This is an MIT Sloan Management Review article. Capturing new growth opportunities is fundamental to strategy, innovation and entrepreneurship. These days, experimentation and improvisational change are in. But how should managers address the challenge? The answer, the authors argue, can be more complex and more crucial to a company's success than previously thought. Their research on mature corporations, growing businesses and new ventures suggests a paradoxical tension between focus and flexibility that can define or break a business. Based on more than 150 interviews with managers at 30 companies in North America, Europe and Asia, the authors conclude that focus is still critical and may be just as important as flexibility. What's more, they conclude that a company's focus may influence its flexibility and vice versa. There are two components to capturing a new business opportunity: opportunity selection and opportunity execution. Opportunity selection involves determining which customer problem to solve, whereas opportunity execution deals with solving the problem. The authors point out that most books, articles and thought leaders focus on opportunity execution -how to create value by developing solutions. But research suggests that innovation initiatives often move so quickly to identify a solution that the innovators have to cycle back to figure out which problem they are actually solving. The authors found that opportunity selection appears to matter as much as opportunity execution. More importantly, how managers approach opportunity selection (whether with flexibility or with focus) has a critical impact on how successful they are at opportunity execution. The authors observed that managers and entrepreneurs tend to fall into two groups: opportunists and strategists. Opportunists rely on a less scripted and more flexible approach to opportunity selection, letting emergent customer inquiries shape opportunity selection. Strategists follow a different pattern. They constrain the selection of opportunities so that they pursue opportunities that are more likely to result in success, and they try to capture several opportunities in a row versus one in isolation. The authors found that companies that were more focused in opportunity selection were often more flexible in opportunity execution.
Authors :: Christopher B. Bingham, Nathan R. Furr, Kathleen M. Eisenhardt
Swot Analysis of "The Opportunity Paradox" written by Christopher B. Bingham, Nathan R. Furr, Kathleen M. Eisenhardt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Opportunity Selection facing as an external strategic factors. Some of the topics covered in The Opportunity Paradox case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Opportunity Paradox casestudy better are - – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, central banks are concerned over increasing inflation, there is backlash against globalization, talent flight as more people leaving formal jobs,
increasing transportation and logistics costs, geopolitical disruptions, etc
Introduction to SWOT Analysis of The Opportunity Paradox
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Opportunity Paradox case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Opportunity Selection, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Opportunity Selection operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of The Opportunity Paradox can be done for the following purposes –
1. Strategic planning using facts provided in The Opportunity Paradox case study
2. Improving business portfolio management of Opportunity Selection
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Opportunity Selection
Strengths The Opportunity Paradox | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Opportunity Selection in The Opportunity Paradox Harvard Business Review case study are -
Training and development
– Opportunity Selection has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Opportunity Paradox Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Opportunity Selection has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Learning organization
- Opportunity Selection is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Opportunity Selection is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Opportunity Paradox Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Opportunity Selection has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study The Opportunity Paradox - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Strategy & Execution field
– Opportunity Selection is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Opportunity Selection in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Opportunity Selection is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Christopher B. Bingham, Nathan R. Furr, Kathleen M. Eisenhardt can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Opportunity Selection digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Opportunity Selection has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Opportunity Selection is present in almost all the verticals within the industry. This has provided firm in The Opportunity Paradox case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Operational resilience
– The operational resilience strategy in the The Opportunity Paradox Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Strong track record of project management
– Opportunity Selection is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Opportunity Selection are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– The Opportunity Paradox firm has clearly differentiated products in the market place. This has enabled Opportunity Selection to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Opportunity Selection to invest into research and development (R&D) and innovation.
Weaknesses The Opportunity Paradox | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Opportunity Paradox are -
Low market penetration in new markets
– Outside its home market of Opportunity Selection, firm in the HBR case study The Opportunity Paradox needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Opportunity Selection has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - The Opportunity Paradox should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Opportunity Selection needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High bargaining power of channel partners
– Because of the regulatory requirements, Christopher B. Bingham, Nathan R. Furr, Kathleen M. Eisenhardt suggests that, Opportunity Selection is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Need for greater diversity
– Opportunity Selection has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Opportunity Paradox, in the dynamic environment Opportunity Selection has struggled to respond to the nimble upstart competition. Opportunity Selection has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Opportunity Selection supply chain. Even after few cautionary changes mentioned in the HBR case study - The Opportunity Paradox, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Opportunity Selection vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Opportunity Selection has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Opportunity Paradox, it seems that the employees of Opportunity Selection don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Increasing silos among functional specialists
– The organizational structure of Opportunity Selection is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Opportunity Selection needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Opportunity Selection to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Opportunity Paradox, is just above the industry average. Opportunity Selection needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities The Opportunity Paradox | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study The Opportunity Paradox are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Opportunity Selection can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Opportunity Selection to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Opportunity Selection to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Opportunity Selection to increase its market reach. Opportunity Selection will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Opportunity Selection can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Opportunity Selection can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Leveraging digital technologies
– Opportunity Selection can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Opportunity Selection can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Opportunity Selection is facing challenges because of the dominance of functional experts in the organization. The Opportunity Paradox case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Opportunity Selection to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Opportunity Selection in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Manufacturing automation
– Opportunity Selection can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Opportunity Selection can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Opportunity Selection to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Buying journey improvements
– Opportunity Selection can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Opportunity Paradox suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats The Opportunity Paradox External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Opportunity Paradox are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Opportunity Selection can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study The Opportunity Paradox .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Opportunity Selection with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Opportunity Selection will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Opportunity Selection.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Opportunity Paradox, Opportunity Selection may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High dependence on third party suppliers
– Opportunity Selection high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Opportunity Selection needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Opportunity Selection can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Opportunity Selection can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Opportunity Selection is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Opportunity Selection can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Opportunity Selection demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of The Opportunity Paradox Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study The Opportunity Paradox needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study The Opportunity Paradox is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study The Opportunity Paradox is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of The Opportunity Paradox is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Opportunity Selection needs to make to build a sustainable competitive advantage.
