Wednesday, December 11, 2013

Strategic Beauty

The beat goes on
The beat goes on
Drums keep pounding a rhythm to the brain
--Sonny & Cher

In strategic management, competitive advantage is only as sustainable as a strategy is inimitable. When competitors can copy what you are doing, then success is fleeting.

In this context, strategic beauty is the strategy that everyone can see as working...yet no one can imitate it.

Dell's strategy in the late 1990s/early 2000s was a good example. Combining prowess in just-in-time (JIT) production with dedication to a direct distribution channel, Dell took market share and profits from the hides of Hewlett Packard (HPQ) and others who pushed production primarily through traditional "two-step" (distributor->retailer) channels.

Everyone in the world could see what Dell was doing. Yet, HPQ and other traditionalists couldn't follow, because doing so would have been too painful. HPQ et al would either have to leave their traditional distribution channels behind, or endure massive channel conflicts--e.g., HPQ is a supplier to Best Buy (BBY) in its traditional channel, but would be a competitor to BBY in a direct channel.

I am reminded of strategic beauty when I see the federal government engage it its wealth redistribution scheme. Unfortunately for many statists who would like to force a levelling of wealth, current policies are forcing wealth toward a more uneven skew.

But the statists are largely silent. If they complained, then they would be admitting that one of their sacred tools for controlling economic activity, the monetary printing press, was not working properly.

And statists, by definition, have real trouble admitting that anything government does is not good.

So the strategy keeps working...and the beat goes on.

no positions

1 comment:

dgeorge12358 said...

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.
~Sun Tzu