Article Summary “Strategy as Simple Rules”

Strategy as ingenuous Rules by Kathleen Eisenhardt and Donald Sull A) member Summary Basically the term describes how and why companies interchangeable Yahoo, AOL or Enron function aboveboard rules in chop-chop moving markets. In the past companies were subject to apply tangled strategies due to a slatternly business decorate and abiding markets, but nowadays most markets argon not stable any to a greater extent. Markets are fast moving and so complex themselves that companies are forced to react and to simplify their strategies.Associated essay The Proverbs of Administration Herbert Simon SummaryThe authors central avouchment is that the traditional approach of staking out a defensible position misses the primaeval to success in rapidly moving markets. That key is the ability to issue and capitalize on fleeting opportunities. For dotcoms like Yahoo or AOL its more important to pursue opportunities than to establish position or to leverage resources. As Kathleen Eise nhardt and Donald Sull analyzed dozens of companies in unpredictable markets, they have discovered that simple rules weed be divided into five categoriesHow-To Rules show key features of how a process is executed. For slip Enron focuses on the seek management process in its commodities trading business with 2 rules 1) Each trade must(prenominal) be offset by an early(a) trade that allows the familiarity to hedge its risk and 2) e actually trader must complete a daily profit-and-loss statement. demarcation Rules define a framework in which managers have to focus on the right-hand(a) opportunities and to dissever out the ones which are outside the pale.Example Cisco focuses on the acquisition process with deuce-ace rules 1) The target must have no more than 75 employees 2) 75% of those employees must be engineers and 3) the target must be inside 50 miles of headquarters. Priority Rules rank the accepted opportunities. Intel for example focuses on the process of allocating m anufacturing capacity with one rule based on a products gross margin. Timing Rules synchronize managers with the pace of emerging opportunities and another(prenominal) parts of the gild.Example Nortel focuses on the product development process with two rules 1) The team up must hunch forward when the product has to be delivered to the key customer in order to win their business and 2) the product development cycle john be no longer than 18 months. Exit Rules tell managers when to hustle out of former opportunities. One high tech family focuses on new business creation by pulling the plug on new initiatives that fail to meet certain sales and profit goals within two years.Key processes Each of these companies has zeroed in on one or two key processes that are critical success factors. They then set up a few simple rules to guide activity in these processes in a expressive style that balances risk with the need to move quickly. Deciding if Simple Rules will Work for You Most d otcom managers are faced with a giddy number of opportunities partnerships, acquisitions, licensing deals, new products, new markets, new ideas, all with the potential to authorize or break the caller-up.Simple Rules may be the right approach for your company to use in managing this creative chaos. B) Application The article was very interesting, it make my pensive and stimulated some new thinking. The most important amour for me as I am a type of human creation that likes dilated situations which need clever decisions to get an advantage over other competitors was the warning about to try to apply complex strategies in rapidly moving markets. Youll probably work 100 hours a week if you complicate your strategy. Therefore I feel this article and ts theses as very adjuvant for my future career. But it is also very doubtful whether I can use this information from the outset. I think its going to be very difficult. A lot of experience will be necessary, especially to know whic h opportunities should be taken and how the accepted opportunities should be ranked. Furthermore it is complicated to sort out yesterdays opportunities for a prospecting manager. It depends also on the industry the company belongs to. If you perceive a company like Yahoo, it will be clear that applying simple rules is not the worst decision.But if you look at a traditional company like ExxonMobil, youll see that opportunities are limited and you have to gain market share with a clever, thought-out strategy. Altogether I would say to know the three approaches and the five categories of simple rules is al interprety a big advantage and one day Ill be certainly able to apply this information, especially as I am looking forward to work for a company which is part of a new business landscape. C) Opinion When I started to read and recognized company names like Yahoo, AOL or Enron, I knew this article was not the newest one.And although Yahoo is still a relatively successful company I am not quite sure whether they have perpetually applied the right strategy. But the principle to use simple rules in a fast moving market probably is the right solution. And regular(a) I liked the article at all, I did not like the structure. Maybe because I read it on the internet and not in the Harvard Business Review Magazine, but for an article which supports a simple way of (business) life, it has a quite confusing structure. But OK, this does not bother me as well as much.After I had stilltually printed it and had read it a second time, I was even more fascinated. Additionally I was enamoured of the caricature on the first page. It shows how complex the business landscape nowadays is and how difficult for a managers it is to find the right way between those many possibilities or to do the next graduation right without a signpost or somebody who can divine service you to capture an opportunity at the right time or to let the wrong opportunities go. In summary I think the art icle is safe of thought provocative examples as well as being an easy read. I highly recommend it