Aesthetics...the Last Frontier of Sustainable Advantage?

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From the course by Copenhagen Business School

Strategic Management

1884 оценки

Copenhagen Business School

Strategic Management

1884 оценки

Course 1 of 4 in the Specialization Strategic Management and Innovation

The world of business strategy is in transition. What used to work doesn't anymore -- not necessarily. This course prepares you to think strategically in an age when companies like Apple, Google, and Microsoft have become more valuable (in market cap terms) than companies like Exxon. Today, business value and competitive advantage arise more often from consumer perceptions of what is "cool" than from physical assets or economies of scale. In this course -- the first of a three-course specialization tailored specifically for the age of creativity and innovation -- you will gear up for the challenges of strategy formulation and implementation in a 21st century business. After taking the course, you'll be able to: - Explain why "doing" strategy is considered "the high point of managerial activity" (Mintzberg); - Recognize and avoid the old, tired ideas about strategy that are still out there, so you can adopt fresher, better ideas; - Point out how doing strategy has changed because of advancing technology and globalization; - Prepare for the Capstone Project for the Strategic Management and Innovation Specialization

From the lesson

Changing World, Changing Strategies

In the past several decades, a lot has changed in the world. Many more people and nations (China, India, Russia, etc) have joined the global market economy. The number of Internet users has skyrocketed and continues dramatically upward. Shipping traffic between countries has multiplied and also continues to grow. All this world change has changed the strategy situation of most companies in a big way. It means, for example, that companies in advanced economies have to compete against rivals that have structural cost advantages, because they operate in lower cost parts of the world. This module describes the shifted and shifting strategy landscape, due to the advance of technology and the relentless march of globalization.

Aesthetics...the Last Frontier of Sustainable Advantage?7:32

Meet the Instructors

Robert Austin
Professor, Management of Creativity and Innovation
Department of Management, Politics, and Philosophy

In this closing lesson of the module, I want to spend some time just raising some

provocative questions, and perhaps suggesting some some of the answers

based on the lessons that we've seen in this module so far.

One thing that we're left wondering is whether aesthetics might be

the last frontier of sustainable advantage?

Maybe coolness and beauty and things like that are difficult to imitate.

Can people imitate Vipp?

Can people imitate Apple?

Can people imitate Bang and Olufsen?

These are some interesting questions.

Clearly some things can be physically imitated.

But if you really want a Vipp trash bin, does having a knock off, something

that you know isn't the real thing, really speak to you in the same way?

So, this ability to convince people that products and

services are cool, or beautiful, or

elegant, might actually be a source of sustainable, competitive advantage.

And might mean that in those industries we don't have to go

the way of hypercompetition.

I mentioned Apple.

Apple is the poster child of this approach.

Although we have to say Apple has managed to not only sell

small volumes of products at higher than normal margins for the category,

they've also managed to sell high volumes of high margin products.

Which is kind of like the Holy Grail of this kind of business strategy.

Failing to obtain competitive advantage that is sustainable,

should companies then move towards a strategy as capabilities idea?

Maybe the only thing left to do if you're in a hypercompetitive environment is to

acquire abilities to create value,

not necessarily knowing whether you're going to be able to use them right away.

So maybe we should be on the lookout all the time for

differentiating strategies, regardless of whether we know what to do with them yet.

That's a possibility.

Another set of ideas that pops up here and

compels us is an idea called hyperdifferentiation.

We've been talking about differentiation and extreme forms of differentiation.

Well, Eric Clemons at the Wharton Business School, a friend of mine,

has developed an idea that he calls hyperdifferentiation.

Which he defines as the art of reducing the importance of price as the principal

determinant of customer selection among alternative goods and services.

So how do we actually make customers price insensitive?

What makes customers not care how much it costs?

Well, we can encourage customers to select goods and

services based, Clemons says, on what he calls deep delight.

And he talks about products that fit a particular chunk,

maybe a very small chunk, of customers particularly well.

Just how to do that might be the new frontier of business strategy.

Now, clearly, technology plays a role.

The Internet democratizes production.

It means that we all have accessible to us ways of producing things.

It democratizes distribution.

It means that companies everywhere can access the same retail outlets and

the same ways of moving products and services around the world.

And it also changes, often, the way that we market.

We may not market in mass terms through advertising on television,

in newspapers, or in magazines anymore.

We might now target social networks and word of mouth, and

this is all part of the same picture.

In fact, one of the interesting ideas that might just be emerging

is that if we can make our products and services things that people want to

know more about, things that have lots of knowledge you can accumulate about them.

So how much can be known about your product?

How much can be found out, how much can be memorized?

That might actually be the key to making customers insensitive about price.

Now if you watch Vipp and how they operate, for example, there are many,

many things to be informed about with that product.

You can know that it's in a museum.

You can know why it's in the museum.

You can know the story of how the bin first came into being in 1939.

You can know the story of the special edition color from this past year and

every year before that as well.

A very interesting company also from this part of the world, along these lines,

is a company called Moods of Norway.

Moods of Norway is a fashion company based in Oslo.

They make everything from shoes to pants to shirts to hats to sunglasses,

mostly for men, but also for women.

And what's distinctive about their clothing is that they go out of their way

to give you something to talk about about their clothing.

So if you look at one of their sports coats, it has a number embroidered

into the sleeve, and you may wonder, what is that number?

You may be able to find out if you investigated,

if you investigate on the web, if you ask someone at one of their stores.

And what you will find out is that number is the number of tractors produced

in Norway in the year that that clothing was produced.

Another set of shoes that they make includes instructions for

how to do a Norwegian dance on the inside of the shoe.

So that you can study the diagram, put the shoe on, and

then proceed to dance in the way of traditional Norwegians.

But their clothing is full of things like this,

things embroidered on the inner cuff of the pants.

A surprising pink lining inside a conservative black jacket.

The whole idea with Moods of Norway is to give you things you can learn about,

give you things that you can talk with people about, about their clothing.

And the more that you have to be informed, the more that you're inclined

to be informed, the more that you seem to be insensitive to prices,

because their prices are rather high.

They're not extremely high, but they are on the high side.

They are priced about like Hugo Boss, or a fashion label like that.

Okay, that's it for this module.

There's more to come on all of this.

So we've looked at how the world is changing.

We've looked at how companies are adjusting tho how the world is changing.

We've looked specifically at how

companies in Northern Europe are implementing what I think of as

21st century strategies to take advantage of how the world is changing.

And we talked a bit about some of the other implications that result

from this changed world, implications like hyper-competition.

We're now gonna move to the capstone project.

In the capstone project,

we'll introduce you to a project about one of these 21st century companies,

a company that's having what I would characterize as a 21st century problem.

In the next module we'll talk about that company,

their problem, and give you an assignment that's related to

all of the things that we've been talking about so far.

So, thanks.

We'll be back in a bit.

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