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 / Summer 2007 / Issue 47(originally published by Booz & Company)


Recent Research

Architecture describes the organization of an industry and the relationships among its players. At the birth of a new technology, the innovator can shape the architecture around the invention. However, the authors argue, most do not.

IBM’s infamous decision to license the operating system for its PC from Microsoft, for instance, created an architecture that favored Bill Gates’s startup and, by association, Intel. Had IBM developed its own operating system or bought one outright, the architecture would have been quite different — and so would the division of value.

Today, we see a very public battle for industry architecture in Sony’s attempts to dominate the high-definition DVD market, with its Blu-Ray technology going head-to-head with HD-DVD, the standard developed by a group of companies led by Toshiba. The eventual winner will occupy a prominent place in the resultant industry architecture.

Many factors can affect an industry’s architecture over time. These include natural evolution (the outcome of Blu-Ray versus HD-DVD, for instance), new production methods (as when the advent of lean manufacturing in the automobile industry shifted control of the architecture to Japanese companies), new laws and regulations (for example, in the pharmaceutical industry, the way patent rules affect the production of generic drugs) and quality validation (such as when a brand like Intel, through its Intel Inside strategy, convinces consumers that its products alone are the standard of excellence for microprocessor chips).

Industry architecture strategies can take a number of forms. For example, innovators can position themselves to be a bottleneck in the industry. By licensing its operating system with new PCs, Microsoft blocked all other software companies from competing in this sector and achieved a global market share in excess of 95 percent.

Indeed, this approach could be mimicked in any industry and by companies of any size, the authors claim. To illustrate, they offer the hypothetical example of a restaurateur “who knows how to create value both by inventive cooking and a talent for spotting trendy, industrial post-modern properties that can be turned into a restaurant.”

By opening a chic restaurant, the innovator makes the location more fashionable, which will attract other fashionable eateries to the area. Instead of regarding these as competition, he or she could choose to invest in suitable local real estate. In this way, every potential restaurant owner would have to go through the bottleneck created by the innovator before opening up a site in the neighborhood that he or she controls.

By broadening their thinking in this way, the authors say, innovators can be rewarded with a greater share of the value from their innovations.

Meeting the Problem Head On
Paula Jarzabkowski ([email protected]) and David Seidl ([email protected]), “Meetings as Strategizing Episodes in the Social Practice of Strategy,” Advanced Institute of Management Research Working Paper No. 37.

Given time pressures and short-term horizons, it is tempting to see each and every meeting you attend as an end in itself. But if you regard meetings in this light, you are failing to come to terms with their real nature. As a result, the meeting — defined as “a planned gathering of three or more people who assemble for a purpose that is ostensibly related to some aspect of organizational or group function” — often remains misunderstood. So say Paula Jarzabkowski of the U.K.’s Aston Business School and the Advanced Institute of Management Research, and David Seidl of the University of Munich’s Institute of Business Policy and Strategic Management.

The objectives of meetings vary. The intention may be for participants to make decisions, set agendas, build commitment, provide information, reduce complexity, or simply converse. But, Jarzabkowski and Seidl suggest, the purpose of a meeting often transcends an individual session. In fact, one aspect of meetings that is not fully comprehended is that one organizational powwow tends to produce the need for another. Depressingly, meetings are not particularly valuable ways to reach consensus or accomplish a great deal in an organization.

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