Strategy Clock
Strategy as Simple Rules by Kathleen M. Eisenhardt and Donald N. Sull
Reprint r0101g
When the business landscape was simple, companies could afford to have complex strategies. But now that business is so complex, they need to simplify. Smart companies have done just that with a new approach: a few straightforward, hard-and-fast rules that define direction without confining it.
as Simple Rules
ILLUSTRATION BY MIN JAE HONG
S by Kathleen M. Eisenhardt and Donald N. Sull
ince its founding in 1994, Yahoo! has emerged as one of the blue chips of the new economy. As the Internet’s top portal, Yahoo! generates the astounding numbers we’ve come to expect from stars of the digital era – more than 100 million visits per day, annual sales growth approaching 200%, and a market capitalization that has exceeded the value of the Walt Disney Company. Yet Yahoo! also provides something we don’t generally expect from Internet companies: profits.
107
Copyright © 2001 Harvard Business School Publishing Corporation. All rights reserved.
S t rat e g y a s S i m p l e Ru l e s
Everyone recognizes the unprecedented success of 50 to do.” In traditional strategy, advantage comes from exYahoo!, but it’s not easily explained using traditional ploiting resources or stable market positions. In strategy thinking about competitive strategy. Yahoo!’s rise can’t as simple rules, by contrast, advantage comes from sucbe attributed to an attractive industry cessfully seizing fleeting opportunities. structure, for example. In fact, the It’s not surprising that a young comThe new economy’s most Internet portal space is a strategist’s pany like Yahoo! should rely on stratworst nightmare: it’s characterized by egy as simple rules. Entrepreneurs have profound strategic implication always used that kind of opportunityintense rivalries, instant imitators, and customers who refuse to pay a cent. grabbing approach because it can help is that companies must Worse yet, there are few
Reprint r0101g
When the business landscape was simple, companies could afford to have complex strategies. But now that business is so complex, they need to simplify. Smart companies have done just that with a new approach: a few straightforward, hard-and-fast rules that define direction without confining it.
as Simple Rules
ILLUSTRATION BY MIN JAE HONG
S by Kathleen M. Eisenhardt and Donald N. Sull
ince its founding in 1994, Yahoo! has emerged as one of the blue chips of the new economy. As the Internet’s top portal, Yahoo! generates the astounding numbers we’ve come to expect from stars of the digital era – more than 100 million visits per day, annual sales growth approaching 200%, and a market capitalization that has exceeded the value of the Walt Disney Company. Yet Yahoo! also provides something we don’t generally expect from Internet companies: profits.
107
Copyright © 2001 Harvard Business School Publishing Corporation. All rights reserved.
S t rat e g y a s S i m p l e Ru l e s
Everyone recognizes the unprecedented success of 50 to do.” In traditional strategy, advantage comes from exYahoo!, but it’s not easily explained using traditional ploiting resources or stable market positions. In strategy thinking about competitive strategy. Yahoo!’s rise can’t as simple rules, by contrast, advantage comes from sucbe attributed to an attractive industry cessfully seizing fleeting opportunities. structure, for example. In fact, the It’s not surprising that a young comThe new economy’s most Internet portal space is a strategist’s pany like Yahoo! should rely on stratworst nightmare: it’s characterized by egy as simple rules. Entrepreneurs have profound strategic implication always used that kind of opportunityintense rivalries, instant imitators, and customers who refuse to pay a cent. grabbing approach because it can help is that companies must Worse yet, there are few