From Fit to Stretch

Concept of Strategic Fit

Strategic Fit is the degree to which an organization is matching
its resources and competences with the needs of the external
environment.
It is an attempt to identify the opportunities in the
environment in which the organization works and then
tailoring the strategy of the organization to capitalize on
these.
However, the strategic intent (or vision) of the organization
may not be limited to the extent of the external environment
or the available opportunities.
A small organization shall always remain small if it only tries to match
its resources to the available external environment.


G Hamel and C K Prahalad, Strategy as
Stretch and Leverage
Issue with Strategic Fit

Slow and Steady wins the race.
Fast and Steady shall always beat the slow and
steady.

G Hamel and C K Prahalad, Strategy as
Stretch and Leverage
Concept of Strategic Stretch

Strategic Stretch is the process of innovation and
development involved in finding new opportunities
and creating a competitive advantage from an
organizations resources and competencies.
The difference between the strategic intent and the
available resources is called Strategic stretch.
The key to strategic stretch is leveraging resources.
The concept of stretch supplements the idea of fit,
leveraging resources is as important as allocating
them, and the long term has as much to do with
consistency of effort and purpose as it does with
patient money and an appetite for risk


G Hamel and C K Prahalad, Strategy as
Stretch and Leverage
From Fit to Stretch
Example:
Companies like NEC, CNN, Sony, Glaxo and
Honda were united more by the
unreasonableness of their ambitions and
creativity in getting the most from the least.
G Hamel and C K Prahalad, Strategy as
Stretch and Leverage
From Allocation to Leverage
Allocating resources across businesses and geographies is
an important part of top managements strategic role.
But leveraging what a company actually has rather than
simply allocating ,it is a more creative response to scarcity.
Ex:
1. IBM challenged xerox in copier business but failed while
canon, a company only 10% the size of the xerox in the
mid 1970s, eventually displaced xerox as the worlds most
prolific copier manufacturer.
2. There were times when CNN was providing 24 hour news
coverage with one fifth of the budget of CBS turning out
only 1 hour of news in the evening.
G Hamel and C K Prahalad, Strategy as
Stretch and Leverage
From Allocation to Leverage
There are 2 basic approaches to garnering
greater resource productivity.
1.Downsizing-Cutting investments & head count
2.Leveraging- Seeks to get most out of the
resources one has.
G Hamel and C K Prahalad, Strategy as
Stretch and Leverage