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Abstract/Syllabus:
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Henderson, Rebecca, 15.963 Advanced Strategy, Spring 2008. (Massachusetts Institute of Technology: MIT OpenCourseWare), http://ocw.mit.edu (Accessed 11 Jul, 2010). License: Creative Commons BY-NC-SA
Advanced Strategy
Spring 2008
This course pays particular attention to relational contracts; here, several examples of relational contracts for a mature, high-performing organization are shown. (Image by Prof. Rebecca Henderson.)
Course Description
This course draws on a wide range of perspectives to explore the roots of long term competitive advantage in unusually successful firms. Using a combination of cases, simulations, readings and, most importantly, lively discussion, the course will explore the ways in which long term advantage is built from first mover advantage, increasing returns, and unique organizational competencies. We will focus particularly on the ways in which the actions of senior management build competitive advantage over time, and on the strategic implications of understanding the roots of a firm's success.
Syllabus
This course draws on a wide range of perspectives to explore the roots of long term competitive advantage in unusually successful firms. Using a combination of cases, simulations, readings and, most importantly, lively discussion, the course will explore the ways in which long term advantage is built from first mover advantage, increasing returns, and unique organizational competencies. We will focus particularly on the ways in which the actions of senior management build competitive advantage over time, and on the strategic implications of understanding the roots of a firm's success.
A central hypothesis of the class is that the ability to build and maintain relational contracts relationships deeply rooted in mutual trust and shared understanding is central to long term advantage since it enables firms to grapple successfully with the challenges of worse before better the unfortunate fact that many important investments do not pay off immediately indeed that in the short term they often appear to reduce performance. We will thus be grappling with many of the "soft" issues of management leadership, culture, competence, trust but from a relatively "hard" perspective.
A central activity for the semester will be the detailed study of a single high performing firm and a plausible rival/laggard to it. Working in teams of 2-3 people, during the first half of the semester I will ask you to write a sequence of "two pagers" short papers that apply the concepts we will be exploring in class to the firm that you find interesting. During the second half of the semester I will ask you to write a final paper that both analyzes the historical performance of your chosen firm and its rival and that recommends a strategy for both going forward. Grades will be determined by class participation, by the short papers and by the final paper, with roughly equal weight given to all three activities.
On Reading
There are two books that are required reading for the class:
Roberts, John. The Modern Firm: Organizational Design for Performance and Growth. New York, NY: Oxford University Press, 2007. ISBN: 9780198293750.
Collins, James. Good to Great: Why Some Companies Make the Leap… and Others Don't. New York, NY: Collins Business, 2001. ISBN: 9780066620992.
The Modern Firm is available in the campus bookstore. My assumption is that most people will have a copy of Good To Great, but if you don't have one please buy yourself a copy.
There is also required reading for (almost every) class. This is often a case, but it is sometimes an article or two. Doing this reading is a "non negotiable requirement" for participation in the class, and I've highlighted it clearly in the syllabus below. If for some reason you come to class without having had a chance to do the reading, please let me know that way we'll both avoid embarrassment should I call on you.
Beyond these two books, there are two kinds of additional reading I shall ask you to consider doing for the class. The first is related to the company that you choose to focus on. You should choose a company that you can explore in depth either because you have worked there for many years, or because there is considerable literature about the firm.
My hope is that you may also become quite intrigued by the ideas that we will explore in class and will want to explore them further. I've given "recommended readings" for nearly every session these are there for you if you're intrigued by a particular topic and want to dive a little deeper into it. I'd also recommend again, only if you're curious that you consider learning a little more about Toyota, Southwest and Wal-Mart, three companies that we will explore in some depth, by reading more about them. Good sources include:
Liker, Jeffrey. The Toyota Way. New York, NY: McGraw-Hill, 2003. ISBN: 9780071392310.
Gittell, Jody. The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. New York, NY: McGraw-Hill, 2005. ISBN: 9780071458276.
Fishman, Charles. The Wal-Mart Effect: How the World's Most Powerful Company Really Works and How It's Transforming the American Economy. New York, NY: Penguin, 2006. ISBN: 9780143038788.
Overlap with Other Classes
There are several other classes which are complementary to this one. Professor Wernerfelt's course on strategy (15.834 Marketing Strategy), for example, also focuses on the sources of long run competitive advantage. Professor Diane Burton's course on entrepreneurial organizations (15.394 Designing and Leading the Entrepreneurial Organization) and Emilio Castilla's course (15.660 Strategic Human Resource Management) both explore ideas that we'll also be exploring, albeit from a different perspective. If you're interested in long term advantage and the role of organizational competence in sustaining it, I strongly recommend that you take as many of these complementary courses as you can. You'll find that we use a few of the same cases where that is the case I've provided alternative readings for those who may be already familiar with the case. I think that you will find the overlap fruitful. It's very difficult to understand the Toyota production system in any depth, for example, during a single class session, so that taking a little more time to think through its origins and its strength and weaknesses will prove to be, I believe, extremely useful.
Missing Class
I have designed this class as an integrated whole. My hope is to invite you to join me in an extended conversation about what makes a firm successful, and about the strategic implications of the answer to that question. If you miss class it makes it very difficult to maintain a coherent conversation. You'll miss ideas and concepts many of them raised by your colleagues that are not in the reading and you'll have a more difficult time contributing to the discussion. So if for some reason you are forced to miss class and I hope that this will be a very rare occurrence please let me know in advance. I'll ask you to write up a "two pager" a brief response to the discussion questions for the day that you will miss and we'll also talk about how to keep you current with the conversation.
Written Assignments
There will be two kinds of assignments: a final paper and a sequence of "two pagers". Both should be written in a team of 2-3 people, and both should be focused upon a company that you believe to have demonstrated sustained competitive advantage and about which you would like to know more. You should pick a company that you know very well or about which you can become deeply informed. Be aware that for much of the course we will be focusing upon a company's "culture" and "leadership" its incentive systems, organizational structure, norms, values, myths and tacit understandings so that you need to pick a company for which it's possible to learn something about what it's been like "inside".
A one paragraph description of your chosen company, explaining why you think it will make a good focus for your semester's work and including the name of everyone on your team, is due in class in Ses #3.
More detailed information is available in the assignments section.
Calendar
Course schedule.
SES # |
TOPICS |
I. Introduction |
1 |
Does sustained performance exist? |
II. What drives sustained performance? |
2 |
Reviewing 15.900: Strategy fundamentals: position vs. competencies |
3 |
Case: Wal-Mart |
4 |
Case: Southwest |
5 |
Pause for reflection |
III. Organizational Competence and Relational Contracts |
6 |
Revisiting 15.311: Lincoln Electric in China |
7 |
Case: The HP-Cisco Alliance |
8 |
Case: Toyota |
9 |
Case: BP |
10 |
Case: BP and the Baker report |
11 |
Pause for reflection |
IV. Changing Relational Contracts |
12 |
Case: Best Buy and Circuit City |
13 |
Case: Delta and Song |
14 |
Pause for reflection: Toyota's expansion |
V. Doing Strategy when Competence Matters |
15 |
Case: Good to Great |
16 |
Case: Lilly (A) |
17 |
Case: Lilly (B) |
18 |
Case: Corning |
19 |
Case: Paul Levy |
20 |
Case: Paul Levy (B) |
21 |
Case: Simmons |
22 |
Case: Simmons (B) |
VI. Wrap Up |
23 |
Student presentations of highlights from term projects |
24 |
Conclusions |
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Further Reading:
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Readings
Keyword
HBS = Harvard Business School Case. Boston, MA: Harvard Business School Publishing
Course readings.
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SES #
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TOPICS
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READINGS
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I. Introduction
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1
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Does sustained performance exist?
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Gawande, Atul. "The Checklist." The New Yorker, December 10, 2007.
Liker, Jeffrey. "The Toyota Way." Chapter 1 in The Toyota Way. New York, NY: McGraw-Hill, 2003. ISBN: 9780071392310.
Suggested further reading:
Gawande, Atul. Better: A Surgeon's Notes on Performance. Iowa City, IA: Picador, 2008. ISBN: 9780312427658.
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II. What drives sustained performance?
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2
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Reviewing 15.900: Strategy fundamentals
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3
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Wal-Mart stores in 2002
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Yoffie, David, and Yusi Wang. "Wal-Mart in 2002." HBS Case: 9-702-466, October 20, 2005.
Recommended (required for those who have read a Wal-Mart case in another class):
Fishman, Charles. "Sam Walton's Ten-Pound Bass." Chapter 2 in The Wal-Mart Effect: How the World's Most Powerful Company Really Works — and How It's Transforming the American Economy. New York, NY: Penguin, 2006. ISBN: 9780143038788.
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4
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Southwest Airlines 2002: an industry under siege
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Heskett, James. "Southwest Airlines-2002: An Industry Under Siege." HBS Case: 9-803-133, March 11, 2003.
Recommended (required for those who have read a Southwest case in another class):
Gittell, Jody. "Southwest versus American Airlines: The Power of Relational Coordination." Chapter 3 in The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. New York, NY: McGraw-Hill, 2005. ISBN: 9780071458276.
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5
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Pause for reflection
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Siggelkow, Nicolaj. "Evolution Toward Fit." Administrative Science Quarterly 47 (2002): 125-159.
Roberts, John. "Strategy and Organizations," and "Key Concepts for Organization Design." Chapters 1 and 2 in The Modern Firm. New York, NY: Oxford University Press, 2007. ISBN: 9780198293750.
You may also find it useful to review:
Saloner, Garth, Andrea Shepard, and Joel Podolny. "Internal Context: Organization Design." Chapter 4 in Strategic Management. New York, NY: Wiley, 2005. ISBN: 9780470009475.
Teece, David. "Explicating Dynamic Capabilities: The Nature and Microfoundations of (sustainable) Enterprise Performance." Strategic Management Journal 28, no. 13 (2007): 1319-1350.
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III. Organizational Competence and Relational Contracts
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6
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Revisiting 15.311: Lincoln Electric in China
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Siegel, Jordan. "Lincoln Electric." HBS Case: 9-707-445, August 25, 2008.
Recommended (required for those that have read the Lincoln case before):
Johnson, H. Thomas, and Anders Broms. "Relationships (MBM) versus Quantity (MBR)." Chapter 2 in Profit Beyond Measure: Extraordinary Results Through Attention to Work and People. New York, NY: Free Press, 2000. ISBN: 9780684836676.
You may also find helpful:
"Agency Theory." Lecture Note 1, Professor Robert Gibbons, Sloan School of Management, MIT
"Relational Contracts." Lecture Note 2, Professor Robert Gibbons, Sloan School of Management, MIT
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7
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Case: The HP-Cisco Alliance (A)
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Casciaro, Tiziana, and Christina Darwall. "The HP-Cisco Alliance (A)." HBS Case: 9-403-120, April 16, 2003.
You may also find helpful:
"Control Rights." Lecture Note 3. Courtesy of Professor Robert Gibbons, Sloan School of Management, MIT. Used with permission. (PDF)
"Make, Buy or Cooperate." Lecture Note 4. Courtesy of Professor Robert Gibbons, Sloan School of Management, MIT. Used with permission. (PDF)
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8
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Toyota Motor Manufacturing USA Inc.
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Mishina, Kazuhiro. "Toyota Motor Manufacturing, U.S.A., Inc." HBS Case: 9-693-019, September 5, 1995.
Recommended (required if you are familiar with the Toyota case):
Spear, Steven, and H. Kent Bowen. Decoding the DNA of the Toyota Production System. Boston, MA: Harvard Business Review, 2008.
Womack, James, Daniel Jones, and Daniel Roos. "What We Have Learned About Lean Production Since 1990." Afterword from The Machine That Changed the World. New York, NY: Free Press, 2007. ISBN: 9780743299794.
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9
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BP: Organizing for performance at BPX
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Podolny, Joel, and John Roberts. "British Petroleum (A1): Organizing for Performance at BPX." Stanford Business School Case. Stanford, CA: Stanford University Publishing. Case: IB16A1, July 4, 1999.
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10
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Case: BP and the Baker report
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Baker, James, et. al. "The Report of the BP U.S. Refineries Independent Safety Review Panel." January 2007.
"Executive Summary" and "Findings," pages viii-xv and 59-94 from The Report of the BP U.S. Refineries Independent Safety Review Panel, January 2007.
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11
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Pause for reflection
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Repenning, Nelson, and John Sterman. "Nobody Ever Gets Credit for Fixing Problems that Never Happened." California Management Review 43, no. 4 (2001): 44-63.
Repenning, Nelson, Paulo Gonçalves, and Laura Black. "Past the Tipping Point: The Persistence of Firefighting in Product Development." California Management Review 43, no. 4 (2001): 64-68.
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IV. Changing Relational Contracts
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12
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Case: Best Buy and Circuit City
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Wells, John, and Travis Haglock. "Best Buy Co., Inc.: Competing on the Edge." HBS Case: 9-706-417, October 25, 2007.
Wells, John. "Circuit City Stores, Inc.: Strategic Dilemmas." HBS Case: 9-706-419, September 16, 2005.
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13
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Delta Air Lines (A): the low cost carrier threat, and Delta Air Lines (B): Song
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Rivkin, Jan, and Laurent Therivel. "Delta Air Lines (A): The Low-Coast Carrier Threat." HBS Case: 9-704-403, January 25, 2005.
———. "Delta Air Lines (B): The Launch of Song." HBS Case: 9-704-439, January 24, 2005.
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14
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Pause for reflection: Toyota's expansion
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"Briefing Toyota: A Wobble on the Road to the Top." The Economist, November 10, 2007, pp. 85-87.
Welch, David, and Ian Rowley. "What's Next: Toyota's All-Out Drive to Stay Toyota." Business Week, December 3, 2007, pp. 54-56.
"At Toyota, A Global Giant Reaches for Agility." New York Times, February 22, 2008.
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V. Doing Strategy when Competence Matters
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15
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Deconstructing Jim Collins's Good to Great
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Collins, James. Good to Great: Why Some Companies Make the Leap... and Others Don't. New York, NY: Collins Business, 2001. ISBN: 9780066620992.
Read:
- Chapter 1: "Good is the Enemy of Great"
- Chapter 2: "Level 5 Leadership"
- Chapter 9: "From Good to Great to Built to Last"
Also (highly) recommended:
"Work of a Modern Leader: An Interview with Ron Heifetz." Boston, MA: Harvard Business Review, 1997.
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16
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Eli Lilly's Project Resilience (MIT authored case)
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Henderson, Rebecca. "Eli Lilly's Project Resilience (A): Anticipating the Future of the Pharmaceutical Industry." MIT Sloan School Case, April 30, 2007.
Recommended:
Cornelius, Peters, Alexander van de Putte, and Mattia Romani. "Three Decades of Scenario Planning in Shell." California Management Review 48, no. 1 (2005): 92-109.
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17
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Lilly (B) (MIT authored case)
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Henderson, Rebecca, and Cate Reavis. "Eli Lilly: Recreating Drug Discovery for the 21st Century (B)." MIT Sloan School Case, March 21, 2008.
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18
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The Leadership Council at Corning (MIT authored case)
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Henderson, Rebecca. "The Leadership Council at Corning." MIT Sloan School Case, forthcoming.
Recommended:
Rock, David, and Jeffrey Schwartz. "The Neuroscience of Leadership." Strategy and Business, Summer 2006.
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19
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Paul Levy and the Deaconess Hospital
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Garvin, David, and Michael Roberto. "Paul Levy: Taking Charge of the Beth Israel Deaconess Medical Center (A)." HBS Case: 9-303-008, January 14, 2003 (revision).
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20
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Case: Paul Levy (B)
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Boston Globe. "Paul Levy: Taking Charge of the Beth Israel Deaconess Medical Center (B)." HBS Case: 9-303-080, December 10, 2002.
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21
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Case: Simmons
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Casciaro, Tiziana, et al. "Leading Change at Simmons (A)." HBS Case: 9-406-046, May 3, 2007.
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22
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Case: Simmons (B)
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Casciaro, Tiziana, et al. "Leading Change at Simmons (B)." HBS Case: 9-406-047, May 3, 2007.
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VI. Wrap Up
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23
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Student presentations of highlights from term projects
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24
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Conclusions
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Pounds, William. "The Process of Problem Finding." Industrial Management Review 11 (Fall 1969): 1-19.
Scharmer, Otto. "Addressing the Blind Spot of Our Time: An Executive Summary of Theory U." (PDF - 4.4 MB)#
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