THE HIGH-PERFORMANCE ORGANIZATION

1989

BEST OF HBR

Sixteen years ago, when Cary Hamel, then a lecturer at London Business

Sehooi, and C.K. Prahalad, a University of Michigan professor, wrote “Stra-

tegic lntent,”the article signaled that a major new force had arrived in

management.

Hamei and Prahalad argue that Western companies focus on trimming

their ambitions to match resources and, as a result, search only for advan-

tages they can sustain. By contrast, Japanese corporations leverage resources

by accelerating the pace of organizational learning and try to attain seem-

ingly impossible goals. These firms foster the desire to succeed among their

employees and maintain it by spreading the vision of global leadership.

This is how Canon sought to “beat Xerox”and Komatsu set out to “encircle

Caterpillar.”

This strategic intent usually incorporates stretch targets, which force com-

panies to compete in innovative ways. In this McKinsey Award-winning arti-

cle, Hamel and Prahalad describe four techniques that Japanese companies

use: building layers ofadvantage, searching for “loose bricks,” changing the

terms of engagement, and competing through collaboration.

Strategic Intent by Gary Hamel and C.K. Prahalad

Most leading global companies started with ambitions that were far bigger than their resources and capabilities. But they created an obsession with winning at ail levels ofthe organization and sustained that obsession for decades.

oday managers in many industries working hard to match the compet- e advantages of their new global ri-

vals. They are moving manufacturing offshore in search of lower labor costs, rationalizing product lines to capture global scale economies, instituting qual- ity circles and just-in-time production, and adopting Japanese human resource practices. When competitiveness still seems out of reach, they form strategic alliances-often with the very compa- nies that upset the competitive balance in the first place.

Important as these initiatives are, few of them go beyond mere imitation. Too many companies are expending enormous energy simply to reproduce the cost and quality advantages their

global competitors already enjoy. Imi- tation may be the sincerest form of flat- tery, but it will not lead to competitive revitalization. Strategies based on imi- tation are transparent to competitors who have already mastered them. More- over, successful competitors rarely stand still. So it is not surprising that many executives feel trapped in a seemingly endless game of catch-up, regularly sur- prised by the new accomplishments of their rivals.

For these executives and their com- panie