Strategy as Simple Rules Kathleen Eisenhardt, Donald Sull Harvard Business Review January, 2001

Lecture and slides draw upon Strategy as Simple Rules, Word Association What are the connotations of the word “define” Are these primarily positive or negative? What are the connotations of the word “confine” Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, Strategy as Simple Rules Kathleen M. Eisenhardt, Donald Sull Harvard Business Review, 2001 Strategies are encouraged to emerge within deliberately designed rules which “define without confining” direction Environment is made up of opportunities, (rather than products, markets, channels) Strategy is opportunism (not position) Strategy is built on processes Intended for “high velocity” environments Intended for high velocity markets Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

A connection to Mintzberg “…define direction without confining it.” Strategy as Simple Rules, page 2 Too much of a strategy’s benefits can lead to missed opportunities and an inability to adapt. Mintzberg, The Strategy Concept II Another Look at Why Organizations Need Strategies California Management Review, Vol.XXX, No.1, Fall 1987 Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Types of “Simple Rules” How-to rules Boundary rules Priority rules Timing rules Exit rules Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, How-to Rules How do we go about pursuing opportunities? What is distinctive about these processes? Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, A connection to Porter How-to rules: How we go about pursuing opportunities What is distinctive about these processes? “Strategy rests on unique activities.” Michael Porter, What is Strategy? Harvard Business Review, July 1996 Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, Boundary Rules What kind of opportunities will we even consider pursuing? What kind of opportunities will we ignore! Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, A connection to Porter Boundary rules determine what kind of opportunities we will even consider … and by implication, those that we will ignore! “Strategy is also about what not to do.” Michael Porter, What is Strategy? Harvard Business Review, July 1996 Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, Priority Rules How will we establish (possibly shifting) priorities among the opportunities within our boundaries? These priorities will probably not be static Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, Timing Rules What is the “pace” of our strategic initiatives? How often do we initiate something new? Within what time frame do we expect an initiative to come to fruition? Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, Exit Rules How do we know when it is time to quit and move on to other opportunities? Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Issues with Simple Rules How many is the right number? How specific should they be? How should they be established? Often this is based on experience A connection to Mintzberg When should they be changed? Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Lecture and slides draw upon Strategy as Simple Rules, Strategy as Simple Rules Kathleen M. Eisenhardt, Donald Sull Harvard Business Review, 2001 “Strategy-space” is made up of opportunities; strategy is opportunism Simple rules “define without confining” direction A very fluid approach to strategy for a dynamic fast-paced environment Lecture and slides draw upon Strategy as Simple Rules, Kathleen M. Eisenhardt, Donald N. Sull, Harvard Business Review, January 2001

Reflection and Reconciliation Emergent Strategy as Process (Mintzberg) Deliberate Strategy as Position (Porter) Resource-based View (Barney et al.) Strategy as Simple Rules (Eisenhardt, Sull) Which concept of strategy, or hybrid of conceptions, is most convincing to you?