1. Conceptual Frameworks
Strategic Dynamics:
Conceptual Frameworks
ROBERT A. BURGELMAN
Stanford Graduate School of Business 1

2. Two Conceptual Frameworks
Strategic Dynamics:
Two Conceptual Frameworks
Overview
I. Dynamic Forces Driving Firm Evolution
II. An Evolutionary Framework of the Strategy-Making Process in Established Firms
Four Strategic Leadership Challenges in Established Firms 1

3. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage in the Industry
Official Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
of the Firm
Robert A. Burgelman, Stanford Graduate School of Business

4. I. Dynamic Forces in Firm Evolution
What it Takes
to Win
Basis of Competitive Advantage in the Industry
What We SAY
What We DO
Official Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
of the Firm
What We’ve Got
Robert A. Burgelman, Stanford Graduate School of Business

5. I. Dynamic Forces in Firm Evolution: “The Rubber Band Model”
DRAM products become a commodity.
Winning requires low cost and high
quality which depends on manufacturing skills.
Market
INDUSTRY FORCES
Non-Market
Basis of Competitive Advantage in the Industry
Official Corporate Strategy
Internal Selection Environment
Strategic Action
Intel skills in circuit design and process technology, but not manufacturing
INERTIA
Distinctive Competence
of the Firm
NEW OPPORTUNITIES
Robert A. Burgelman, Stanford Graduate School of Business

6. I. Dynamic Forces in Firm Evolution: “The Rubber Band Model”
ACTION is ahead of STRATEGY
Fab capacity allocation diverges from strategy
Basis of Competitive Advantage in the Industry
Official Corporate Strategy
Internal Selection Environment
Official STRATEGY is ahead of ACTION
Apple “Newton”:
handheld product strategy
Strategic Action
Distinctive Competence
of the Firm
Robert A. Burgelman, Stanford Graduate School of Business

7. I. Diagnosis #1: Sources of Strategic Dissonance
Dissonance is Strategic if:
There is a divergence between Basis of Competitive Advantage and Distinctive Competence
Example: Silver Bullet Target Test:
Who is your most dangerous competition? Is it still clear?
Robert A. Burgelman, Stanford Graduate School of Business

8. I. Diagnosis #1: Sources of Strategic Dissonance
Dissonance is Strategic if:
There is a divergence between Basis of Competitive Advantage and Distinctive Competence
Example: Silver Bullet Target Test:
Who is your most dangerous competition? Is it still clear?
There is a divergence between Stated Strategy and
Strategic Action
Example: We say that we provide customer solutions but we only sell them our own technology
Note: Initially the signals are usually weak
Robert A. Burgelman, Stanford Graduate School of Business

9. I. Dynamic Forces in Firm Evolution
What it Takes
to Win
Basis of Competitive Advantage in the Industry
What We SAY
Culture
What We DO
Official Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
of the Firm
What We’ve Got
Robert A. Burgelman, Stanford Graduate School of Business

10. II. Diagnosis #2: Organizational Capability to Adapt
Characteristics of a Culture Ready for Strategic Change*:
Resource allocation reflects competitive reality
Strategic planning has forums for debating new opportunities
Capacity of top and senior managers for strategic recognition
Capacity for strategic leadership
* Note: Created by ourselves and/or by others
Robert A. Burgelman, Stanford Graduate School of Business

11. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
Robert A. Burgelman, Stanford Graduate School of Business

12. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
Robert A. Burgelman, Stanford Graduate School of Business

13. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
An Evolutionary Framework of the Strategy-Making Process in Established Firms
Robert A. Burgelman, Stanford Graduate School of Business

14. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
An Evolutionary Framework of the Strategy-Making Process in Established Firms
Concept of Corporate Strategy
Robert A. Burgelman, Stanford Graduate School of Business

15. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
An Evolutionary Framework of the Strategy-Making Process in Established Firms
Concept of Corporate Strategy
Induced Strategic Action
Robert A. Burgelman, Stanford Graduate School of Business

16. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
An Evolutionary Framework of the Strategy-Making Process in Established Firms
Concept of Corporate Strategy
Induced Strategic Action
Structural Context
Robert A. Burgelman, Stanford Graduate School of Business

17. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
An Evolutionary Framework of the Strategy-Making Process in Established Firms
Autonomous Strategic Action
Concept of Corporate Strategy
Induced Strategic Action
Structural Context
Robert A. Burgelman, Stanford Graduate School of Business

18. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
An Evolutionary Framework of the Strategy-Making Process in Established Firms
Autonomous Strategic Action
Strategic Context
Concept of Corporate Strategy
Induced Strategic Action
Structural Context
Robert A. Burgelman, Stanford Graduate School of Business

19. I. Dynamic Forces in Firm Evolution
Basis of Competitive Advantage
Corporate Strategy
Internal Selection Environment
Strategic Action
Distinctive Competence
An Evolutionary Framework of the Strategy-Making Process in Established Firms
Autonomous Strategic Action
Strategic Context
Concept of Corporate Strategy
Induced Strategic Action
Structural Context
Variation
Selection
Retention
Robert A. Burgelman, Stanford Graduate School of Business

20. II. An Evolutionary Framework of the Strategy-Making Process in Established Firms
amend
CREATE LINKAGE
Radical Innovation
(initially not necessarily large)
Middle/Senior Mgt
Strategic Context 5
: Increase Scale
Conceptual Skills
Political Skills
But: Complement or Substitute?
Concept of Corporate Strategy 1 e
emerging environments
Autonomous Strategic Action 4 E
the existing environment
Induced Strategic Action 2
Structural Context 3
Distinctive Competence
Product Market Domain
Core Values
Objectives
Organizational
Learning
Top Management Beliefs about:
Incremental Innovation
(not necessarily small)
Organizational Structure
Planning & Control Systems
Resource Allocation Rules
Measurement & Reward Systems
Principles of Behavior
ACHIEVE ALIGNMENT
Robert A. Burgelman, Stanford Graduate School of Business

21. Four Strategic Leadership Challenges in Established Firms
Exploiting the opportunities associated with the current strategy: DISCIPLINE #1
Exploiting new opportunities spontaneously generated from within: DISCIPLINE #2
Creating the adaptive organization: balancing the emphasis on existing and new opportunities
Stimulating strategic renewal (when new opportunities are no longer spontaneously generated)
Robert A. Burgelman, Stanford Graduate School of Business