Michael A. Hitt

July 2012

Being Strategic and Entrepreneurial: Building Capabilities and Exploiting

Opportunities in a Dynamic Competitive Landscape

Competitive LandscapeEvery morning in Africa, a gazelle wakes upIt knows that it must run faster than the fastest lion or it

will be killedEvery morning a lion wakes upIt knows that it must outrun the slowest gazelle or it will

starve to deathIt doesn’t matter if you are a lion or gazelle, when the

sun comes up, you had better start running

(Friedman (2005)

The New Competitive Landscape

Extreme Emphasis on Price, Quality and Satisfaction

Blurring of Industry Boundaries

Hypercompetitive Markets

Global Economic and Political Discontinuities and Disequilibrium

Increasing Importance of Innovation and Continuous Learning

Lack of Entrepreneurial Mindset

Polaroid: Leader in “Instant Photography”

Blockbuster: Unchallenged Leader in Video Rental

Netflix and Redbox Satellite Rentals Stock Value Fell to Near Zero Filed Chapter 11

At One Time, Member of Top 50 Firms Digital Technology Disrupted the Industry Bankrupt; Dissolved Business

Lack of Entrepreneurial Mindset (cont’d)

Barnes & Noble: Unparalleled Leader in Large Bookstore Retail Sales

Amazon.com Electronic Books Major Reductions in Stock Price The Company Was Offered for Sale Microsoft Invested $300 million (Nook)

Lack of Strategic Mindset

Priceline.comStarted with a Unique Reverse-Auction System (patented)

Allowing the Customer to Name the Price and Companies Can Respond to Provide if Desired

In First Six Weeks, It Sold More than 10,000 Airline Tickets

Total Revenues Grew to Over $1 billion within 4 years of Operation

Lack of Strategic Mindset (cont’d)

Competitors:Microsoft Expedia—Almost Perfect Imitation of Priceline’s patented Reverse Auction System

Travelocity.com--Represents 420 Airlines Operated by SABRE

Hotwire—Alliance of Six Major Airlines

Orbitz.com—(Owned by American, Continental, Delta, Northwest and United)

Strategic and Entrepreneurial Leader

Strategic Leadership is the “ability to anticipate, envision, maintain flexibility, think strategically, and entrepreneurially and work with others to initiate changes that create a viable future for the organization.”

Vision

Continuous Development of Capabilities

Emphasizing Innovation

Building and Sustaining a Competitive Advantage

A Good Vision

Ambitious/Challenging

Inspirational (Enthusiasm)

Reflects Uniqueness/Distinctiveness

Emphasizes Excellence

Clear/Unambiguous

Building and Using Capabilities

Resource Portfolio

Building Capabilities

Leveraging the Capabilities for Competitive Advantage

Gaining a Competitive Advantage

Competitive Advantage: Providing Value to Customers that Is Superior to that Provided by Competitors

Having Capabilities that Are:

Valuable

Rare

Difficult to Imitate

Nonsubstitutable

Building Capabilities

To Gain a Competitive Advantage, Capabilities Must Have the Following Characteristics

Valuable

Rare

To Sustain a Competitive Advantage, Capabilities Must Have the Following Additional Characteristics

Difficult to Imitate

Nonsubstitutable

Building and Leveraging Capabilities

Using the Portfolio of ResourcesEnriching Current CapabilitiesDeveloping New Capabilities

Exploit Current ProductsInnovate and Enter New Markets

Leveraging Capabilities for Advantage

Managing Strategically

Know Your Firm’s Strengths and Acknowledge Its Weaknesses

Know Your Competitors Well

Continuously Seek to Gain and Maintain a Competitive Advantage

Act Entrepreneurially

Identify/Create New Business Opportunities and Exploit Them

Acting Entrepreneurially

Build Flexibility into Processes and SystemsOpen to ChangeRespond Rapidly

Be Proactive instead of Reactive

Be Creative and Promote Innovation

Seek External Input

Focus on Creating New Products and Markets While Simultaneously Exploiting Existing Ones

Identifying Opportunities

Entrepreneurial Alertness: Recognizing Opportunities that Others Do Not See

Competitive Advantage

Can Firms that Have Fewer Resources Win Competitive Battles against

Firms with More Resources?

If we know ourselves and our enemy, we

will win

(Sun Tzu, The Art of War)

Conclusion

“Champions do not become champions when they win the event, but in the hours, weeks, months and years they spend preparing for it. The victorious performance itself is merely the demonstration of their championship character.”

T. Alan Armstrong