Good Strategy Bad Strategy 13: Using Dynamics (Richard Rumelt)

This chapter deals with how to attain a position of advantage and how to defend it. There are many ways to do this, but the author has decided to focus on exploiting waves of change. How to do do this?

"You exploit a wave of change by understanding the likely evolution of the landscape and then channeling resources and innovation towards positions that will become high ground - become valuable and defensible - as the dynamics play out."

Take your best guess about where the ball is going, and then position yourself to receive it. Get in early before the change becomes common practice. Once it becomes common practice, it's not an advantage anymore. It's another me too escapade. 

Study the patterns of history. How have changes in your industry typically happened? What are the first signs of a radical shift? Looking at the current landscape, can you see such signs?

Don't stop there. Look beyond the obvious wave of change. What other possibilities are waiting to happen because of this change? Rumelt makes an example of how the invention of TV affected the movie industry and eventually led to the creation of independent movie studios. Ask yourself, "What patterns will be interrupted because of this change? How can I position myself to profit from these interruptions?"

Jay Abraham talks about considering the entire customer journey. What triggers the need for your product? What do customers need to have in place before they buy your product? What else do they need after they buy your product? How will these changes affect their journey before, during and after they purchase from you? How can you then position yourself to profit at every step of the journey?

The author asserts that in order to make good bets on how a wave of change will play out you must acquire enough expertise to question the experts. Reason is because there many pundits who don't know what the hell they're talking about. If you believe what they say, you will lose. Listen to what they have to say, poke holes in their arguments, and then reach your own conclusions. 

And, as is always the case, never forget the competition. How will they respond to these changes? How will their responses affect your plans? Luckily, you don't have to get it completely right. You just have to be more right than your competitors. That slight edge will give you incredible leverage. 

1. Rising fixed costs

2. Deregulation 

3. Predictable biases in forecasting 

4. Incumbent response to change

5. Attractor state. 

Each of these are discussed in detail in the book.

Point of caution though, just because a strategy is working today doesn't mean it will work indefinitely. Don't be fooled into thinking that the current best practices will endure. Sometimes they do; most times they don't.