Anticipation

the key anticipations are often of buyer demand and competitive reactions.

The strategy must have insight into predictable aspects of others' behavior that can be turned to advantage.  At the simplest level, a strategy of investing in Manhattan real estate is based on the anticipation that other people's future demand for this real estate will raise its value.  In competitive strategy, the key anticipations are often of buyer demand and competitive reactions.

As an example of anticipation, while the SUV craze was booming in the United States, Toyota invested more than $1 billion in developing hybrid gasoline-electric technologies: an electronically controlled continuously-variable-speed transmission and its own chips and software to control the system.  There were two anticipations guiding this investment.  First, management believed that fuel economy pressures would, over time, make hybrid vehicles a major product category.  Second, management believed that, once presented with the chance to license Toyota's technology, other automakers would do so and not invest in developing possibly superior systems.  Thus far, both anticipations have proven reasonably accurate.

ACTION POINT: What are the predictable behaviors of your markets that you can anticipate to create advantage?

Leverage II

strategic leverage arises from a mixture of anticipation, insight into what is most pivotal or critical in a situation

Knock loose a keystone, and a giant will fall. Seize the moment, as James Madison did in 1787, turning colleague Edmund Randolph's ideas about three branches of government with a bicameral legislature into the first draft of the Constitution, and you just might found a great nation.

When the largest computer company in the world comes knocking at your door in 1980 asking if you can provide an operating system for a new personal computer, say, "Yes, we can!"  And be sure to insist, as Bill Gates did in 1980, that, after they pay you for the software, the contract still permits you to sell it to third parties.  You just might become the richest person in the world.

ACTION POINT: In general, strategic leverage arises from a mixture of anticipation, insight into what is most pivotal or critical in a situation, and making a concentrated application of effort.

Leverage

Finding such crucial pivot points and concentrating force on them is the secret of strategic leverage.

A good strategy draws power from focusing minds, energy, and action.  That focus, channeled at the right moment onto a pivotal objective, can produce a cascade of favorable outcomes.  This source of power can be called leverage.

Archimedes, one of the smartest people who ever lived, said, "Give me a lever long enough, a fulcrum strong enough, and I'll move the world."  What he no doubt knew, but did not say, was that to move the earth, his lever would have to be billions of miles long.  With this enormous lever, a swing of Archimedes' arm might move the earth by the diameter of one atom.  Given the amount of trouble involved, he would be wise to apply his lever to a spot where this tiny movement would make a large difference.  Finding such crucial pivot points and concentrating force on them is the secret of strategic leverage.

ACTION POINT: Look for the place where small changes will make big differences.

Things I am Thankful for

Grace

Wife

Sons
Daughters
Friends

Work
This time of year.

Happy Thanksgiving

Sources of Power

There is more to know about strategy than any one volume can possible treat.

The next posts will explore a number of fundamental sources of power used in good strategies:  leverage, proximate objectives, chain-link systems, design, focus, growth, advantage, dynamics, inertia, and entropy.

Obviously, this set is not exhaustive.  There is more to know about strategy than any one volume can possible treat.  The sources of power (and trouble) featured were chosen for both their generality and freshness.  Most extend beyond a business context and apply to government, security, and nonprofit situations as well.  Plus, they explore particular issues that are fundamental but that have not been given as much attention as they deserve.

ACTION POINT: Stay tuned for more on sources of power.