In Beyond Competitive Advantage: How to Solve the Puzzle of Sustaining Growth While Creating Value, Todd Zenger argues that a unique and insightful corporate theory is the key to sustaining value-creating growth.
What specific benefits does this corporate theory offer? According to Zenger, it provides decision-makers with an enhanced vision or perspective in three separate but interdependent ways:
1. Foresight concerning the future evolution of the relevant industries, technologies, and customer tastes
2. Insight regarding sustainably unique assets, resources, and activities possessed by the firm
3. Cross-sight that recognizes patterns of complementarity between and among assets, activities, and resources both within and outside the firm.
“A central message of the book is that a strategist seeking to sustain value creation needs more than a map to a position. A strategist needs a corporate theory of value creation, something that provides ongoing guidance to the selection of positions and a vast array of strategic actions. In much the same way that a scientist’s insightful theory reveals promising experiments to conduct, a well-crafted corporate theory reveals a succession of promising strategic experiments — a succession of strategies and strategic choices.”
He goes on to observe, “Better corporate theories reveal better strategies — strategies with a higher probability of success. Moreover, a well-crafted corporate theory elevates the strategist’s task of sustained value creation from a series of a la carte decisions about acquisitions, investments, design, financing, integration decisions, and leadership, each guided by rather fragmented logic, to a more coherent set fob choices guided by a synthetic logic.”