Kenichi Ohmae on Competitive strategy: The point is to gain an advantage over the competition at a reasonable cost. Find out How…

  • BUJOREAN & CO
  • March 14, 2019
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We are continuing the series of literature review on competitive strategy and business growth. In this article we will review the perspective of Kenichi Ohmae.

According to the Japanese strategist, Kenichi Ohmae, the first step in strategy is to identify the one issue that matters most —• the critical issue. In his book, The Mind of the Strategist, Ohmae considers that in order to do this, one must frame the question properly. “Suppose a company is incurring high costs for overtime work. What is the correct question? Could it be, “How can we reduce overtime?” or maybe, “Do we have enough staff?” or perhaps, “Does our staff have the necessary skills to do the work in a timely manner?” Each question would elicit a different response. Clearly, though, it is necessary to answer the third question before moving to the second, and then the first.” (Ohmae, 1982) 

According to the Japanese strategist, Kenichi Ohmae, the first step in strategy is to identify the one issue that matters most —• the critical issue. In his book, The Mind of the Strategist, Ohmae considers that in order to do this, one must frame the question properly. “Suppose a company is incurring high costs for overtime work. What is the correct question? Could it be, “How can we reduce overtime?” or maybe, “Do we have enough staff?” or perhaps, “Does our staff have the necessary skills to do the work in a timely manner?” Each question would elicit a different response. Clearly, though, it is necessary to answer the third question before moving to the second, and then the first.” (Ohmae, 1982) 

Ohmae recommends a structured approach and a disciplined method that can help anyone arrive at a workable definition of the critical issue. This methodology can apply to a broad spectrum of business issues.

“Strategy is about achieving competitive advantage. If there were no competitors, there would be no strategy. No one would need it. This suggests that the most important strategic issue is competitiveness. A company can tolerate certain internal deficiencies, but firms cannot survive competitive inadequacy. Allowing the company to deteriorate vis a vis its competitors means putting the company’s fate in the hands of the competition. People think differently when they face competitive survival. This changes their focus. They recognize that the best is the enemy of the good, and possibly the friend of the competition. Good enough is good enough. There’s no point looking for the perfect strategy or the perfect competitive situation. The point is to gain an advantage over the competition at a reasonable cost. Do that often enough and you will win.” (Ohmae, 1982)

According to him, the competitive advantage over competition can be accomplished in four ways: 

  1. Re-allocate resources
  2. Focus on one’s relative strength
  3. Redefine the key issue of the business by a bold stroke
  4. Be free.

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(Fragment from Insights on the Growth and Development of the Romanian SMEs, 2019, D. A. Bujorean)