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Long Range Planning

35/6 December 2002

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Charles Baden-Fuller Editorial

    As the turbulence in the world economy shows no signs of diminishing, organisations need to check their strategy. Do you have a secure business and revenue-model, and are you ready for surprises? During boom times, the robustness of business models and revenue models are not well tested. When the bumps occur, then they get tested. Insecure revenue models lead to starvation. Insecure business models lead to catastrophic failure, because profits plummet and the business fails. All the papers in this issue deal with aspects of flexibility and the business model.

    Mark Vandenbosch and Tom Clift explore how firms can speed up cycle times of new product introduction. They show how a focus on speed can lead to satisfaction among customers who want quick results rather than flexibility. Flash development is a new variant on the standard NPD model that differs from other variants such as improving flexibility. They use the example of Nortel to show how cycle times can be shortened using specific short cuts. In today's climate where speed to market is often the make or break of getting client acceptance and new customers, their model is both practical and exciting.

    In an increasingly turbulent world, to survive we cannot stand; alone we need partners. But which partnerships work best and how do they influence our business model and our flexibility? Shih-Chang Hung examines three very successful Taiwanese computer firms, and asserts that much of their success can be ascribed to their innovative use of networks of partners. What is interesting is that the three firms: Acer, Mitac and FIC construct different networks and use them differently. Using categories such as Industrial networks, Policy networks and Technological networks, he traces the competitive consequences of each firm.
     
    Andreas Hinterhuber explores how firms can virtually move across the value chain. This is an old idea, but Andreas shows new insights. He details how these chains work in the agrochemical-biotech sector showing that effective networking can reach over many different overlapping segments. The networks of the most successful firms reach further than the usual one-step-removed; they extend right out across the whole sector. It seems that reach is a source of competitive advantage.

    Finally, we return to having a corner for the CEO. David Irwin was the CEO of an awkward but important public sector organisation: the Small Business Service. He shows how he mobilised the workforce and his partners inside and outside of government by creating a meaningful strategy map. He relates his activities to the concept of the balanced scorecard and other classic metaphors in the strategy literature.

Executive Summaries

Mark Vandenbosch and Tom Clift Dramatically Reducing Cycle Times Through Flash Development mvandenbosch@ivey.uwo.ca

    For companies working in high-tech industries, the rate at which new products can come to market is the key to success and survival. This paper examines the traditional strategies to speed up the cycle times of new product development and proposes its own approach. The authors advocate an approach that they call ‘flash development' whereby the outcome is defined right from the start of the process and all energies are focused on reaching that outcome as soon as possible.

Shih-Chang Hung Mobilising Networks to Achieve Strategic Difference schung@mx.nthu.edu.tw

    Strategic difference is becoming more important, and studies of strategy recognise that firms that are able to offer something specialised or unique will achieve a competitive advantage over their rivals in an environment that is too competitive to tolerate the identical. Rather than accepting generic models of strategy as simply market given or internally driven, this article argues that firms can draw on external network relations to make a difference to their strategies. The author shows that from a socially embedded viewpoint, firms can depend on more than one social sphere to gain access to a structure of network resources in order to achieve strategic differentiation.

    The article is illustrated with a comparative case study of three Taiwanese computer firms each relying on very different social network relations to secure strategic difference. The article identifies Acer as a ‘state star', enjoying a policy-driven network advantage over its domestic rivals; Mitac as an ambidextrous player that uses both its Intel and Silicon Valley connections, as well as familial networks; and FIC as a successful Taiwanese industrial exploiter. The article shows that managers keen to secure their firms' survival and growth can meet the increasing scope of resource challenges by expanding their external networks of relationships. By seeking to identify and develop structures that are resourceful, rare and inimitable, corporate differentiation can be achieved from a wide variety of external social network relationships.

Andreas Hinterhuber Value Chain Orchestration in Action and the Case of the Global Agrochemical Industry
andreas_hinterhuber@yahoo.com

    Alliances, mergers and acquisitions, and joint ventures are playing an ever more important role in corporate development, and an emergent phenomenon of such strategic organisation is the increasing use of networks which have been configured along extended, cross-industry value chains. This article studies the orchestration of such "virtual value chains" detailing ways in which value is created and captured by structuring, coordinating, and integrating the activities of previously separate markets. By relating these activities effectively to in-house operations, the aim of developing networks that create fundamentally new markets can be achieved.

    The author works from an in-depth knowledge of the agrochemical-biotechnology sector, and illustrates his article with extended examples from two case studies detailing the networking activities of Monsanto and DuPont. Examining the concept of virtual value chain orchestration, he considers the steps needed for orchestrating a successful virtual value chain, and notes the conditions which might indicate when strategic alliances, rather than joint ventures or acquisitions can best capture the value created. Preliminary results of the case studies lead to the conclusion that the successful orchestration of extended networks of diverse partner companies is likely to lead to superior financial results.

David Irwin Strategy Mapping in the Public Sector David@irwin.org

    Having a clear vision and a strategy to achieve that vision is just as important in a public sector agency as in a for-profit company. This paper describes how strategy mapping was employed in new public sector agency, the UK Small Business Service (SBS). The author, who was the first chief executive of the agency, outlines how he set about compiling a route map for the staff to help them see how their individual activities fitted into the bigger picture as well as providing an external communication tool.

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