For me, there is a special excitement in fundamental questions—their childlike simplicity covers deep mysteries. A student once asked physicist John Wheeler: “What is time?” Wheeler replied, “Time is what prevents everything from happening at once.” Just as time is a fundamental mystery in physics, the world of business strategy also has its fundamental questions. One that I helped define and which has guided a great deal of my own research is “Why are firms different?”
At first glance this might seem to be a trivial concern. Each tree or mountain is different from other trees or mountains—so why are differences among firms puzzling? The puzzle arises because firms compete. If one firm has a design which works better, either by accident or cleverness, then other firms will work to incorporate those superior elements into their own designs. Yet, we know, that despite all this continual striving, striking differences in effectiveness remain among competing businesses. The challenge is to discover what allows these differences in effectiveness to persist despite competition.
As a simple example, Dell succeeded greatly during 1988-2002, besting competitors IBM, Hewlett-Packard, Compaq, and Gateway. Because of this high performance, books were written, MBA students studied cases about Dell, key managers left Dell for employment elsewhere, and a host of other mechanisms spread the word about Dell’s strategy and methods. After over a decade, what can possibly remain proprietary about Dell that that its rivals could not have duplicated or even improved?1 Just as time is that which separates events, there is something that sustains the distinctiveness of firms. That “something” is the substance out of which sustained advantage is constructed. Figuring out the nature of that “substance” energizes a substantial stream of research in the field of business strategy.
In this series (What Keeps High Profits High?) I trace key steps in the evolution of thinking about this “something.” It is largely a personal narrative, centered on my own research and my own changes in thinking. It is also unabashedly academic in content and tone. Indeed, part of my intent in writing this series has been to communicate some of what it feels like to do scholarly research.
Being a Foot Soldier
Everyone knows that university professors teach, an activity we have all experienced if only on the receiving end. But, what is it to be a scholar in a practical field like business? Being a scholar is not normally a road to riches or popular fame. Instead, scholars are interested in finding out how things work. Their external rewards, if any, are recognition, honor and remembrance by their fellows. The University of California, where I work, has nine campuses, and employs about 8,800 professors. According to the internal promotion documents, each professor is at the forefront of their field. But most know the truth—almost all of us are only foot soldiers in the battle for understanding. Only one of us in fifty will be read after their passing. Only one in five hundred will be remembered half a century beyond. And, perhaps one in a generation will write words that whisper down the centuries.
The academic community has a long memory. Within it, research in business is a new activity and research in business strategy is in its infancy. We boast no Nobel Laureates nor is there any “Council of Strategy Advisors” to the President. Why would anyone choose such a field over well-established strongholds like, economics, political science, and psychology? I chose it because it is small, new, and undeveloped. I thought that in this new developing field one foot soldier just might make a difference.
- HP and Compaq merged in 2002. IBM sold its PC business to Levano in 2004. [↩]
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