K a ih a n K r ip p e n d o r ff Kaihan Krippendorff | S t r a t e g ic Strategic Narratives N a rr and Competitive Advantage: a t iv e s Do Winners Speak Differently? a n d C o m p e t it iv e A d v a n t a g e : D o W in n e r s S p e a k D iff e r e n t ly ? | 2 0 1 4 9 789517 657501 Åbo Akademi University Press | ISBN 978-951-765-750-1 Kaihan Krippendorff Bachelor of Science in Engineering, School of Engineering, University of Pennsylvania; Bachelor of Science in Economics, Wharton School of Business, University of Pennsylvania; Masters in Business Administration, Graduate School of Business, Columbia University; adjunct faculty, Florida International University; visiting faculty, Universidad Americana de Paraguay. Åbo Akademi University Press Tavastgatan 13, FI-20500 Åbo, Finland Tel. +358 (0)2 215 3478 E-mail: [email protected] Sales and distribution: Åbo Akademi University Library Domkyrkogatan 2–4, FI-20500 Åbo, Finland Tel. +358 (0)2 -215 4190 E-mail: [email protected] STRATEGIC NARRATIVES AND COMPETITIVE ADVANTAGE Strategic Narratives and Competitive Advantage Do Winners Speak Differently? Kaihan Krippendorff Åbo Akademis förlag | Åbo Akademi University Press Åbo, Finland, 2014 CIP Cataloguing in Publication Krippendorff, Kaihan. Strategic narratives and competitive advantage : do winners speak differently? / Kaihan Krippendorff. - Åbo : Åbo Akademi University Press, 2014. Diss.: Åbo Akademi University. ISBN 978-951-765-750-1 ISBN 978-951-765-750-1 ISBN 978-951-765-751-8 (digital) Painosalama Oy Åbo 2014 Acknowledgements Pursuing a doctorate somewhat later in my career than the norm involved a less direct path toward my goal. My commitments to my consulting practice and family, having three children along the way, stretched the journey to nearly ten years. But it also afforded me time to connect with a global group of collaborators, supporters, and guides to depend on. First, I wish to thank my wife, Pilar Ramos, and three children – Lucas, Kaira, and Makar – for providing the purpose which drove me and for affording me late evenings and weekends in the library, away from home, to complete this effort. I also owe immense gratitude to my father, Klaus Krippendorff, who spent hours adding up to days discussing the topics of this thesis with me so that I might attempt to peek forward from the shoulders of his lifetime of related work. My supervisors, Professor Malin Brännback and Professor Alan Carsrud, agreed enthusiastically to support me from my first mention of my ambition in 2004. In addition to their invaluable input into the content of my work, they patiently coached me as I learned to adapt my approach and language from that of a business practitioner into one more appropriate for academia and, I have discovered, more true to the intricacies and uncertainties of the world. My pre-examiners, Professor Janne Tienari from Aalto University and Jan Löwstedt from Stockholm Business School of Stockholm University took on a level of involvement beyond what I had anticipated. Responding to and addressing their comments and feedback required that I clarify my thinking, expand my knowledge base, and ultimately produce a far better thesis. Nadia Laurinci was instrumental in conducting and learning from the analysis on which this thesis is based. In addition, innumerable other thinkers and friends from the areas of strategy an innovation have reacted to and influenced this work including Dr. Tony Crabb, Professor George Day, Professor Gary Hamel, Paul Kennedy, Michael Feiner, and the clients I have had the opportunity to work with, applying some of the principles touched on in this thesis. v Abstract Concepts, models, or theories that end up shaping practices, whether those practices fall in the domains of science, technology, social movements, or business, always emerge through a change in language use. First, communities begin to talk differently, incorporating new vocabularies (Rorty, 1989), in their narratives. Whether the community’s new narratives respond to perceived anomalies or failures of the existing ones (Kuhn, 1962) or actually reveal inadequacies by addressing previously unrecognized practices (Fleck, 1979; Rorty, 1989) is less important here than the very phenomena that they introduce differences. Then, if the new language proves to be useful, for example, because it helps the community solve a problem or create a possibility that existing narratives do not, the new narrative will begin circulating more broadly throughout the community. If other communities learn of the usefulness of these new narratives, and find them sufficiently persuasive, they may be compelled to test, modify, and eventually adopt them. Of primary importance is the idea that a new concept or narrative perceived as useful is more likely to be adopted. We can expect that business concepts emerge through a similar pattern. Concepts such as “competitive advantage,” “disruption,” and the “resource based view,” now broadly known and accepted, were each at some point first introduced by a community. This community experimented with the concepts they introduced and found them useful. The concept “competitive advantage,” for example, helped researchers better explain why some firm’s outperformed others and helped practitioners more clearly understand what choices to make to improve the profit and growth prospects of their firms. The benefits of using these terms compelled other communities to consider, apply, and eventually adopt them as well. Were these terms not viewed as useful, they would not likely have been adopted. This thesis attempts to observe and anticipate new business concepts that may be emerging. It does so by seeking to observe a community of business practitioners that are using different language and appear to be more successful than a similar community of practitioners that are have not yet begun using this different language as extensively. It argues that if the community that is adopting new types of narratives is perceived as being more successful, their success will vi attract the attention of other communities who may then seek to adopt the same narratives. Specifically, this thesis compares the narratives used by a set of firms that are considered to be performing well (called Winners) with those of set of less- successful peers (called Losers). It does so with the aim of addressing two ques- tions:  How do the strategic narratives that circulate within “winning” companies and their leaders differ from those circulating within “losing” companies and their leaders?  Given the answer to the first question: what new business strategy concepts are likely to emerge in the business community at large? I expected to observe “winning” companies shifting their language, abandoning an older set of narratives for newer ones. However the analysis indicates a more interesting dynamic: “winning” companies adopt the same core narratives as their “losing” peers with equal frequency yet they go beyond these. Both “winners” and “losers” seem to pursue economies of scale, customer captivity, best practices, and securing preferential access to resources with similar vigor. But “winners” seem to go further, applying three additional narratives in their pursuits of competitive advantage. They speak of coordinating what is uncoordinated, adopting what this thesis calls “exchanging the role of guest for that of host,” and “forcing a two-front battle” more frequently than their “loser” peers. Since these “winning” companies are likely perceived as being more successful, the unique narratives they use are more likely to be emulated and adopted. Understanding in what ways winners speak differently, therefore, gives us a glimpse into the possible future evolution of business concepts. vii SAMMANFATTNING Begrepp, modeller eller teorier som påverkar praxis, oberoende av disciplin, uppstår genom enn förändring i språket. Grupper eller branscher börja prata på ett nytt sätt genom att ta in nya ord (Rorty, 1989) i sina narrativer och berättelser. Det är av en mindre betydelse i denna avhandling om gruppens nya narrativ och berättelser beror på anomalier eller för att existerande begrepp inte förmår beskriva på ett ändamålsenligt sätt helt ny praxis (Kuhn, 1962, Fleck, 1979, Rorty, 1989). I fall det nya språket visar sig vara funktionellt genom att det tex. hjälper gruppen lösa problem som de existerande narrativerna inte förmår göra, kommer de nya narrativen och begreppen att tas i bruk mera allmänt. Användingen sprider sig sedan successivt . Det viktiga här är att begrepp och narrativ som upplevs som funktionella har en större sannolikhet att tas i bruk. Vi förväntas oss att begrepp och narrativ som används i affärsvärlden uppstår på liknande sätt. Allmänt använda begrepp och uttryck så som “konkurresnfördel”, “störningar” , “det resursbaserade synsättet”, användes och accepterades först av en grupp. Gruppen hade genom att använda bgreppen konstaterat att de fungerade som goda beskrivningar av aktiviteter eller förehavanden. Begreppet konkurrensfördel hjälpte forskare att bättre beskriva varför en del företag klarade sig bättre än andra i en konkurrens situation. Begreppet hjälpte praktiker att bättre förstå vilka val och beslut som behövdes för att förbättre företagets möjligheter till tillväxt och ökad lönsamhet. Användningen av dessa begrepp spreds till andra grupper då dessa grupper också fann dem funktionella. Denna avhandling studerar existerande och potentiellt nya begrepp. I avhandlingen studeras företag i samma bransch som använder olika begrepp för att beskriva sin framgång och verksamhet. Det förefaller finnas en skillnad mellan användingen av begrepp mellan framgångsrika och mindre framgångsrika företag. Om en grupp eller bransch är mera framgångsrik kommer användningen av begrepp och narrativ att sprida sig till andra grupper och branscher. I avhandlingen jämförs de narrativ som används av en grupp framgångsrika företag (vinnare) med motsvarande mindre framgångsrika företag (förlorare) i samma bransch. Avhandlingen söker svar på två forskningsfrågor: viii