Sunday, September 12, 2021

g-f(2)491 THE BIG PICTURE OF THE DIGITAL AGE (9/12/2021), INSEAD Knowledge, Strategising for Success in Winner-Take-All Industries




ULTRA-condensed knowledge


"g-f" fishing of golden knowledge (GK) of the fabulous treasure of the digital age, Strategy (9/12/2021)  g-f(2)426 

Opportunity, How does a firm from a small town in the Netherlands beat one of the best-known brands in the world?, INSEAD Knowledge 
  • Nikon attempted to retake its lead but faltered. ASML seized the opportunity to go all in, making enormous investments that unseated the market leader.
  • To put information on tiny semiconductor chips, guidance via light is required. In the early 1990s, Nikon was the world leader in this technology, but the Dutch firm ASML has dominated the market since 2002. Now ASML has cornered the market on extreme ultraviolet lithography exposure equipment, an essential chipmaking apparatus in creating the semiconductors that are indispensable for connected devices. ASML is now the sole firm that mass-produces this technology.
        Opportunity, Over time, any slight differences in resource positions amplifies into large performance differences, INSEAD Knowledge 
        • Competition for resources that are highly scalable and depreciate rapidly, like the innovative technology of lithography, encourages market leaders to extend their leads.  
        Opportunity, Not all markets are the same, which is why some have market leaders that are seemingly untouchable – like Facebook or Google, INSEAD Knowledge 
        • Using a formal model, I show when high heterogeneity of performance versus low heterogeneity can be expected in a market. All firms face limitations in how quickly they can build their resource positions. It is a long-term process saddled with uncertainty. If managers understood which resource positions to watch out for, some of this uncertainty could be lessened.  
        Opportunity, Strategic investments underpin competitive advantage, INSEAD Knowledge 
        • How do you make resource investments? Where do you place your pawns on the chess board of resource investments? Building your stocks of assets and capabilities isn’t played out over months or quarters, but over years or decades. Because Nikon neglected to take the long-term amplification dynamics of lithography into account more than 20 years ago, ASML’s market capitalisation is now more than US$300 billion. The long-term is where the most interesting strategic processes come to fruition.
          
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        Condensed knowledge


        Opportunity, The big picture of your life, Fishing for Golden Knowledge in the age of abundance


        Some relevant characteristics of this "genioux fact"

        • Category 2: The Big Picture of the Digital Age
        • [genioux fact deduced or extracted from INSEAD Knowledge]
        • This is a “genioux fact fast solution.”
        • Tag Opportunities those travelling at high speed on GKPath
        • Type of essential knowledge of this “genioux fact”: Essential Analyzed Knowledge (EAK).
        • Type of validity of the "genioux fact". 

          • Inherited from sources + Supported by the knowledge of one or more experts.


        References


        ABOUT THE AUTHORS


        Phebo Wibbens


        Phebo Wibbens (@PheboWibbens, In) is an Assistant Professor of Strategy at INSEAD in France. He teaches the MBA electives MAACS (Mergers, Acquisitions, Alliances and Corporate Strategy) and Org 2.0, a course on cutting edge organisational design methods, such as machine learning, A/B testing, and graph theory.

        In his research, Phebo applies mathematical modeling to the Resource Based View (RBV), which posits that long-term financial success is only possible if firms have access to resources that cannot be effectively obtained by their competitors. Using modern time-series statistics and econometrics, Phebo finds substantial empirical evidence that inter-firm resource competition for resources indeed shapes long-term profit patterns, and that rather than playing in the right industry, in most situations it is much more important to develop the right resource positions within an industry.

        Phebo holds PhD and M.Sc. degrees in Management from the Wharton School, University of Pennsylvania, as well as M.Sc. degrees (cum laude) in both Physics and Mathematics from the University of Groningen (The Netherlands). Before his academic career, Phebo worked for 8 years at Bain & Company in Amsterdam and Boston, first as a consultant and later leading the research team in the Global Strategy Practice. He co-authored the management book Iconic: How to create a virtuous circle of success, describing the strategies of long-term iconic organisations such as the Royal Concertgebouw Orchestra.


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