Rita Gunther McGrath - Marketbusters: 40 Strategic Moves That Drive Exceptional Business Growth

Copyright 2005 Harvard Business School Publishing Corporation

All rights reserved

No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to , or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

First eBook Edition: April 2005

ISBN: 978-1-59139-123-4

There was Helge, who completed a groundbreaking PhD and mowed the lawn when women didnt do things like that; who greatly enjoyed the occasions when her only granddaughter matched her daughters behavioral standard; and who worried a lot.

There was Wolfgang, who could never resist a good book, who was one of the first people to get that a mouse was not a rodent, and whose boundless curiosity encouraged me to go find out.

There was Moninna, who despite every reason to doubt it, passionately believed that women who took initiative would succeed, and who has created and sustained a place of renewal and comfort for our family.

There was David, who never let obstacles, disappointments, or the cruelty of others infect him with bitterness and who never tired of shaping the world around him, brilliantly.

To the inlaws and outlaws who shaped our past, share our present, and will always be part of what we become in the future: Helge, Wolfgang, Moninna, and in memory of David, this book is lovingly dedicated.

Rita McGrath

To three people whom Jean and I wish were here to read this dedication: Joan and Ken MacMillan and Guy Crosby; and to Gladys Crosby, who mercifully will get to read it.

Ian MacMillan

CONTENTS

T HE FOCUS OF THIS BOOK strategic growthis one of the most vital, fascinating, and poorly understood of business processes. We spend most of our research energy trying to make it less mysterious and to help executives manage it more effectively. In our first book, The Entrepreneurial Mindset, we emphasized helping managers in large, established companies learn from the practices of habitual entrepreneurspeople who are in the habit of creating new businesses over and over again. We argued in that book that half the battle is using appropriate leadership disciplinesrecognizing, for example, that new initiatives need to be managed more like options and less like established businesses. In the time since The Entrepreneurial Mindset was published, much has changed. The Internet bubble burst, leading new ventures to fall off the agenda at many companies, in favor of a back to basics approach.

Nonetheless, the fundamental issue of where you are going to find new sources of growth hasnt gone away. You know that if you dont innovate and change in the long run youll be too weak to compete. So, where will your company find new opportunities? How will you as an executive enhance your own potential for career success? How will you sustain the interest of top-quality people? How will you take advantage of changing markets and competitive conditions?

MarketBusters is our effort to provide you with some practical answers. Our hope is that this book will land on your bookshelf (or, even better, in your lap) together with several other excellent books that to us represent the state of the art in understanding growth through new business development. Like Clayton Christensens The Innovators Dilemma and his and Michael Raynors The Innovators Solution , this book gives you a point of departure for thinking about growth. Unlike those books, this one focuses on some specific types of opportunities and how you can move to capture them. Think of the books as complementary.

What is a marketbusting move? Its an action taken by your firm that changes the game to deliver markedly superior performance. Weve discovered that with the right guidelines, people often surprise themselves by finding that identifying opportunities isnt all that hard. This book is about helping you learn the techniques. Weve distilled our observations from a three-year research program into a set of forty moves, clustered around five core strategies that you can use to create marketbusters. One thing that makes this book different is that we have also examined companies that tried, but failed.

Expect to find specific tools, checklists, and techniques, as well as the examples that make them come alive. Expect to find the practical concepts derived not only from our research but also from our attempts over the past three years to apply the tools to real companies facing real dilemmas of growth and differentiation. Where we can, well share with you some of our experiences. Where we cant (for reasons of confidentiality), well illustrate the techniques with examples from our case study database.

Where MarketBusters Come From

The core of this book involves five strategies to create marketbusters. We developed these strategies after an extensive analysis of forty moves used by firms to successfully transform their market spaces.

We begin with the least difficult idea: to examine the entire set of linked activities customers engage in when they do business with you with the goal of changing the customers experience. If you figure out how to improve their experience, you can be richly rewarded. Next, we suggest you take a hard-nosed look at how your products and services stack up against the competition. Although this is a tad more challenging because changes usually involve changing internal processesat least you have a basis of experience to go on. Slightly more challenging is a strategy of radically changing some factor that drives performance in your industry, either to significantly boost your numbers or to help your customers become more competitive in their markets.

Up to this point, you are basically working from a platform of experience. With the final two strategies, youll move into new spaces, and thus the final two strategies are the most ambitious. The first involves capitalizing on or sparking a major upheaval in your industry. The second is to identify and exploit what (for you) are radically new opportunity spaces. As youll see, the strategies increase in difficulty and risk as you work your way through the book.

Two of the strategiestransforming the customers experience and transforming your offeringsmay be familiar because weve explored them in other contexts. In our new research, we found that they are powerful for finding a number of our moves and that we had not really done them justice in earlier works. Three of the strategiesredefining profit drivers, exploiting industry shifts, and creating radically new offerings for your companyare published here for the first time. Table 1-1 summarizes the five approaches.

TABLE 1-1

A Framework for MarketBusters

Each approach leads you to look for opportunities in a slightly different way. The first approach: Examine your customers total experience with a view to transforming it. This strategy helps you to identify ways (often surprisingly simple ones) to radically improve the customers experience of getting their needs met, ideally ways that favor you. We introduced the consumption chain tool in our first book but stopped short of showing you how to make reconfiguration of the consumption chain a centerpiece of your strategy. Here, we use consumption chain analysis as a lens to help you identify how you might be able to capitalize on opportunities by changing your customers experiences.