What is strategic dynamics? Strategic dynamics describes the interactions between companies and their environments. Over time, these interactions strengthen or weaken the strategic position and the distinctive competencies of incumbent companies. All companies in all industries are affected by the results of strategic dynamics and many eventually succumb to them. (Just compare, for instance, the companies on the Fortune 500 list in 1950 with that of 2005.) But to study how strategic dynamics work it makes sense to do so in industries in which they can be observed to operate at a relatively fast rate and so for this book we have chosen to focus on information technology-driven industries.

Why information technology-driven industries? First, because we know them best; but beyond that because they are characterized by rapid changes in the business environment due to the constant evolution of technology, which in turn necessitates frequent strategic changes.

What are information technology-driven industries? They are, first, firms in the information technology industry proper, such as various hardware component (e.g., Intel), software component (e.g., Microsoft), original equipment (e.g., Dell), and service companies (e.g., IBM), whose fortunes are driven by the relentless advances of information technologies broadly defined. But increasingly, they are also industries in which incumbent companies’ inputs, outputs, and distribution are radically transformed by digital technology. Think, for instance, of how of digital technology has affected or threatens to affect companies that publish traditional animated stories (e.g., Disney), produce and distribute music (e.g., Universal music group), or provide telephone service (e.g., AT&T) . All of the companies in these industries have struggled to find the right strategies and associated set of strategic actions to meet the challenges faced by the information technology-driven changes. What are strategic actions? They are changes in the business, planned and executed by general management to shape the future of the company.

Who are we? One of us has spent a career studying the way strategy is formed by both top-down and bottom-up actions in organizations; another of us has worked in the information technology industry for 40 years.

The book offers the opportunity to study the evolution of several information technology-driven industries. Chapter 1 of this Introduction presents a very brief overview of this evolution, starting with the maturation of the microchip, the technological driving force for most changes. It then discusses the confluence of compounding forces that have produced the Internet economy and ecommerce, and others that are currently reshaping the software industry. This is followed by different manifestations of the convergence and/or collision between different sectors of the industry that are the consequence of technological evolution.

The book also offers the opportunity to study three interrelated conceptual themes related to strategic actions. These are discussed in chapter 2. The first of these, titled “strategic action and strategic dynamics”, examines the role of strategy in companies’ evolution and the dynamics that results from the interaction of the companies’ strategic actions with their environment, which often changes. Of particular interest is the case when the environment changes as a result of the strategic action itself. The second theme studies the relationship between strategy as intended and strategy as reality, strategy and action. In particular, we examine what happens when alignment between the stated strategy and the strategic action diverges, as often is the case in rapidly changing environments. When the environmental changes are very large, they often create conditions that we call strategic inflection points, periods which represent the possibility of having to choose between alternative strategies, which can further widen the divergence between the possible paths of future development of the companies’ evolution.

The third theme describes the ways different companies navigate such large environmental changes – we study corporate transformation, ways companies change in a major way what they do and how they do it. Such transformations require management to navigate and control chaos on one hand and reining in chaos on another, requiring exquisite leadership on the part of a top management.

The book’s structure follows chapter 1’s discussion of the evolution of industries driven by information technology, and each of its main parts contains cases that can be studied in light of the three major themes discussed in chapter 2. Many of these cases illustrate more than one of the major themes and the choice of which theme to emphasize is dictated by our judgment of what learning each case can highlight best. Wherever possible, we use a technique that we like to call critical comparative case analysis. This involves juxtaposing comparable situations in which there are differences in only a limited number of variables, while keeping most conditions approximately the same. By confining our cases to information technology-driven industries, it is possible to find opportunities for such comparative analysis.

We have found both studying and practicing strategic dynamics in information technology-driven industries very exciting and very much fun. We hope you will too.