We also know that in most industries companies cluster around a relatively small number of strategic positions and within each cluster hold similar conceptions of how to compete. Consider the motorcycle industry, which has two major clusters of firms. The Japanese manufacturers—Honda, Yamaha, Suzuki, and Kawasaki—compete on technical innovation and lower costs. The Harley-Davidsons and Ducatis of the world view their business through a very different lens—as entertainment. Here’s how Federico Minoli, the CEO and chairman of Ducati from 1996 to 2007, described his decision to build a museum celebrating the firm before he repaired a damaged factory: “Ducati is not, or not only, a motorcycle company. We sell something more: a dream, passion, a piece of history.” Analyze most industries, and you’ll find a similar situation: two or three groups of companies jostling for position upon the same two or three competitive mountaintops. Now consider the major U.S. airlines. They all struggled for many years in cutthroat competition around the same position until Herb Kelleher of Southwest Airlines saw a different, low-cost way to compete.
It is unlikely that truly superior close opportunities exist that have not been spotted. Within each position, we have many firms with myopic managers who all wear the same lenses. They see well what is close to them, and they view the competitive landscape the same way. To the extent that superior opportunities exist, they will be those that are cognitively distant. The challenge for strategic leaders is, therefore, to learn how to see them.
We also know that in most industries companies cluster around a relatively small number of strategic positions and within each cluster hold similar conceptions of how to compete. Consider the motorcycle industry, which has two major clusters of firms. The Japanese manufacturers—Honda, Yamaha, Suzuki, and Kawasaki—compete on technical innovation and lower costs. The Harley-Davidsons and Ducatis of the world view their business through a very different lens—as entertainment. Here’s how Federico Minoli, the CEO and chairman of Ducati from 1996 to 2007, described his decision to build a museum celebrating the firm before he repaired a damaged factory: “Ducati is not, or not only, a motorcycle company. We sell something more: a dream, passion, a piece of history.” Analyze most industries, and you’ll find a similar situation: two or three groups of companies jostling for position upon the same two or three competitive mountaintops. Now consider the major U.S. airlines. They all struggled for many years in cutthroat competition around the same position until Herb Kelleher of Southwest Airlines saw a different, low-cost way to compete.
It is unlikely that truly superior close opportunities exist that have not been spotted. Within each position, we have many firms with myopic managers who all wear the same lenses. They see well what is close to them, and they view the competitive landscape the same way. To the extent that superior opportunities exist, they will be those that are cognitively distant. The challenge for strategic leaders is, therefore, to learn how to see them.
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