book

Failsafe Strategies: Profit and Grow from Risks That Others Avoid

Name: Failsafe Strategies: Profit and Grow from Risks That Others Avoid
Author: Sayan Chatterjee
ISBN: 9780131011113

by Sayan Chatterjee

September 2004

Intermediate to advanced

312 pages

6h 56m

English

Pearson

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Copyright
Dedication
Praise for Failsafe Strategies
Acknowledgments
Introduction Understanding Risk: The Real Key to Competitive Strategy
An Overview of the BookSection 1: Designing Strategies for Avoiding RiskChapter 1: How to See Gold Where Others See Risk: Identify More Choices to Get the GoldChapter 2: Three Steps to Design a Low-Risk StrategyChapter 3: Identifying Multiple Capability ConfigurationsChapter 4: Designing Strategies with Low Capability RisksChapter 5: Lowering Capability Risks with Visible and Invisible OutputsChapter 6: Organizations That Can Benefit from the Outcome-To-Objectives FrameworkSection 2: The Risks in Growth and Diversification StrategyChapter 7: When and How to Use Differentiation Entry StrategyChapter 8: When and How to Use a Low-Price Entry StrategyChapter 9: Strategies to Shape Markets: Products, Process, and PlatformChapter 10: Develop Multiple Migration PathsAppendixSome Concluding ThoughtsEndnotes
1. Designing Strategies For Avoiding Risk
1. How to See Gold Where Others See Risk: Identify More Choices to Get the Gold
To Visualize More Options, You Need an Outside-In PerspectiveThe Traditional Frameworks Lead To an Inside-Out PerspectiveFocus on Desired Outcomes to Identify Multiple OptionsOutcome To (Competitive) ObjectiveWe Can Anticipate Competitive Risks Better by Focusing on OutcomesAn Aside on Creativity and ChoiceDecide on Objectives Based on How Your Firm Wants To CompeteEndnotes
2. Three Steps to Design a Low-Risk Strategy
Step 1. Demand Risks: Broad Competitive Objectives Must Deliver the Core Customer OutcomesStep 2. Competitive Risks: Identify the Core Competitive Objectives That Cannot Be Imitated by CompetitorsCore Objectives Must Be Specific and MeasurableCore Objectives Must Be Leading or Contemporaneous IndicatorsStep 3. Capability Risks: Using Core Objectives to Reduce Capability RisksCore Objectives Lead to Clarity in Capabilities: Capability MapsCapability Maps Provide a Shared Framework for Making Business DecisionsLack of a Shared Framework Increases Capability RisksHow To Lower Capability Risks with Alternate ConfigurationsEndnotes
3. Identifying Multiple Capability Configurations
Deliver the Same Core Objective with Different CapabilitiesOutsourcing Core CapabilitiesCapability Options for Reducing Demand RisksHow to Apply This Framework to Any BusinessManaging Capability RisksEndnotes
4. Designing Strategies with Low Capability Risks
Complex CapabilitiesDevote Sufficient Time to Develop Complex CapabilitiesInvestment Risks in Acquiring CapabilitiesLowest Risk: Use Existing Capabilities for the Current Value ChainReduce Risk Using In-House CapabilitiesReduce Risks with Off-the-Shelf TechnologyModerate Risk: Investment in Capabilities to Modify Part of the Value ChainSatisfy a Latent Desired OutcomeAdd Optional Features to Deliver New OutcomesSubstitute a Manageable Risk to Reduce AnotherHigh Risk: Creating an Entirely New Value ChainCapabilities for Exploiting White SpacesLeverage Complementary Capabilities to Develop White SpacesRestructure a Market to Create White SpacesFind the Sweet Spot of a MarketDevelop Capabilities to Exploit Sweet SpotsCapabilities Dictate the Limits of Your Business ModelCapabilities Dictate the Natural Size of Your BusinessSummary ThoughtsEndnotes
5. Lowering Capability Risks with Visible and Invisible Outputs[1]
Critical Capabilities and Table StakesNot All Outputs Are Equally Valued by the CustomerReengineer Activities That Deliver Invisible OutputsIt Is Risky to Be Too Thrifty in Visible OutputsInvisible Outputs May Be Visible to Some Customers: What to Do About ItExploit Hidden Value in Invisible OutputsRemove Visible Outputs with Negative or No ValueCheck Your Assumptions and Logic When Investing in CapabilitiesAssumption RiskDevelop ResiliencyTake Baby Steps Before a Big PlungeLogic RiskUnfocused Objectives and HubrisSummary ThoughtsEndnotes

6. Organizations That Can Benefit from the Outcome-to-Objectives Framework
Organizing for Taking RiskCore Objectives Help Create a Common DoctrineCore Competitive Objectives Must Be Pushed Down in the OrganizationHow Frontline Employees Can Reduce Demand RiskHow to Develop Core Objectives Deeper in an OrganizationContext and Collaboration Are Critical to Create and Implement Core ObjectivesCodifying Knowledge Through Core ObjectivesCore Objectives and Control SystemsClosing Thoughts on Section 1Endnotes
2. The Risks in Growth and Diversification Strategy
7. When and How to Use Differentiation Entry Strategy
In Early Product Lifecycle—DifferentiateWhen There Is a Strong Incumbent—DifferentiateHow To Execute a Differentiation Entry StrategyIdentify a Sweet SpotTakeawayDevelop Capabilities for DifferentiationTakeawayDevelop Capabilities That Are Difficult to ImitateTakeawayConsolidate Capabilities Before Expanding the Sweet Spot—SlowlyTakeawayEndnotes
8. When and How to Use a Low-Price Entry Strategy
For a Mature Product, the Entry Strategy Should Be Low PriceRisks for Differentiation Entry Strategy in a Mature MarketTakeawayCapabilities for a Low-Price StrategyDell Computer: Leveraging Low-Cost Operations to Multiple MarketsDevelop a Profile for Your Target MarketsServer BusinessStorage BusinessRisky Profile: Be Careful of Tit-for-Tat Market EntryRisky Profile: Reduce New Capability Risk Through OutsourcingThe Risks of Not Developing a Profile of the Target MarketEndnotes
9. Strategies to Shape Markets: Products, Process, and Platform
Who Is a Market Shaper?Core Objectives for Market Shaping: Create Entry BarriersCore Objectives for Market Shaping: Exit StrategiesStrategies for Market Shaping: How to Acquire a Long-Standing Profit StreamProductThe Risks in Single Product Market-Shaping StrategiesProcessPlatformDevelop an Installed Base for the Derivative ProductsTakeawayPosition the Platform in a Sweet SpotTactics for Reducing the Risks in Market-Shaping StrategiesThe Ability to Visualize a Platform Beyond the Immediate ProductTakeawayExtending a Product into a Standard ProcessExpecting Too Much from the PlatformMake Sure Your Firm Can Push the Platform to the End MarketModify Unsuccessful Platforms for Other End MarketsSummary ThoughtsEndnotes
10. Develop Multiple Migration Paths
Migration Paths for AdaptingThe First Path: Become the KingmakerThe Second Path: Frontal AssaultThe Third Path: Hide Your WeaknessTakeaway: You Never Go Broke Taking ProfitsTakeaway: Only Risk What You Can Afford to LoseTakeaway: Give Your Competitors a Chance to Make MistakesMigration Paths for ShapingTakeaway: Understand the Risks in Each PathMigration Paths for Platform StrategyEndnotes
Epilogue
Appendix: Enron's Incremental Descent into Bankruptcy: A Strategic and Organizational Analysis[1]
AbstractThe Secret of Enron's Growth Plans: Recurring Asset SalesEnron's Collapse: The AntecedentsThe Q3 2001 Earnings AnnouncementEnron's Diversification: From Integrated Utility to Broadband ServicesEGSThe First Special Purpose Entity (SPE) [8]ElectricityEuropean Energy MarketsIndustrial MarketsThird World Strategy: Energy MarketsThird World Strategy: The Azurix Water VentureThe Retail Electricity MarketBroadbandEnronOnlineEnron: Anatomy of a FailureRisk Management: The Kernel of Enron's Early SuccessesAsset-LightEnron's Successes and Failures: An OverviewLesson 1: Codify the Business ModelStraying from Asset-Light(Mis-)Matching Customers to Asset-LightAbandoning Asset-LightLesson 2: Have Clarity in Strategic VisionSuccess Factors for a Vertical Integration StrategyLesson 3: Control Systems Are Critical for Complex Business ModelsThe Role of HubrisUncritical Acceptance of Accolades and NarcissismSeries of Successes and Exemption from the RulesLesson 4: Every Strategy Has a Natural SizeThe Role of the Limited Partnerships.The Complicity of the Capital MarketSummary ThoughtsEndnotes

Content preview from Failsafe Strategies: Profit and Grow from Risks That Others Avoid

Acknowledgments

The central thesis of this book emerged from a gradual convergence of ideas from two sources. The first source is my research on risk and value creation. The second source is my consulting and executive development experience. Chance encounters have played a major role in some significant directions that I have taken in my life, and it is fair to say that had Michael Lubatkin not started the conversation in the late 1980s about looking at risk from a strategic perspective, I may never have been drawn into this stream of research on risk. I may have written a book on strategy, but that would not have been half as interesting to me as the risk management lens of strategy.

Although the notion of risk provides the architecture, the ...

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Failsafe Strategies: Profit and Grow from Risks That Others Avoid

by Sayan Chatterjee

Acknowledgments

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