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Thursday, September 29, 2011

Good Strategy-Bad Strategy: Post #3--Power

Discovering Power: I have always loved the story about David and Goliath, which Rumelt uses to make his point. David, a Jewish boy and a shepherd, took on the menacing Philistine giant, Goliath—much to the skepticism of everyone, including King Saul. It was a foregone conclusion that David would be crushed by the massive warrior. However, David’s rock, hurled from his shepherd’s slingshot, hit the only weakness unprotected by armor—Goliath’s forehead. Thus, the little shepherd boy defeated the colossus by applying his power to an opponent’s vulnerability. Wal-Mart did the same sort of thing when it went against convention. Retail wisdom says that a full discount store needs a surrounding population of about 100,000 to succeed. To get into smaller communities, Sam Walton decided to change the definition of store to that of “network” of stores—therefore enlarging his “local” market. Using a coherent, integrated design, he employed bar codes, integrated logistics, just-in-time deliveries, and much more to convert to a strategy that changed the equation. Thus, he created a responsive network, and effectively changed the definition of “store” to “network.”

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