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¹² Andrews, The Concept of Corporate Strategy, 29.

¹³ Ibid., 100.

¹⁴ Theodore Levitt, “Marketing Myopia,” Harvard Business Review (July/Aug. 1960): 52.

¹⁵ Ansoff, Igor, Corporate Strategy (New York, 1965), 106–9Google Scholar.

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¹⁷ Porter, Michael E., “Industrial Organization and the Evolution of Concepts for Strategic Planning,” in Naylor, T. H., ed., Corporate Strategy (New York, 1982), 184Google Scholar.

¹⁸ Adam M. Brandenburger, Michael E. Porter, and Nicolaj Siggelkow, “Competition and Strategy: The Emergence of a Field,” paper presented at McArthur Symposium, Harvard Business School, 9 Oct. 1996, 3–4.

¹⁹ Stanford Research Institute, Planning in Business (Menlo Park, 1963)Google Scholar.

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²¹ Interview with Seymour Tilles, 24 Oct. 1996. Tilles credits Henderson for recognizing the competitiveness of Japanese industry at a time, in the late 1960s, when few Americans believed that Japan or any other country could compete successfully against American industry.

²² Henderson, Bruce, The Logic of Business Strategy (Cambridge, Mass., 1984), 10Google Scholar.

²³ Henderson, Bruce D., Henderson on Corporate Strategy (Cambridge, Mass., 1979), 6–7Google Scholar.

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²⁵ Henderson, Henderson on Corporate Strategy, 41.

²⁶ Bruce Henderson explained that, unlike earlier versions of the “learning curve,” BCG's experience curve “encompasses all costs (including capital, administrative, research and marketing) and traces them through technological displacement and product evolution. It is also based on cash flow rates, not accounting allocation.” Henderson, Bruce D., preface to Boston Consulting Group, Perspectives on Experience (Boston, 1972; first published 1968)Google Scholar.

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²⁸ Patrick Conley, “Experience Curves as a Planning Tool,” in Boston Consulting Group pamphlet (1970): 15.

²⁹ Bruce Henderson, preface, Boston Consulting Group, Perspectives on Experience.

³⁰ Conley, “Experience Curves as a Planning Tool,” 10–11.

³¹ Interview with Mike Allen, 4 Apr. 1997.

³² Sidney E. Schoeffler, Robert D. Buzzell, and Donald F. Heany, “Impact of Strategic Planning on Profit Performance,” Harvard Business Review (Mar./Apr. 1974): 139–40, 144–5.

³³ See Walter Kiechel III, “Corporate Strategists under Fire,” Fortune (27 Dec. 1982).

³⁴ Frederick W. Gluck and Stephen P. Kaufman, “Using the Strategic Planning Framework,” in McKinsey internal document, “Readings in Strategy” (1979), 3–4.

³⁵ J. Quincy Hunsicker, “Strategic Planning: A Chinese Dinner?” McKinsey staff paper (Dec. 1978), 3.

³⁶ Philippe Haspeslagh, “Portfolio Planning: Uses and Limits,” Harvard Business Review (Jan./Feb. 1982): 59.

³⁷ William J. Abernathy and Kenneth Wayne, “Limits of the Learning Curve,” Harvard Business Review (Sept./Oct. 1974): 111.

³⁸ Pankaj Ghemawat, “Building Strategy on the Experience Curve,” Harvard Business Review (Mar./Apr.): 1985.

³⁹ Wind, Yoram, Mahajan, Vijay, and Swire, Donald J., “An Empirical Comparison of Standardized Portfolio Models,” Journal of Marketing 47 (Spring 1983): 89–99CrossRefGoogle Scholar. The statistical analysis of their results is based on an unpublished draft by Pankaj Ghemawat.

⁴⁰ Gluck and Kaufman, “Using the Strategic Planning Framework,” 5–6.

⁴¹ Robert H. Hayes and William J. Abernathy, “Managing Our Way to Economic Decline,” Harvard Business Review (July/Aug. 1980): 68.

⁴² Ibid., 71.

⁴³ William G. Shepherd, “Causes of Increased Competition in the U.S. Economy, 19391980,” Review of Economics and Statistics (Nov. 1982): 619.

⁴⁴ Cournot, Antoine A., Recherches sur les Principes Mathematiques de la Theorie des Richesses (Paris, 1838)Google Scholar, sects. 26, 27; and Niehans, Jurg, A History of Economic Theory (Baltimore, 1990), 180–2Google Scholar.

⁴⁵ Economists associated with the Chicago School generally doubted the empirical importance of this possibility–except as an artifact of regulatory distortions.

⁴⁶ Mason's seminal work was “Price and Production Policies of Large-Scale Enterprise,” American Economic Review (Mar. 1939): 61–4.

⁴⁷ Joe S. Bain, “Relation of Profit Rate to Industry Concentration: American Manufacturing. 1936–1940,” Quarterly Journal of Economics (Aug. 1951): 293–324.

⁴⁸ Bain, Joe S., Barriers to New Competition (Cambridge, Mass., 1956), 3 nCrossRefGoogle Scholar.

⁴⁹ See, for instance, Goldschmid, Harvey J., Mann, H. Michael, and Weston, J. Fred, eds., Industrial Concentration: The New Learning (Boston, 1974)Google Scholar.

⁵⁰ Michael E. Porter, “Note on the Structural Analysis of Industries,” Harvard Business School Teaching Note, no. 376–054 (1983).

⁵¹ Porter, Michael E., “Toward a Dynamic Theory of Strategy,” in Rumelt, Richard P., Schendel, Dan E., and Teece, David J., eds., Fundamental Issues in Strategy (Boston, 1994), 427–9Google Scholar.

⁵² Schmalensee, Richard, “Inter-Industry Studies of Structure and Performance,” in Schmalensee, Richard and Willig, R. D., eds., Handbook of Industrial Organization, vol. 2 (Amsterdam, 1989)Google Scholar.

⁵³ Brandenburger, Adam M. and Nalebuff, Barry J., Co-opetition (New York, 1996)Google Scholar.

⁵⁴ Coyne, Kevin P. and Subramanyam, Somu, “Bringing Discipline to Strategy,” McKinsey Quarterly 4 (1996): 16Google Scholar.

⁵⁵ See, for instance, Richard P. Rumelt, “How Much Does Industry Matter?” Strategic Management Journal (March 1991): 167–85.

⁵⁶ See Hunt, Michael S., “Competition in the Major Home Appliance Industry,” DBA diss., Harvard University, 1972Google Scholar. A theoretical foundation for strategic groups was provided by Richard E. Caves and Michael E. Porter, “From Entry Barriers to Mobility Barriers,” Quarterly Journal of Economics (Nov. 1977): 667–75.

⁵⁷ This is based on my experience working at BCG in the late 1970s.

⁵⁸ Walter Kiechel III, “The Decline of the Experience Curve,” Fortune (5 Oct. 1981).

⁵⁹ Porter, Michael E., Competitive Advantage (New York, 1985), ch. 3Google Scholar.

⁶⁰ Quoted in Kiechel, “The Decline of the Experience Curve.”

⁶¹ Interview with Hugo Uyterhoeven, 25 Apr. 1997.

⁶² Interview with Fred Gluck, 18 Feb. 1997.

⁶³ Porter, Michael E., Competitive Strategy (New York, 1980)Google Scholar, ch. 2; and William K. Hall, “Survival Strategies in a Hostile Environment,” Harvard Business Review (Sept./Oct. 1980): 78–81.

⁶⁴ Porter, Competitive Strategy, 41–4.

⁶⁵ Porter, Competitive Advantage, 33, 37.

⁶⁶ Talk by Arnoldo Hax at MIT on 29 April 1997.

⁶⁷ Scherer, F. M. and Ross, David, Industrial Market Structure and Economic Performance (Boston, 1990)Google Scholar, ch. 5.

⁶⁸ Benjamin C. Esty, “Note on Value Drivers,” Harvard Business School Teaching Note, no. 297–082 (1997).

⁶⁹ Pankaj Ghemawat, “Sustainable Advantage,” Harvard Business Review (Sept./Oct. 1986): 53–8, and Commitment (New York, 1991)Google Scholar, ch. 5.

⁷⁰ The first economic citation of the “Red Queen” effect is generally attributed to L. Van Valen. See Van Valen, L., “A New Evolutionary Law,” Evolutionary Theory 1 (1973): 1–30Google Scholar. The literary reference is to Lewis Carroll's Alice's Adventures in Wonderland and Through the Looking Glass (New York, 1981Google Scholar; first published 1865–71), in which the Red Queen tells Alice: “here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast…” (p. 127).

⁷¹ George Stalk Jr., “Time–The Next Source of Competitive Advantage,” Harvard Business Review (July/Aug. 1988).

⁷² Stalk and Hout, Competing Against Time, 179.

⁷³ George Stalk Jr. and Alan M. Webber, “Japan's Dark Side of Time,” Harvard Business Review (July/Aug. 1993): 94.

⁷⁴ Ibid., 98–9.

⁷⁵ Ibid., 101–2.

⁷⁶ This test of stability is in the spirit of the game theorists, John von Neumann and Oskar Morgenstern. See their Theory of Games and Economic Behavior (Princeton, 1944)Google Scholar.

⁷⁷ Ibid.

⁷⁸ There is also a branch of game theory that provides upper bounds on players' payoffs if freewheeling interactions between them are allowed. See Brandenburger and Nalebuff's Coopetition for applications of this idea to business.

⁷⁹ Ghemawat, Pankaj, Games Businesses Play (Cambridge, Mass., 1997), 3Google Scholar.

⁸⁰ For a late 1980s survey of game-theory 10, consult Carl Shapiro, “The Theory of Business Strategy,” RAND Journal of Economics (Spring 1989): 125–37.

⁸¹ Ibid., 127.

⁸² Dixit, Avinash K. and Nalebuff, Barry J., Thinking Strategically (New York, 1991), 120Google Scholar. Their logic is based on Schelling's, Thomas C. pioneering book, The Strategy of Conflict (Cambridge, Mass., 1979; first published in 1960)Google Scholar.

⁸³ For a detailed critique, see Richard P. Rumelt, Dan Schendel, and David J. Teece, “Strategic Management and Economics,” Strategic Management Journal (Winter 1991): 5–29. For further discussion, see Ghemawat, Games Businesses Play, chap. 1.

⁸⁴ For a discussion of the original models (by Ghemawat and Nalebuff) and the supporting empirical evidence, consult Ghemawat, Games Businesses Play, ch. 5.

⁸⁵ In the same year, Richard Rumelt also noted that the strategic firm “is characterized by a bundle of linked and idiosyncratic resources and resource conversion activities.” See his chapter, “Towards a Strategic Theory of the Firm,” in Lamb, R. B., ed., Competitive Strategic Management (Englewood Cliffs, N.J., 1984), 561Google Scholar.

⁸⁶ Wernerfelt, Birger, “A Resource-based View of the Firm,” Strategic Management Journal 5 (1984): 171CrossRefGoogle Scholar. In addition to citing Andrews's 1971 book, The Concept of Corporate Strategy, Wernerfelt referred to the pioneering work of Edith Penrose, The Theory of the Growth of the Firm (Oxford, 1959)Google Scholar.

⁸⁷ Jay B. Barney, “Firm Resources and Sustained Competitive Advantage,” Journal of Management (March 1991): 107–11.

⁸⁸ C. K. Prahalad and Gary Hamel, “The Core Competence of the Corporation,” Harvard Business Review (May/June 1990): 81.

⁸⁹ David J. Teece, Gary Pisano, and Amy Shuen, “Dynamic Capabilities and Strategic Management,” mimeo (June 1992): 12–13.

⁹⁰ Teece, David and Pisano, Gary, “The Dynamic Capabilities of Firms: An Introduction,” Industrial and Corporate Change 3 (1994): 540–1CrossRefGoogle Scholar. The idea of “routines” as a unit of analysis was pioneered by Nelson, Richard R. and Winter, Sidney G., An Evolutionary Theory of Economic Change (Cambridge, Mass., 1982)Google Scholar.

⁹¹ Teece, Pisano, and Shuen, “Dynamic Capabilities and Strategic Management,” 2.

⁹² Dorothy Leonard-Barton, “Core Capabilities and Core Rigidities: A Paradox in Managing New Product Development,” Strategic Management Journal (1992): 111–25.

⁹³ For a book-length discussion of commitments, see Ghemawat, Pankaj, Commitment (New York, 1991)Google Scholar. For connections to the other modes of dynamic analysis discussed in this section, see chs. 4 and 5 of Ghemawat, Pankaj, Strategy and the Business Landscape (Reading, Mass., 1999)Google Scholar.

⁹⁴ Townsend, Robert, Up the Organization (New York, 1970)Google Scholar.

⁹⁵ See, for instance, Baumol, William J., Panzar, John C., and Willig, Robert D., Contestable Markets and the Theory of Industry Structure (New York, 1982)Google Scholar for an analysis of the economic implications of zero commitment; and Richard E. Caves, “Economic Analysis and the Quest for Competitive Advantage,” American Economic Review (May 1984): 127–32, for comments on the implications for business strategy.

⁹⁶ For a more extended discussion of the ideas in this postscript, see Pankaj Ghemawat, “Competition among Management Paradigms: An Economic Analysis,” Harvard Business School Working Paper (2000).

⁹⁷ For additional discussion of the methodology employed, consult Pascale, Richard T., Managing on the Edge (New York, 1990), 18–20Google Scholar.

⁹⁸ For some evidence that management ideas have become shorter-lived, see Paula P. Carson, Patricia A. Lanier, Kerry D. Carson, and Brandi N. Guidry, “Clearing a Path through the Management Fashion Jungle: Some Preliminary Trailblazing,” Academy of Management Journal (December 2000).

⁹⁹ Richard D'Aveni, among many others, asserts unprecedented levels of environmental change in Hypercompetition: Managing the Dynamics of Strategic Maneuvering (New York, 1994)Google Scholar. William Lee and Gary Skarke discuss apparently transient ideas that are permanently valuable in “Value-Added Fads: From Passing Fancy to Eternal Truths,” Journal of Management Consulting (1996): 10–15. Robert G. Eccles and Nitin Nohria emphasize the rhetorical uses of changing the wrappers on a limited number of timeless truths about management in Beyond the Hype: Rediscovering the Essence of Management (Boston, 1992)Google Scholar.

¹⁰⁰ See Hammer, Michael and Champy, James, Reengineering the Corporation (New York, 1993)Google Scholar See also Micklethwait, John and Wooldridge, Adrian, The Witch Doctors (New York, 1996)Google Scholar. Micklethwait and Wooldridge devote a chapter to CSC Index.

¹⁰¹ Michael Hammer, “Reengineering Work: Don't Automate, Obliterate,” Harvard Business Review (July/Aug. 1990): 104.

¹⁰² Micklethwait and Wooldridge, The Witch Doctors, 29.

¹⁰³ See O'Shea, James and Madigan, Charles, Dangerous Company: The Consulting Powerhouses and the Businesses They Save and Ruin (New York, 1997)Google Scholar.

¹⁰⁴ For a general discussion, see Frank, Robert H. and Cook, Philip J., The Winner-Take-All Society (New York, 1995)Google Scholar; for formal modeling and a discussion specific to the management idea business, see Ghemawat, “Competition among Management Paradigms.”

¹⁰⁵ See, for example, Anton, James J. and Yao, Dennis A., “The Sale of Ideas: Strategic Disclosure, Property Rights, and Incomplete Contracts,” unpublished working paper, Fuqua School of Business, Duke University (1998)Google Scholar.

¹⁰⁶ See Sushil Bikhchandani, David Hirshleifer, and Ivo Welch, “Learning from the Behavior of Others: Conformity, Fads and Informational Cascades,” Journal of Economic Perspectives (1998): 15–70.

¹⁰⁷ See Daniel L. McFadden and Kenneth E. Train, “Consumers' Evaluation of New Products: Learning from Self and Others,” Journal of Political Economy (Aug. 1996): 683–703.

¹⁰⁸ These models derive some of their real-world appeal from the use of relative performance measures to evaluate managers. See Robert Gibbons and Kevin J. Murphy, “Relative Performance Evaluation of Chief Executive Officers,” Industrial and Labor Relations Review (Feb. 1990): 30S–51S.