On March 18th I was able to attend an open VentureLab Twente training about entrepreneurial strategies with professor Michael Hitt.
In this article I will try to cover some of the highlights of the VentureLab Twente Open Training, without unraveling the complete details of the training, that was tailored at the entrepreneurs in the VentureLab program. 🙂
Generic Strategies – A starting point to develop your competitive strategy
Michael E. Porter, a Bishop William Lawrence University Professor and leading the Harvard Business School Institute for Strategy and Competitiveness, described these three generic strategies in the book Competitive Strategy: Techniques for Analyzing Industries and Competitors back in 1980.
While this strategic theory is already a few decades old, it still is a very valuable starting point for developing your own competitive strategy as an entrepreneur.
Professor Michael Hitt illustrates the generic strategies with an example of the history of priceline.com who developed a patented reverse auction system. However due to the lack of adapting the competitive strategy to the changing environment and competitive landscape, competition like Microsoft Expedia with an excellent skillset, knowledge and deep financial pockets, could neutralize the priceline.com competitive advantage by developing an almost perfect imitation of the reverse auction system without violating the patents.
How to gain a competitive advantage ?
According to Professor Hitt, Competitive Advantage can be defined as providing customers a product/service superior to that of competitors.
The reasoning to answer the question how to gain a competitive advantage follows the line of thinking presented in the article “Firm Resources and Sustained Competitive Advantage” by Jim Barney (published in the Journal of Management in 1991). Both internal- and external analysis can help to answer the question of how to gain a competitive advantage and help you to know more/be smarter about products, resources competition, markets, etc.
A possible answer to how to gain a competitive advantage (which covers just a part of the model) is having resources and capabilities that are valuable, rare, difficult to imitate or non-substitutable. Closely related is the strategic management of your resources in terms financial, human or social capital. Remark the article of Groen et. al (2002) “Creating and Justifying Research and Development Value: Scope, Scale, Skill and Social Networking of R&D” published in Creativity and Innovation Management.
Of course there is no single right answer to answer the question in the title of this paragraph. Some hints are provided above, but entrepreneurs need to develop their own strategy and build further upon their entrepreneurial alertness.
I would like to finalize this paragraph with a quote used by Professor Hitt, that really covers the dimensions of the term strategy. The quote is taken from the book The Art of War, a Chinese military treatise that was written by Sun Tzu in the 6th century BC.
“If we know ourselves and know our enemy, we will win” (Sun Tzu, The Art of War)”
Overall thoughts and final conclusion
At first I would like to compliment the people of VentureLab Twente for bringing such excellent high quality speaker into the program, which reminds me of another great session on the topic of Effectuation with Professor Saras Sarasvathy, Associate Professor at the Darden Graduate Business School at the University of Virginia.
You can really experience the exceptional quality of the speaker, Michael Hitt, and please have a look at his resume in the about section below. While during the session the term strategy and the underlying internal relations and external relations with different “actors” in the highly complex competitive landscape are oversimplified, the content and knowledg provided give entrepreneurs of start-ups a real head-start resulting in their first competitive advantage. 🙂
During the coffee break I was fortunate to ask professor Hitt a question about the relation between strategy and business model, and the opportunity of conducting early experiments to aggregate knowledge about different variables that help a business to perform superior to competition. It was an awesome experience to have a short and open discussion about this topic, and hear the thoughts and insights from a world-class strategic management expert !!
If you are interested in the topic of strategic management I would further recommend the video report of a session professor Michael Hitt at the University of Groningen on the topic “Strategy & Entrepreneurship through times of Crisis: Challenges and Opportunities”
About VentureLab Twente
“VentureLab Twente is a community of entrepreneurs, scientists, managers, and experts from industry and the financial world, brought together with one aim: assisting high-technology, high potential start-ups to develop and reach their full potential.”
About professor Michael A. Hitt
“Michael A. Hitt is a Distinguished Professor and holds the Joe B. Foster Chair in Business Leadership at Texas A&M University.
He has more than 260 publications including 26 co-authored or co-edited books. He has been recognized as one of the ten most cited scholars in management over a 25-year period in an article published in the 2008 volume of the Journal of Management.
A more extensive resume of professor Michael A. Hitt’s publications, books and activities can be found on the profile page on the Texas A&M University website.”