Shaping Strategy in a World of Constant Disruption

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80 Harvard Business Review

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October 2008

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hbr.org

Art Credit

STRATEGY in a World of
Constant Disruption
A company’s bid to rally an industry ecosystem around a new competitive view is an uncertain gambit. But the right strategic approaches and the availability of modern digital infrastructures improve the odds for success.

SHAPING

Jonathan Bartlett

G

by John Hagel III, John Seely Brown, and Lang Davison

GOOGLE GRABS HEADLINES

by announcing forays into the telecom space, prompting competitive responses from AT&T, Verizon, and other leading network service providers. At the same time, Google continues to help shape the advertising business through AdSense. And Facebook and Salesforce.com – each in very different parts of the high-tech world – reveal they are opening up platforms for third-party developers. These initiatives are examples of shaping strategies, which mobilize global ecosystems and transform industries and markets – often dramatically. A shaping strategy is no less than an effort to broadly redefine the terms of competition for a market sector through a positive, galvanizing message that promises benefits to all who adopt the new terms. What Bill Gates did

hbr.org

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October 2008

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Harvard Business Review 81

Shaping Strategy in a World of Constant Disruption

with Microsoft in the early 1980s is a classic example. In essence, he said that computing power was moving inexorably from centralized mainframes to desktop machines. Companies that wanted to be leaders in the computer industry needed to be on the desktop. It’s one thing to coin a persuasive slogan – “The desktop is the future!” – and something else entirely to get others to invest in fulfilling its promise. In reality, shaping strategies are built upon deep structures, which we describe in this article. We also explain why the moment is ripe for pursuing and benefiting from shaping strategies, thanks to pervasive changes in the global digital infrastructure. And we show why players in a growing array of markets and industries (not just high-tech companies) can and should consider making the attempt. Shaping strategies are not new. Indeed, the Medici family deployed successful shaping strategies in Renaissance Italy, most notably in banking. More recent examples can be found in industries as diverse as shipping, financial services, and apparel. What is new are powerful enabling infrastructures, which can strengthen the hand of shapers while reducing their exposure to risk. These relatively recent developments take

shaper’s broad ecosystem can use the strategy to create and capture enormous value as they learn from – and share risk with – one another. Let’s look at the changes in infrastructure that are making these strategies more viable and attractive. Then we’ll explore the key elements that must come together to execute positive shaping strategies. Finally, we’ll examine how to develop these strategies using a pragmatic migration path that builds capability rapidly.

From Bedrock to Plasma – The Changing Infrastructure
We live in an era of profound and accelerating change, keynoted by what historian Carlota Perez calls a new “technoeconomic” paradigm. In her book Technological Revolutions and Financial Capital, she offers a compelling view of the role infrastructures play in shaping business activity. Major technological innovations like the steam engine, electricity, and the telephone brought forth powerful new infrastructures. Inevitably, these disruptive innovations transformed industry and commerce, but eventually they became stabilizing forces, once businesses learned to harness their capabilities and gained confidence in the new order. That historical pattern – disruption followed by stabilization – has itself been disrupted. A new kind of infrastructure is evolving, built on the sustained exponential pace of performance improvements in computing, storage, and bandwidth. Because the...
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