Richard Rumelt: evaluation

Transcript context

…Yeah. Actually I want to talk about both those things, so I'm glad that you teed them up. Let's talk about power. What is this idea of power and how does that play into strategy? Why is it so important? And then what are some examples of power that people can think about when they're trying to think about implementing and adding a power to their strategy? Well, in a competitive situation, the fundamental aspect of power is something that's going to give you some sort of advantage. Usually it's in asymmetry of some kind. If two fighters are equally balanced or two horses are equally fetched or two armies are equally... And they meet in competition, it's 50/50. Who knows what will happen. For a strategy you need to exploit in asymmetry of some kind. You hear a little faster. Or they're a little... Something has to be different between now and between things. So that's the beginning of power, is asymmetry. We can think of it as leverage, but sometimes think first is a source of power. Being first to recognize something can be a source of power. Having a reputation of a certain kind gives you some power that someone doesn't have that reputation doesn't have. On the other hand, having a well-established reputation of a certain type can be the opposite of power because people don't expect you to be able to do something new. They expect you to be able to do this, but not that. Having relationships can be a source of power. When Gerstner took over IBM as it was failing in the face of the microprocessor revolution, he recognized that their primary asset, their source of power, was that they were respected and they had [inaudible 00:30:38] into every large corporation on the planet. Nobody else had that as an actual producing company. And so he said, we're going to embrace our customers. Bear hug our customers. We're going to serve our customers. That's our source of our power. That's our leverage. That's the synergy. Now the world begins to change and computing begins to move to the cloud. And IBM's customers, the largest companies in the world, are the most hesitant to do that, because they've got the big IT departments that don't want move to cloud. And so small companies move to the cloud and the big companies are, well, it's insecure in the cloud. We'd have to lay off people. We have these big machines we like to run. And so IBM then becomes disadvantaged in the new world because it inherits this big company orientation and that lagging behind. So the opposite side of power is what you inherit. From [inaudible 00:32:01] can be the wrong thing. But a source of power is that. A source of power can be an invention, a source of power can be a particular customer base that you have identified. It doesn't last forever, power, but all the different sources of advantage that are sometimes transitory and sometimes permanent are sources of power that a company has to use to compete and survive. I imagine people listening are just like, oh man, I got to figure out the power, the advantage that I have with my business. Is there any advice you could share about helping people figure out where their power might lie?…

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