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Management article
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Reference no. SMR47216
Published by: MIT Sloan School of Management
Published in: "MIT Sloan Management Review", 2006
Length: 7 pages

Abstract

Big strategic shifts are risky, but the constantly changing business environment periodically forces corporate leaders to reposition their businesses in fundamental ways. With case studies from the telecom equipment, auto, computer and beverage industries, the authors examine why some companies have been successful in making smart big moves while others have failed. Some of their findings were, by their own admission, predictable: for example, companies that initiated successful big moves exploited and in some instances enhanced their distinctiveness relative to their competitors. However, the authors identified a more surprising factor, which they refer to as ''complementarity''. The more successful companies followed a consistent learning logic both internally and externally, and they made big moves that were complementary over time. Complementarity plays out in three ways: (1) it builds on a successful business model; (2) it relies on periodic shifts in the balance between innovation, efficiency and customer intimacy when the business model is not working; and (3) it promotes a sequenced development of capabilities when the balance shifts.

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Abstract

Big strategic shifts are risky, but the constantly changing business environment periodically forces corporate leaders to reposition their businesses in fundamental ways. With case studies from the telecom equipment, auto, computer and beverage industries, the authors examine why some companies have been successful in making smart big moves while others have failed. Some of their findings were, by their own admission, predictable: for example, companies that initiated successful big moves exploited and in some instances enhanced their distinctiveness relative to their competitors. However, the authors identified a more surprising factor, which they refer to as ''complementarity''. The more successful companies followed a consistent learning logic both internally and externally, and they made big moves that were complementary over time. Complementarity plays out in three ways: (1) it builds on a successful business model; (2) it relies on periodic shifts in the balance between innovation, efficiency and customer intimacy when the business model is not working; and (3) it promotes a sequenced development of capabilities when the balance shifts.

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