The three imaginations step by step
Let’s turn to the individual steps of the strategy-making matrix. As discussed previously, I take a deductive approach here by drawing on, and condensing, previous process models into three generic steps. A THREE-STEP APPROACH FOR DESCRIPTIVE IMAGINATION Step One: Envisaging Imaginative Strategies Defining industry boundaries Industry analysis represents a focal concern in descriptive imagination, which seeks to describe and simplify a complex and confusing world ‘out there’. As Porter emphasized, the industry or industries in which the firm competes is the single most important variable in strategy making (Porter, 1980, 1985, 2001). Industry analysis illuminates the competitive landscape in ways so as to aid strategy making. To illustrate: it can help establish whether a particular industry is likely to prove attractive to the average competitor and consequently shed light on profit differences among competitors in that industry (Collis and Ghemawat, 1994). In descriptive imagination the industry or industries in which the firm competes determine or significantly affect industry performance (for example, Porter, 1980; Bain, 1956). Put differently, the industry or industries in which the firm competes pose contingencies in terms of the types and ranges of competitive actions pursued in different contexts (for example, Datta and Rajagopalan, 1998). Before beginning to analyse an industry, it seems expedient to define the boundaries of the industry to be analysed. For the purposes of this study, industry analysis is divided into two levers: ‘defining industry boundaries’, which will be discussed in this sub-section, and ‘diagnosing industry dynamics’ which will be discussed in the...
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