By Lisa Hochgraf
This resident of the Rochester, N.Y., area knows a Kodak engineer who used to get really super excited about making beautiful reds on traditional camera film.
Trouble was, at the same time this engineer and his team were perfecting a longstanding technology, Kodak's film market share was declining rapidly and the company was losing in the new digital camera space.
Now, the "Kodak moment" appears to be all but over, as the company filed bankruptcy in January 2012.
Rita Gunther McGrath might say Kodak failed because it couldn't unstick from its old strategy to provide film for capturing great moments--and, as a result, it missed the digital wave. A professor at New York's Columbia Business School, McGrath will describe "the new strategy playbook" in keynoting CUES' CEO/Executive Team Network, Nov. 3-6 in San Diego.
In her 2013 book, The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business," McGrath says one of the key ways companies will keep their strategies current today is by competing in "arenas," not "industries."
"It isn't that industries have stopped being relevant," she writes in the book. "It's just that using industry as a level of analysis is often not fine-grained enough to determine what is really going on at the level at which decisions need to be made."
What does this mean in action? According to the book, if a company is taking an industry perspective on success measurement, it considers market share. If it's taking an arena perspective, it measures "share of potential opportunity spaces." If it's taking an industry perspective on a goal, it looks at positional advantage. If it's taking arena perspective on a goal, it measures terroritory captured.
Think about Kodak. Taking an industry perspective is akin to making sure it would sell more film than Fuji in a shrinking market by making sure the red in Kodak prints was tops. But maybe taking an "arena" perspective would have helped the company see it wasn't gaining ground in capturing territory or "share of potential opportunity" in the new and rapidly expanding digital camera marketplace.
For credit unions, this makes me think of the payments space. Credit unions are certainly competing with banks--and others in the financial services industry--for business. But they're also competing in the same arena with newcomers that are not financial industry players--such as PayPal, Square and Google Wallet. What is credit unions' strategy for this today, and what will it be tomorrow?
How would you apply these ideas to your credit union's strategy development? I'd like to learn from you in the comments.
Lisa Hochgraf is a CUES editor.
Learn more about CUES' CEO/Executive Team Network Nov. 3-6 in San Diego.
