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February 16, 2008 1

CPET 575 Management Of TechnologyLecture onReading II-15

Strategic IntentBy

Gary Hamel and C. K. Prahalad

References:

1. Robert A. Burgelman, Clayton M. Christensen, and Steven C. Wheelwright, Strategic Management of Technology and Innovation, 4th edition, McGraw-Hill, ISBN 0072536950, 2004. pp. 550-562

2. Gary Hamle and C. K. Prahalad, “Strategic Intent,” Harvard Business Review, May-June 1989, pp. 63-76

Paul I-Hai Lin, Professor

http://www.ipfw.edu/~lin

M.S. Technology - IT and Advanced Computer Applications Track

Purdue University Fort Wayne Campus

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Strategic Intent

Source: Reprinted from Harvard Business Review, May-June 1989,

pp. 63-76

Introduction

• Many companies

Matching Competitive Advantages by

• Moving manufacturing offshore – lower labor cost,

capture global scale economic

• Improving quality control: quality circle, just-in-time

production

• Adopting Japanese HR practices

• Forming strategic alliances

Trapped in the imitation and catch up games

• Companies should – apply the strategic thinking

approaches

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Strategic Intent

Evaluate Both Current and Future Competitors –

understand your enemy

• Competitor Analysis focusing on the existing

resources (human, technical, and financial) of present

competitors

Back in 1970

• Komatsu was less than 35% as larges as Caterpillar (by

sales)

• Honda was smaller than American Motors (1954-1987)

• Cannon << Xerox

• Lessons Learned

Assessing the current technical advantages of known

competitors will not help you understand the resolution,

stamina, and inventiveness of potential competitors

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Strategic Intent

From 1979 -1989 research on

• Global competition

• International alliances

• Multinational management

Findings on Remaking Strategy

• Implicit strategy models of managers

One - Centers on the problem of maintaining strategic fit

The other – Centers on the problems of leveraging resources

• Mapping: differences, similarities

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Strategic Intent

Many companies are familiar with “Strategic

Planning”

• The planning process == Feasibility sieve (accept vs.

reject)

• Are the milestone clear?

• Do we have the necessary skills and resources?

• How will competitors react?

• Has the market been thoroughly reached?

• Be realistic!

Future oriented/opportunities, not about solving

today’s problems

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Strategic Intent

Strategic Intent (not well understood)

• captures the essence of wining.

• is stable over time.

• sets a target that deserves personal effort and

commitment.

Planning for global leadership?

Japanese companies using “Strategic Intent” – 20-

year “strategies” for attacking Western markets:

Komatsu vs. Caterpillar

Honda vs. American Motors

Cannon vs. Xerox

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Strategic Intent Strategic Intent’ Goals

• Fold the future back into the present

• Important Question to Ask

NOT – How will next year be different from this year?

But – What must we do differently next year to get closer to

our strategic intent?

Strategic Intent’s Challenges

• Implies a sizable stretch for an organization; current

capabilities and resources will not suffice

• Creates an extreme misfit between resources and

ambitions

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Strategic Intent Challenge to Building New Advantages – Building

Capabilities and Leadership Positions

Creativity, self-supported, do more with less

• Take on larger, better financed competitors

• Fujitsu Example

Forming strategic alliance with Siemens and STC (UK) in

Europe to attack IBM

• Canon Example – How to Overcome Resource

Constraints

Understand Xerox’s patent

Licensing technology to create a product – yield early market

experience

Gearing up internal R&D efforts

Licensing its own technology to other manufacturers to fund

further R&D

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Strategic Intent Exhibit 1 Building Competitive Advantages at

Komatsu

• Protect Komatsu’s home market against Caterpillar -

Early 1960

• Reduce costs while maintaining quality – Mid 1960

• Make Komatsu an international enterprise and build

export market – Mid 1960 to mid 1970

• Respond to external shocks that threaten markets –

Mid 1970 to 1979

• Create new products and markets – late 1970 to 1981

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Strategic Intent

Engaging entire organization to create new

competitive advantages (Ford, IBM)

• Create a sense of urgency (reciprocal responsibility:

top management, workers/staffs)

• Develop a competitor focus at every level through

widespread use of competitive intelligence

• Provide employees with the skills they need to work

effectively

• Give the organization time to digest one challenge

before launching another

• Establish clear milestones and review mechanism

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Strategic Intent

Four Approaches to competitive innovation used

by Japanese companies in the global expansion:

• Building layers of advantage

• Searching for loose bricks

• Changing the terms of engagement, and

• Competing through collaboration

Licensing, outsourcing agreements, joint ventures

Know competitor’s strengths and weaknesses: Toyota/GM,

Mazda/Ford

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Strategic Intent

The Process of Surrender

• Unseen Strategic Intent | Under Estimate

Resourcefulness | Unconventional entry tactics

Competitive surprise

Partial response

Catch-up trap

Lost battles

Sense the inevitability

Retreat and exit

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Conclusion