185
See also: Protect the core business 170–71 ■ Avoiding complacency 194–201 ■
Porter’s five forces 212–15 ■ The value chain 216–17
WORKING WITH A VISION
be blinded to the choices available.
Rather than making tough decisions,
they will try to accommodate a
multitude of conflicting demands
and interests to stick to a plan.
Managers in these circumstances
risk following old ideas and paths
that no longer work, rather than
leading with new ones.
Film is dead
The demise of Kodak is a prime
example of a company following
bad strategy. Founded in 1890, by
the 1970s Kodak was the US market
leader in the photographic sector,
with nearly 90 percent of the film
and camera market. It was rated as
one of the world’s top brands. In
1975 Kodak engineers invented the
digital camera, but the senior
management of Kodak ignored the
opportunity presented by this new
technology. They believed they
were in the chemistry-based film
business and were not prepared to
“kill the golden goose.” Executives
failed to see that digital photography
would make film redundant and
challenge their near-monopoly
business. Japanese company
Fujifilm, however, recognized the
threat and diversified successfully.
Kodak began its shift to digital
cameras too late, as smartphones
and tablets replaced cameras.
The senior executives’ inability to
make the tough decision to change
course led to the company being
declared bankrupt in 2012. ■Richard Rumelt
Professor Richard Rumelt
(1942–) studied electrical
engineering at the University
of California, Berkeley, before
going on to receive a doctorate
in business administration
from Harvard Business School
in 1972. He worked as a
systems engineer at NASA’s
Jet Propulsion Laboratories
while also serving on the
faculty of Harvard Business
School. In 1976 he joined
the Anderson School of
Management at the University
of California, where he has
remained ever since, rising to
become Professor of Business
and Society. From 1993 to 1996
he taught at INSEAD, the
leading French business
school at Fontainebleau, near
Paris. Rumelt also works as a
consultant to several
companies and governments.Key works1982 Diversity and Profitability
1991 How Much Does Industry
Matter?
2012 Good Strategy/Bad
StrategyThe essence of strategy is choosing
what not to do.Company A sets out to
define its strategy for the
coming years. It conducts
analysis to understand......its strengths,
such as quality of
manufacturing......its opportunities,
such as developing new
products or going into
different markets......its weaknesses,
such as manufacturing
capacity or the availability
of skilled labor......and its threats,
such as the strength of the
competition, or shortage
of raw materials.Company A must
set clear goals and
decide where to focus
its efforts.Good strategy honestly
acknowledges the
challenges being faced
and provides an approach
to overcoming them.
Richard Rumelt