Focus on Strategic Intent
Introduction
In the book "Random Walk Down Wall Street", Burton Malkiel took the idea of efficient markets to its logical conclusion, and argued that a blindfolded monkey in theory should be able to perform as well on the stock market as professional brokers. The Wall Street Journal found this argument intriguing, and decided to test the hypothesis by having reporters throw darts to select random stocks. An informal competition was consequently arranged over several months to test how random selection performed against leading stock traders. Luckily for the financial analysts, the latter managed to at least beat the darts on average, but the victory was not deemed sufficiently convincing enough to justify the hefty brokerage fees charged by analysts. Similar criticism has been raised against management consultants, but a performance comparison can in this case not be performed using darts or monkeys. Despite the criticism, consulting is a quickly growing industry and the demand for tools like strategic models are increasing in correlation with the industry. It thus created somewhat of an upheaval when London Business School Professor Gary Hamel and University of Michigan Professor C.K. Prahalad published the article "Strategic Intent" in a 1989 edition of The Harvard Journal.
The authors take what some consider to be a revolutionary approach to corporate strategy, and argue that a core competency is embedded within the organisation. A core competency is, in other words, not just something that the company does well. As the article was written before the burst of the bubble, Hamel and Prahalad appear to be very enthusiastic about the Japanese economy. This fascination explains much of the background for their new approach to strategy, and Japanese examples are also used to point out shortcomings of more traditional corporate strategy models. The thesis presented by the authors does in some cases contradict previously accepted knowledge in the field of corporate strategy. In other cases, though, the thesis supports the principle behind the more traditional models. This paper will attempt to analyse the arguments presented by Hamel and Prahalad, for then to apply models as the experience curve, the Porter models, the growth-share matrix, the industry attractiveness model, and the product-life cycle to the thesis. In addition, frequent references will be given to Boston Consulting founder Bruce D. Henderson's article on "The Origin of Strategy". Before applying the models, however, a brief review of the thesis presented by Hamel and Prahalad is necessary.