Richard A. D’aveni - Strategic Supremacy: How Industry Leaders Create Growth, Wealth, and Power through Spheres of Influence

Advance praise for
STRATEGIC SUPREMACY

Provides insights into how companies grow and decline within their spheres of influence. Will make Wall Street analysts, investment bankers, and M&A experts rethink how they evaluate the diversification strategies undertaken by CEOs.

JEROME P. KENNEY, Executive Vice President, Corporate Strategy and Research, Merrill Lynch & Co.

DAveni has once again raised the bar in the area of strategic leadership. He provides new strategies for creating order from the chaos created by aggressive and omnipresent competition.

ALEXANDER M. CUTLER, Chairman and CEO, Eaton Corporation

Offers a holistic, pragmatic, and highly effective strategy for competition management, while revolutionizing the entire paradigm of corporate strategy.

VINAY RAI, Chairman & CEO, USHA India Ltd.

A unique contribution to the corporate strategy literature and a major advance in understanding the dynamics of competition at the global level.

IAN MACMILLAN, D.B.A., Fred R. Sullivan Professor of Management, The Wharton School, University of Pennsylvania, and co-author of Corporate Venturing

Through intriguing parallels, DAveni demonstrates that now, as throughout history, anticipating, creating, interfacing, and reinventing markets, while managing risk, is the ticket to leading and succeeding.

JEFFREY SKILLING, former President and CEO, Enron Corp.

A pathbreaking contribution. Spheres of Influence will prove as powerful as Hypercompetition in improving the quality of strategic thinking and analysis in companies. A tour de force!

SUMANTRA GHOSHAL, Ph.D., D.B.A., Professor of Strategic & International Management, London Business School, and author of Managing Across Borders: The Transnational Solution

Very timely! Tells us how to succeed in this crazy new environment, without betting the ranch at every turn. Must reading!

DAVID R. HOLMES, Chairman of the Board, The Reynolds & Reynolds Company

Nobody thinks about strategy like DAveni. Provides innovative ways for companies to create spheres of influence to tip the balance of power in their favor. Read it and learn how to gain an edge and defend your position.

BRUCE A. PASTERNACK, Senior Vice President and Member of the Executive Committee, BoozAllen & Hamilton, and Managing Partner, Strategic Leadership Practice

Stimulates reexamination of ones business assumptions and strategies. A practitioners roadmap to evolving strategy. A lively dialogue between reality and theory, reflecting on which can make a huge difference to your strategy.

RAHUL BAJAJ, Chairman and Managing Director, Bajaj Auto Ltd., India

Finally powerful tools for building and defending a global enterprise. A rich toolkit for the corporate leaders charged with this complex and challenging task.

JAMES HAYMAKER, Corporate Vice President, Strategy and Business Development, Cargill, Inc.

Provides for a mindset that will trigger change in your strategic thinking and create a dynamic vision for leadership in your industry.

HADDO MEIJER, Chairman Executive Committee, P&O Nedlloyd, The Netherlands/UK

STRATEGIC
SUPREMACY

How Industry Leaders Create Growth,
Wealth, and Power through
Spheres of Influence

Richard A. DAveni
With Robert Gunther and Joni Cole

THE FREE PRESS
NEW YORK LONDON TORONTO SYDNEY SINGAPORE

THE FREE PRESS
A Division of Simon & Schuster, Inc.
1230 Avenue of the Americas
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Copyright 2001 by Richard DAveni

All rights reserved, including the right of reproduction in whole or in part in any form.

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DESIGNED BY LISA CHOVNICK

Manufactured in the United States of America

10 9 8 7 6 5 4 3 2 1

Library of Congress Cataloging-in-Publication Data

DAveni, Richard A.

Strategic supremacy: how industry leaders create growth, wealth, and power through spheres of influence / Richard A. DAveni with Robert Gunther and Joni Cole.

p. cm.

Includes bibliographical references and index.

1. Strategic planning.

2. Competition.

3. Wealth.

4. Power (Social sciences)

5. Spheres of influence.

I. Gunther, Robert E.

II. Cole, Joni.

III. Title.

HD30.28.D376 2001

658.412dc21 2001051068

ISBN 0-684-87180-7 (alk. paper)

ISBN-13: 978-0-684-87180-6

eISBN-13: 978-0-743-21763-7

The author gratefully acknowledges permission from the following sources to reprint material in their control:

Academy of Management Review for a figure from Volume/Edition 16.1 by Christine Oliver that appears as exhibit 4.4 in this book. Copyright 1991 by Academy of Management. Reprinted by permission of the publisher via Copyright Clearance Center.

Academy of Management Review for a figure from Volume/Edition 16.1 by Christine Oliver that appears as exhibit 4.5 in this book. Copyright 1991 by Academy of Management. Reprinted by permission of the publisher via Copyright Clearance Center.

Academy of Management Review for a figure from Volume/Edition 21.1 by Ming-Jer Chen that appears as exhibit 6.1 in this book. Copyright 1991 by Academy of Management. Reprinted by permission of the publisher via Copyright Clearance Center.

EC Media Group for table Preemptive Strategies from Journal of Business Strategy, 1983, Vol. 4, that appears as exhibit 3.2 in this book. Copyright 1983 by EC Media Group, Eleven Penn Plaza, New York, NY 10001.

Oxford University Press for a graph located in Contemporary Economic Policy, Vol. 18, No. 3, July 2000, page 312, by Joseph A. Clougherty, that appears as exhibit 6.10 in this book. Copyright 2000 by Oxford University Press.

Prentice-Hall, Inc., for an excerpt by Ian MacMillan titled Seizing Competitive Initiative on page 274 of the January 1, 1984, edition of Competitive Strategic Management by Robert B. Lamb that appears as exhibit 3.3 in this book. Copyright 1984 by Lamb, Robert B. Reprinted by permission of Prentice-Hall, Inc., Upper Saddle River, NJ.

A Dedication

To my hero, my father, Pfc. Anthony Rosario DAveni, who landed with the 9th Infantry Division as part of the second wave of the D-Day (June 6, 1944) invasion of Europe. Awarded the Purple Heart with Oak Leaf Cluster. For the benefit of mankind, you and your fallen friends completed a cross-channel invasion, something that had not been done since William the Conqueror in A.D. 1066. Historians may remember the generals, but I will never forget that history is made by men like you.

And a Tribute

Out of respect and love, I have published your August 26, 1998, letter to me in Appendix A of this book. Your humility would never have allowed this, so please excuse the surprise. The world and your grandchildren should know your bravery and sacrifice. And you should know my pride in being your son.

Where there is no vision, the people perish.

PROVERBS 29:18

Youve got to be very careful if you dont know where youre going, because you might not get there.

YOGI BERRA

Many people have contributed to the development of this book. First and foremost, I want to thank my colleague, executive assistant, and friend, Tracy Flynn-Scott; my secretary at the Tuck School of Business at Dartmouth College, Pat Hunt; and the research staff at Dartmouths Feldberg Library, including Sarah Buckingham, Jim Fries, Karen Sluzenski, and especially Bette Snyder. They put endless hours into the research and production of this book. Without them, this book would have never existed.