initiative” on page 274 of the January 1, 1984, edition of Competitive Strategic
Management by Robert B. Lamb that appears as exhibit 3.3 in this book.
Copyright © 1984 by Lamb, Robert B. Reprinted by permission of Prentice-
Hall, Inc., Upper Saddle River, NJ.
A Dedication
To my hero, my father, Pfc. Anthony Rosario D’Aveni, who landed with the 9th
Infantry Division as part of the second wave of the D-Day (June 6, 1944)
invasion of Europe. Awarded the Purple Heart with Oak Leaf Cluster. For the
benefit of mankind, you and your fallen friends completed a cross-channel
invasion, something that had not been done since William the Conqueror in A.D.
1066. Historians may remember the generals, but I will never forget that history
is made by men like you.
And a Tribute
Out of respect and love, I have published your August 26, 1998, letter to me in
Appendix A of this book. Your humility would never have allowed this, so
please excuse the surprise. The world and your grandchildren should know your
bravery and sacrifice. And you should know my pride in being your son.
“Where there is no vision, the people perish.”
PROVERBS 29:18
“You’ve got to be very careful if you don’t know where you’re going, because
you might not get there.”
YOGI BERRA
ACKNOWLEDGMENTS
Many people have contributed to the development of this book. First and
foremost, I want to thank my colleague, executive assistant, and friend, Tracy
Flynn-Scott; my secretary at the Tuck School of Business at Dartmouth College,
Pat Hunt; and the research staff at Dartmouth’s Feldberg Library, including
Sarah Buckingham, Jim Fries, Karen Sluzenski, and especially Bette Snyder.
They put endless hours into the research and production of this book. Without
them, this book would have never existed.
I am grateful to countless business leaders who have shared their experiences
and insights with me (and sometimes with my students) during the last five years
of research, consulting, and speaking. The executives (and their titles at the time
of my discussions with them) include: Jim Abegglen, Founder of Gemini-Japan;
Doug Atkins, CEO, Instinet (Reuters); Jim Bailey, Executive Vice President of
Citicorp; Paul Batchelor, Managing Director of Coopers & Lybrand Europe; J.T.
Battenberg, III, CEO, Delphi Automotive Systems; Hans Beckerer, CEO, John
Deere; Steve Beebe, CEO, J.R. Simplot Co.; Larry Bossidy, CEO of Allied
Signal; Yale Brandt, Vice Chairman of the Board, Reynolds Metals; Edward
Brennan, CEO of Sears; Rudie Bryce, CEO, Schering-Plough International;
William Burke, Vice President of Boston Technologies; Peter Campanella, CEO,
Corning Consumer Products; Lt. General (ret.) Paul Cerjan, President of the
National Defense University and NATO Command; Alison Corcoran, Vice
President and General Manager, Polaroid Corporation; Karen Dawes, Senior
Vice President, Marketing and Sales, Bayer Pharmaceuticals; David Delia Penta,
President and CEO, Fischer Scientific; Tom Doorley, Founding Partner of
Braxton Associates; Douglas Dunn, Vice President of AT&T Multimedia
Services; David Ehlen, CEO of Wilson Learning; Michael Eisner, CEO of
Disney; Jerry Elson, Vice President of General Motors; Dom Esposito, CEO,
Grant Thornton; Bob Forte, Vice President, Marketing, Fischer Scientific; John
Foster, CEO, Foster Investments; William Gaither, Chairman of the Board of
The Heafner Group; Jim Haymaker, Vice President of Strategy and Business
Development, Cargill; David Holmes, CEO of Reynolds and Reynolds; David
Jarvis, Co-head of Global Financial Institutions, Salomon Smith Barney; Guy
Jillings, retired Head of Strategic Planning of Royal Dutch Shell; Phil Koerner,
Chairman and CEO, National Grange Mutual; Charles Leighton, CEO, CML
(Nordic Track); David Martin, Executive Vice President of Texas Instruments;
Kevin McGrath, CEO of Hughes Communications; Richard Measle, Worldwide
Managing Partner of Arthur Andersen & Co.; Haddo Meijer, Chairman
Executive Committee of P & O Nedlloyd, The Netherlands/UK; John Miller,
Head Strategy Officer, AT&T Network Systems (now Lucent); Hans Morris,
Co-head of Global Financial Institutions, Salomon Smith Barney; Loay Nazer,
Vice Chairman, Nazer Group (Saudi Arabia); Terry Neil, Managing Director of
Andersen Consulting-Europe; Jonathan Newcomb, CEO, Simon & Schuster;
Ken Noyes, CEO, Schwans Food; Tom Peters, Founder of The Tom Peters
Group; Jim Preston, CEO of Avon Products; Robert Purcell, Jr., Executive in
Charge of Corporate Strategy at General Motors; Tony Ridder, Chairman and
CEO of Knight-Ridder; Matt Rightmire, Vice President and General Manager,
Yahoo! Inc.; Anthony T.G. Rogers, Managing Director of Zeneca Ltd.; Joan
Rothman, Senior Vice President, Marketing, Dun & Bradstreet; Peter Shreer,
President of Philip Morris-Latin America; Andy Sigler, CEO of Champion
International; Ted Simplot, Chairman, J.R. Simplot Co.; Dan Simpson, Vice
President of Strategy & Planning for Clorox; Adrian Slywotzky, Founding
Partner, Corporate Decisions, Inc.; Terri Taylor, CEO, Dun & Bradstreet; Walter
Thoma, CEO of Philip-Morris-Europe; April Thornton, Vice President
Marketing, Armstrong Industries; John Tormondsen, Managing Director, Fixed
Income Securities Trading, Goldman Sachs & Company; Alex Trotman, CEO of
Ford Motor Co.; Paul Walsh, CEO of Pillsbury; Wolf Schmitt, CEO of
Rubbermaid; Roy Vagelos, CEO of Merck & Co.
I would also like to thank the following Tuck and Dartmouth students who have
worked as research assistants for me: Rebecca Adams, Brent Ahrens, Tamara
Brock, Greg Capitolo, Fernando R. Chaddad, Tracy Dorsey, Tracey Fudge, Lutz
Goedde, Heather Grace, Jeffrey Halpern, Eric Harnish, Jack Herrick, Andrew
Hirsch, Rebecca Joffrey, Derrick Johnson, Clinton Kendall, Ilmars Kerbers,
Matthew Kunkle, Alexandra Y. Latypova, Eugene Lowe, Steve Mendola, Stuart
Murray, Robert Lynch, Sameer V. Nadkarni, Terri E. O’Connor, Chris Pears,
Michael J. Perera, Igor Popov, James Rice, Brett Rome, Kathy Schaider,
Michael Sexton, Gary Smith, James Sole, Yancey Spruill, Karin Stawarky,
Stephen Wilson, Brittany Windsor, Barry Winer, Paul Whiting, Jr. Their efforts
and ideas have made a big difference to the accuracy and depth of the book.
I also thank all the students who took my seminars. They suffered through early