Richard A. D'Aveni, Professor of Strategic Management

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Advanced Competitive Strategy

Course Overview - Using Diplomatic and Military Strategy in Business

Although there is no need to purchase them, this course is intended for students who wish to be exposed to the strategic perspectives developed in three books written by Professor D'Aveni: Beating the Commodity Trap, Strategic Supremacy and Hypercompetition. The underlying thesis of these books is based on the vast strategy literature that exists regarding international relations and military science. These literatures are often ignored by business schools. But as corporations become large and multinational, they begin to look and act like the multinational empires found in ancient history and modern times. Similar to nation states, large powerful corporations stake out spheres of influence within their competitive space. They struggle for turf as if they were playing on a global chessboard. And they use their spheres to interact with rival global corporations in ways that enhance their market power. These interactions can lead to:

A division of the market and establishment of "borders" among competitors, mutual assured destruction, testing and probing using parts of their geo-product portfolio for different purposes, a struggle for control over the offensive/defensive mindsets of other players.

Just as in international relations, the strategies used by rival spheres of influence affect how the players see and play “the game.” Actions can stimulate aggressive, defensive, stabilizing, or retreating mindsets. So strategic supremacy is a matter of having superior influence over (1) where the rivals locate their spheres in the competitive space, and (2) the mindset of those rivals about where they have the will and capability to win.

It is also (in part) a matter of using tactics that rely on speed, surprise, and other techniques from military strategy. Thus industry and global political leaders can be disrupted and displaced by ambitious hypercompetitors or revolutionaries who seek to:

Use competitive dynamics to outmaneuver each other and to use creative disruption to throw competitors off guard,

Change the rules of competition using a series of incremental competitive initiatives that:

  • Cause profit pools to evolve
  • Drive industry life cycles
  • Eliminate competitors
  • Undermine their competencies

Change the rules of competition swiftly and massively through the use of Revolutionary new products and business models, or Industry re-invention

The history of world politics and international business competition has always been characterized by a tension between the forces for change and the forces of stability—the revolutionaries versus the establishment. This course will address how and why some firms seek market stability while others seek disruption and chaos, looking at industries as self-organizing “competitive pressure systems” that act like the international system of nation states creating a world order or disorder.

The perspectives of military and international relations provide a different perspective for managers who must learn to think like their competitors in global markets. On continents lacking an “MBA-culture,” such as Europe and Asia, managers often structure their strategic thinking using non-economic mental models. For example, training based on the classics provides many Europeans with a historical perspective of strategy routed in the politics of European dynasties vying for power over the continent and far-flung colonial empires. In Asia, the game called “Go” and books written for or about war lords, such as Sun Tzu’s The Art of War, form the basis of many managers’ strategic thinking. Thus, even though this course is “off the beaten path” for MBAs, and even though it at times deviates from economics-based approaches, it will be useful in understanding the mental models of many of the most important rivals you will face during your career.

Course Goals and Takeaways

While military and diplomatic thinking is one goal of this course, it is necessary to relate this type of thinking to practical business frameworks. In order to achieve this pedagogical goal, the course will develop several consulting tools. You should walk away from this course with a few techniques and frameworks for analyzing and creating portfolio strategies as well as strategies for competitor selection and the use of multi-market contact and competitive positioning. These include: sphere of influence analysis, price-benefit mapping, and competitive pressure mapping. You should also walk away with some consulting tools and frameworks for mapping guerilla-like moves and counter-moves, including competitive maneuvering in the price-quality and strongholds arenas as well as hypercompetitive and revolutionary methodologies for creating rule-shifting strategies. These tools and frameworks are intended to be “differentiators” that will distinguish you from the pack of MBAs trained only in the more traditional strategic concepts, tools and theories. To get the full grasp of these tools, you may be asked to do a project using these tools, so you will learn by doing them.

Who Should Take the Course

This course is primarily intended for those students planning to go into consulting, but will also be useful to those who are interested in strategic planning, market research, competitive intelligence, securities analysis, and general management. It will also be of interest to those who want to be the future leaders and better citizens of their nations, with a wish to broaden their understanding of international relations and military strategy in order to become better able to interpret the geo-political events shaping our times.