Competing on the Edge: Strategy as Structured Chaos. - Review - book review

Administrative Science Quarterly,  March, 2000  by Jamal Shamsie

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Shona L. Brown and Kathleen M. Eisenhardt. Boston:

Harvard Business School Press, 1998. 299 pp. $27.95.

It is becoming increasingly clear that we need to develop more dynamic models of strategy (Porter, 1991). A few recent books (D'Aveni, 1994; Hamel and Prahalad, 1994) have proposed frameworks for the development of competitive advantage within industries that experience high levels of instability, but these frameworks have tended to be both somewhat vague in their treatment of strategy and limited in their generalizability across industries. Competing on the Edge is therefore a welcome addition to the field because it complements the earlier books by providing a more specific conceptual framework that could be applied to a relatively broader cross section of industries.

In basic terms, the book argues against the notion of pushing for the best possible strategic fit between elements of environment, strategy, and organization. It suggests that such a push for an optimal fit tends to make firms relatively inflexible, making it harder for them to respond to changes. Instead, the authors suggest a looser and broader coupling between the key elements, resulting in some form of semi-coherent strategic direction for the firm. One of the key ideas in this regard is for firms to focus on the present as the link between the past and the future. In other words, firms should try to keep making themselves over by drawing on their past strengths and searching for ways to adapt these to deal more effectively with the future.

The notion of a firm as a growing and learning organization can hardly be disputed, but the authors' specific prescriptions raise a few questions. Above all, the model of strategy in this book does not seem to be associated with a bold and clear vision. Instead, the vision of successful firms in high-velocity environments must start out quite broadly, thereby allowing it to be shaped in part by subsequent events. Although this may help the firm to survive, it is not clear how such an incrementally evolving mission may allow a firm to attain a substantial lead over all other competitors. It seems that many firms have phenomenal success because they gamble on a vision of the future and then push for this vision to materialize.

The authors extend this evolutionary approach to the development of strategy by emphasizing that its aim should be to create momentum through regular, incremental moves. Consequently, the formation of strategy is largely viewed to be the result of a process that is more emergent than intended (Mintzberg, 1978). But again, would such an incremental approach lead the firm to put off any significant investments that might commit it to a particular course of action? It has been argued that higher levels of commitment from the firm may in fact be necessary for the creation of more sustainable advantages (Ghemawat, 1991). By avoiding such commitments, would it be possible for a firm to improve its position substantially relative to its competitors? Furthermore, will it always be possible to avoid any radical reorientation? It is well established that firms go through periods of little change separated by periods of substantial change (Miller and Friesen, 1984). Even if they are loosely coupled, the various links be tween a firm's environment, its strategy, and its organization can be pushed only to certain limits. Beyond that, some form of basic reorientation may be necessary. It is not clear how the firm can always respond in incremental ways if it cannot control the rate at which changes occur within its competitive environment.

The authors should be commended for their use of a wide cross section of organizations to ensure that their ideas are generalizable to different types of contexts. But it is not clear whether the framework would be equally effective in all of the cases that were considered. For the framework to be more useful, the authors could have tried to specify the conditions under which their model could best be applied. It is easy to believe that some industries during certain phases of their evolution can become relatively unpredictable. Even though it may be possible to anticipate some form of change, the exact nature and direction of this change can be extremely hard to predict during certain stages of an industry's evolution. Furthermore, the model may apply differently to the various firms in a relatively fast-changing industry. Clearly, a firm that has a relatively strong position within the industry may be less willing to take risks than one that is in a comparatively weaker position.

It is clear that the book makes a useful contribution to our thinking about the development of strategy in an ever-changing context. But, at the same time, it is hard to ignore the fact that strategy is about making choices that can sometimes be risky because the outcome cannot be clearly anticipated at the time that decisions are made. These risks could be reduced, but there may be limits and costs to keeping a firm's options open. In fact, it is this very trade-off between possible risks and potential benefits that is central to the process of development of a firm's overall strategy.