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Term: Business Unit Strategy

Term: Business Unit Strategy

Business Unit Strategy, as described by Richard Koch, focuses on how a single business or division within a larger corporation achieves and sustains competitive advantage within a specific, well-defined market or “arena” (a product-market segment). This level of strategy is about winning in one particular space, rather than deciding which spaces to play in.

Key Elements of Business Unit Strategy (per Koch):

  • Arena-Specific: Business unit strategy operates within the boundaries of a particular product, service, or customer group—what Koch calls an “arena”.
  • Competitive Advantage Focus: It is centrally concerned with how a business beats competitors. Koch identifies two principal sources:
    • Cost Leadership: Supplying a comparable product at a lower price and cost than rivals.
    • Differentiation: Offering a product that is more useful, easier to use, or more aesthetically pleasing than competitors’ products.
  • Simplicity and Scale: Koch emphasizes that both cost and differentiation advantages are often achieved by having a product that is simpler and produced at a larger scale than rivals.
  • Market Share in Context: The value of market share is only meaningful when assessed in the context of the specific arena relative to competition, often within highly specialized or niche markets.
  • Resource Deployment: At the business unit level, strategy dictates how to deploy resources and capabilities to maximize success in the chosen arena.
 

Business Unit vs. Corporate Strategy (per Koch):

 
Business Unit Strategy
Corporate Strategy
Scope
Single market or arena (product-market segment)
Multi-business, deciding “where to play” as an organization
Key Question
How do we win here?
Which arenas/markets should we be in?
Focus
Achieving and sustaining competitive advantage against rivals
Portfolio management; value creation across businesses
Basis
Cost leadership or differentiation within the market
Allocation of resources and synergies across units

Richard Koch asserts that the heart of any firm is the product-market segment(s) where it holds or can hold a distinctive edge, whether through cost or uniqueness, and that “strategy” at this level is about defending and growing that advantage.

In summary, business unit strategy is about how to compete and win within a chosen market, whereas corporate strategy is about deciding which markets or businesses to be in and optimizing the whole portfolio for maximum value. Koch’s work draws on the importance of focusing efforts—guided by the 80/20 principle—on those few arenas where success is most likely and most valuable.

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Quote: Richard Koch Author, investor, strategist

Quote: Richard Koch Author, investor, strategist

“The 80/20 Principle asserts that a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards.” – Richard Koch – Author, investor, strategist

The quote, “The 80/20 Principle asserts that a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards,” originates from the acclaimed British author, entrepreneur, and strategist Richard Koch. This principle, also widely known as the Pareto Principle, suggests that in many aspects of business and life, a focused minority is responsible for producing the majority of results. In practical terms, Koch observed that 20% of activities typically lead to 80% of the value or outcomes—whether those are profits, happiness, or productivity.

Koch’s sharp insight into this pattern did not emerge in isolation. He built his career in environments where optimizing results and leveraging limited resources was essential. After earning an M.A. from Oxford University and an M.B.A. from The Wharton School, Koch launched his professional journey with the Boston Consulting Group, before becoming a partner at Bain & Company. There, consulting for leading global organizations, he recognized that the most significant outcomes often stemmed from a narrow selection of strategic moves or high-leverage initiatives.

Leaving Bain in 1983, Koch co-founded L.E.K. Consulting and became a serial investor and entrepreneur, with ownership in businesses such as Filofax, Plymouth Gin, Betfair, and FanDuel. Across these varied ventures, Koch repeatedly saw the 80/20 rule in action—whether identifying the most profitable customers, streamlining operations, or focusing on the few core products that drove sales.

About Richard Koch

Richard Koch (born July 28, 1950) has become a globally recognized voice on strategy, entrepreneurship, and the science of effectiveness. Beyond his consulting work and private equity investments, Koch has authored several influential books, most notably The 80/20 Principle, which has sold over a million copies and been translated into 35 languages. His writing popularized the application of the Pareto Principle beyond economics, demonstrating its practical relevance for business, personal development, and lifestyle choices.

Koch’s personal journey reflects the core lesson of his message: by identifying the vital few factors that matter most, and minimizing time on the trivial many, individuals and organizations can multiply their effectiveness and reward. He has credited his mastery of this principle as the key to amassing significant wealth and achieving a form of early retirement, allowing him the freedom to invest, write, and speak across the world.

Today, Koch’s 80/20 Principle stands not just as a tool for efficiency but as a transformative lens for reimagining how we approach challenges, prioritize resources, and strive for lasting success.

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Term: Corporate Strategy

Term: Corporate Strategy

Corporate strategy, as outlined by Richard Koch, refers to the overarching plan and direction for a multi-business organization, focusing on where the firm should compete and what kinds of businesses it should own or enter. This type of strategy is concerned with the selection and management of a portfolio of business units, industries, or product-market segments, and the allocation of resources among them. Koch emphasizes that corporate strategy is about understanding and choosing the arenas in which a firm operates, especially in cases where multiple distinct business areas are involved.

Related theorist: Richard Koch

Corporate strategy asks questions such as:

  • In which markets or industries should the company operate?
  • How should resources be allocated among business units?
  • How should the businesses be structured to maximize overall value and competitiveness?

It focuses on creating value through synergies, developing core competencies shared across units, and ensuring that the whole organization delivers more value than the sum of its parts.

Business Unit Strategy vs. Corporate Strategy (as per Koch)

 
Corporate Strategy
Business Unit Strategy
Scope
Multi-business, multi-industry; whole corporation
Single business or product-market segment
Focus
Where to compete (which arenas/businesses)
How to compete (within a chosen arena/business)
Key Questions
What businesses should we own? How do we manage the portfolio? What is the right mix for overall advantage?
How do we win in our chosen market/industry? What is our source of competitive advantage?
Resource Allocation
Allocates capital and resources across business units and functions
Deploys resources to maximize advantage within a specific unit or market
Value Creation
Pursues synergies, portfolio optimization, and leveraging core capabilities across units
Pursues cost leadership, differentiation, or focus strategies for competitive edge in a defined arena

Koch stresses that, at the business unit level, strategy centers on achieving competitive advantage within a specific product-market segment or arena—by either being the lowest-cost producer or by offering a product that is markedly more attractive to customers than competitors’ offerings. In contrast, corporate strategy is about identifying and managing the “few arenas” (businesses) that generate the most value, and ensuring they work together to deliver superior results for the corporation as a whole.

“At the heart of a firm is one or more product-market segments or arenas in which it operates. If the firm operates in several arenas, one of them, or a few, will supply most or all the cash and profit the firm generates… In these few arenas, which are the intersection of the product and a similar group of customers, the firm has competitive advantage.”
— Richard Koch.

In summary, corporate strategy is about the selection and management of a portfolio of businesses to create overall value, whereas business unit strategy is about achieving and sustaining competitive advantage in a chosen market or segment. Koch’s distinction makes it clear: corporate strategy sets the direction for the whole enterprise; business unit strategy wins the battle in each chosen arena.

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Quote:  John P. Kotter – Professor, author

Quote: John P. Kotter – Professor, author

“A useful rule of thumb: Whenever you cannot describe the vision driving a change initiative in five minutes or less and get a reaction that signifies both understanding and interest, you are in for trouble.” – John P. Kotter – Professor, author

John P. Kotter’s observation—“A useful rule of thumb: Whenever you cannot describe the vision driving a change initiative in five minutes or less and get a reaction that signifies both understanding and interest, you are in for trouble.”—emerges from decades of rigorous research into the mechanics of organizational transformation and leadership.

The quote distills a critical insight at the heart of Kotter’s renowned work on change management: successful change initiatives hinge on the clarity and communicability of their vision. Drawing upon his extensive study of over 100 organizations undergoing transformation, Kotter discovered that even the most technically sound change efforts falter when the vision behind them is vague, convoluted, or fails to energize those involved. This realization became a cornerstone of his influential framework, emphasizing that a vision must not only provide direction but must also be articulated succinctly—capturing both understanding and enthusiasm from stakeholders in minutes, not hours.

The context for this rule of thumb is rooted in Kotter’s widely adopted “8-Step Process for Leading Change,” first introduced in his 1996 book, Leading Change. In this step-by-step model, the third and fourth steps—form a strategic vision and communicate the vision—underscore the necessity of crafting a compelling narrative for change and ensuring that it resonates organization-wide. Kotter’s research established that if people cannot quickly grasp and feel inspired by the vision, skepticism and resistance are likely to follow, undermining the entire transformation effort.

 

About John P. Kotter

John P. Kotter is a distinguished professor, author, and pioneer in the field of organizational change. As a long-standing Harvard Business School professor, Kotter has spent his career analyzing what distinguishes successful transformation from failure. His groundbreaking 8-step change model, developed in the mid-1990s, remains one of the most influential frameworks in business strategy and leadership circles worldwide. Kotter’s work emphasizes that enduring change is as much about human dynamics and communication as it is about strategic planning. He is recognized for distilling complex organizational theories into actionable advice, with a particular focus on the importance of urgency, coalition-building, and the communicability of vision.

Contextual Insights

Kotter’s insight is especially relevant in today’s rapidly evolving business landscape, where organizations face constant social, technological, and economic pressures to adapt. His rule serves as both a warning and a guide: If leaders cannot convey the purpose and promise of change in a way that is easily understood and genuinely exciting, it is likely that confusion and inertia will hinder progress.

This quote encapsulates the wisdom that visionary leadership demands not just an inspiring destination, but a message so clear that it can be shared, understood, and embraced across every level of an organization—swiftly and memorably.

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Term: Change Leadership

Term: Change Leadership

Change leadership is the process of driving transformational change by setting direction, building momentum, and inspiring people to achieve a shared vision. In Kotter’s framework, change leadership focuses on the emotional and behavioral aspects of change: motivating people, creating a compelling sense of urgency, aligning stakeholders around a strategic vision, and building the commitment necessary for long-term organizational transformation. Change leadership is proactive and visionary, seeking to shape organizational culture and inspire people to move beyond the status quo.

Related theorist: John P. Kotter

Kotter’s 8-Step Process for Leading Change embodies this approach, emphasizing steps such as:

  • Creating a sense of urgency
  • Building a guiding coalition
  • Forming a strategic vision
  • Communicating the vision
  • Empowering broad-based action
  • Creating short-term wins
  • Consolidating gains
  • Anchoring new approaches in the culture

This process requires leaders to guide, motivate, and equip people to embrace and realize the change, making it a leadership-driven, holistic journey.

Change Management (in contrast):

Change management, by comparison, involves the systematic planning, implementation, and monitoring of specific change initiatives within an organization. It is more operational, focusing on process, procedures, and minimizing disruption. Change management covers the coordination of tasks, resource allocation, risk mitigation, and communication to ensure the smooth technical execution of change.

Key Differences Summarized:

Aspect
Change Leadership (Kotter)
Change Management
Focus
Vision, motivation, inspiration, culture
Planning, controlling, executing change projects
Approach
Proactive, people-centered, strategic
Reactive or structured, task-oriented, operational
Key Activities
Creating urgency, coalition-building, vision-casting, empowering people
Scheduling, resource allocation, process control
Outcome Emphasis
Long-term transformation, embedded cultural change
Effective completion of projects/initiatives
Leadership Role
Guide and inspire, remove barriers, anchor change in culture
Plan, organize, monitor

Kotter’s Perspective: Kotter stresses that change leadership is the engine for lasting change—without it, organizations often struggle to move beyond incremental improvements or sustain change over the long term. Strong change leadership is necessary to win hearts and minds, align actions with a bold vision, and anchor new behaviors in the organization’s culture. In Kotter’s view, while change management is necessary for handling logistics, only change leadership can transform an organization for the future.

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Quote:  John P. Kotter – Professor, author

Quote: John P. Kotter – Professor, author

“Develop the Change Vision and Strategy. Clarify how the future will be different from the past, and how you can make that future a reality.” – John P. Kotter – Professor, author

The quote “Develop the Change Vision and Strategy. Clarify how the future will be different from the past, and how you can make that future a reality.” by John P. Kotter encapsulates a critical principle in leading transformation within organizations. This insight is deeply rooted in Kotter’s groundbreaking work on organizational change, particularly as articulated in his influential 8-Step Change Model.

In the early 1990s, Kotter, a professor at Harvard Business School, conducted extensive research across more than 100 organizations undergoing major transitions. Through this research, he observed recurring patterns in both successful and failed transformation efforts. Kotter distilled these findings into his seminal 8-step process, outlined in his widely acclaimed book, Leading Change (1996).

Central to this model is the necessity of crafting a clear and compelling change vision and a practical strategy to achieve it. According to Kotter, after establishing a sense of urgency and assembling a guiding coalition, leaders must articulate a vision that vividly contrasts the future state from the current reality. Equally important is clarifying the strategies that will turn this vision into concrete results. Without this clarity, organizations risk losing alignment and momentum, leaving change initiatives vulnerable to confusion and resistance from within.

Kotter’s approach underscores that effective change cannot rely solely on top-down mandates or external pressures. Instead, it is about engaging people at every level, fostering understanding of the purpose behind the change, and painting a vivid picture of the benefits and pathway forward. This vision-driven strategy not only unifies teams but also motivates sustained action, making large-scale transformation achievable even in complex and turbulent environments.

About John P. Kotter

John P. Kotter is recognized globally as one of the foremost authorities on leadership and change. A long-standing professor at Harvard Business School, he has authored several best-selling books, including Leading Change, which has become a foundational text in the field of change management. Kotter’s contributions are not confined to theory—his research has influenced leaders and organizations worldwide, guiding the implementation of sustainable change.

Through his 8-Step Change Model, Kotter reshaped how businesses approach transformation, emphasizing the human side of change as much as the procedural and structural aspects. His model is celebrated for its practical application, clear structure, and lasting impact, making it a go-to framework for organizations navigating moments of critical transition.

In the face of rapid technological, social, and economic shifts, Kotter’s enduring message is that visionary leadership and a well-communicated strategy are indispensable for organizations striving not just to adapt but to thrive.

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Term: Vision

Term: Vision

A corporate vision is a statement describing the desired future state of an organization. It articulates where the company aspires to be in the long term, usually over a period of 3 to 10 years, in terms of impact, scale, and key achievements. The vision provides a forward-looking, ambitious goal that inspires and aligns stakeholders, guiding both strategic planning and resource allocation.

Related Theorist Gary Hamel
 
Gary Hamel is widely recognized as the leading strategy theorist associated with the concept of corporate vision. Alongside C.K. Prahalad, Hamel introduced the importance of “strategic intent”—a precursor to modern corporate vision—emphasizing how a compelling future ambition can energize organizations and guide long-term strategy. Their work underscores the idea that a clear, aspirational vision is not just inspirational, but central to driving long-term competitive advantage and organizational alignment.

Key characteristics of an effective corporate vision:

  • Aspirational and Forward-Looking: Outlines an inspiring, ambitious future, often beyond current capabilities.
  • Directional: Sets the general direction for the company’s strategic planning and long-term objectives.
  • Purpose-Driven: Conveys the broader impact the company aims to have on customers, industries, or communities.
  • Clarity: Easily communicated and understood across all organizational levels.
  • Motivational: Rallies employees and stakeholders toward a shared goal.

For example, Microsoft’s vision statement is, “to empower every person and every organization on the planet to achieve more.” This statement is forward-looking and reflects the company’s broad ambition and values.

Vision vs. Mission vs. Purpose

Term
Definition
Focus
Vision
Describes the desired future state or ultimate goal the company aims to achieve in the long-term.
What the organization wants to become or accomplish.
Mission
Defines the organization’s core purpose, its present reason for existence, and how it serves stakeholders.
What the organization does, whom it serves, and how.
Purpose
Explains the fundamental reason the organization exists, often rooted in core values or social good.
Why the organization exists at the most fundamental level.

Key Contrasts:

  • Vision is future-oriented, providing inspiration and long-term direction—where the organization wants to go.
  • Mission is present-oriented, describing what the organization does, for whom, and how.
  • Purpose is existential, expressing the underlying reason for the organization’s existence, often tied to values and societal impact.

Summary:
A corporate vision sets a compelling, long-term destination for the organization, guiding strategy and inspiring action. It differs from the mission, which describes current operations, and purpose, which roots the company’s existence in broader meaning and values. Gary Hamel is the theorist most closely linked to the transformative power of vision in strategy.

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Quote:  John P. Kotter – Professor, author

Quote: John P. Kotter – Professor, author

“This iceberg is not who we are. It is only where we now live.” – John P. Kotter – Professor, author

This quote originates from John P. Kotter’s influential fable, Our Iceberg Is Melting: Changing and Succeeding Under Any Conditions, co-authored with Holger Rathgeber. Set in the frozen expanse of Antarctica, the story follows a colony of penguins confronted with a daunting realization: their iceberg home is melting. As they struggle to face this existential threat, the colony must overcome resistance to change, tackle denial, and forge a path forward together.

 

The line, “This iceberg is not who we are. It is only where we now live,” encapsulates a pivotal theme of the book. Spoken during a dramatic meeting among the penguins, the message is clear: identity is not tied to current circumstances. The iceberg symbolizes comfort zones, established routines, or the familiar structures organizations or individuals cling to, especially when confronted by uncertainty or crises. Kotter’s insight is that circumstances—however urgent or threatening—do not define one’s core values, purpose, or collective identity. By distinguishing between “who we are” and “where we live,” Kotter urges audiences to separate the essence of their identity from temporary conditions, laying the groundwork for adaptability and resilience in the face of necessary change.

Our Iceberg Is Melting itself is a parable designed to distill and illustrate Kotter’s renowned Eight Step Process for Leading Change. Through the narrative of the penguins, Kotter conveys how successful adaptation—whether in organizations or communities—relies on assembling the courage to accept uncomfortable truths, mobilize around a shared vision, and act collectively, rather than retreating into denial or nostalgia.

About John P. Kotter

John P. Kotter is a preeminent authority on leadership and change management. As a professor at Harvard Business School, Kotter has spent decades researching how leaders successfully navigate major transformations within organizations. He is the author of numerous award-winning books, including Leading Change, which introduced his influential Eight Step Process, and Our Iceberg Is Melting, which brings those concepts to life in a memorable, accessible way.

Kotter’s work has shaped the practice of organizational change around the world. His emphasis on the need for urgency, clear vision, inclusive leadership teams, and systematic action provides a roadmap for leaders seeking to inspire adaptability and resilience in times of disruption. By blending rigorous research with the engaging storytelling found in Our Iceberg Is Melting, Kotter has helped countless leaders and teams confront challenges, recognizing that—no matter the “iceberg” they inhabit—their identity and potential transcend present circumstances

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Term: Strategic Fit

Term: Strategic Fit

“Strategic Fit” refers to the alignment between an organization’s internal capabilities (resources, structure, and processes) and the external environment (market demands, competition, and industry trends). Achieving strategic fit ensures that a company can effectively execute its strategy by leveraging its strengths to capitalize on opportunities and mitigate threats.

Related Theorist: Henry Mintzberg

The concept of “Strategic Fit” sits at the heart of effective business strategy, yet its significance has deep roots in the evolving landscape of management thought. In the mid-20th century, as organizations grew more complex and global, leaders recognized that simply having a strategy was not enough—what mattered was how well a company’s internal strengths aligned with external market realities.

As strategic management matured, early approaches favored rigorous planning and analysis, treating strategy as a linear exercise: survey the environment, select your objectives, and systematically deploy resources. However, as thinkers like Henry Mintzberg observed, such structured approaches often fell short when faced with the unpredictable and dynamic nature of real-world markets.

Mintzberg, known for his influential work on strategy and organizational design, challenged the prevailing orthodoxy. He argued that successful strategies do not emerge from rigid plans but rather from a synthesis of deliberate intent and emergent, adaptive learning. In his view, “Strategic Fit” is not a static achievement but a continuous process of aligning an organization’s resources, structures, and processes with changing market demands, competitive pressures, and broader industry trends.

Mintzberg’s research into organizational forms—ranging from the entrepreneurial “personal enterprise” to the decentralized “project organization”—demonstrated that there is no one-size-fits-all structure. Instead, organizations must adapt, blending vision with learning and analysis with intuition, always seeking a fit between what they do well and what the world requires. His famous “5 Ps of Strategy” and work on emergent strategy highlight the creative, often non-linear interplay between an organization’s internal realities and its external environment.

Today, “Strategic Fit” remains a guiding principle for organizations navigating complexity. Its roots in Mintzberg’s work remind us that true strategic advantage lies not just in having a plan, but in mastering the ongoing, dynamic alignment between inside capabilities and outside demands. By continuously seeking strategic fit, organizations maintain their relevance, resilience, and capacity for sustained success across ever-shifting global landscapes

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Quote:  John P. Kotter – Professor, author

Quote: John P. Kotter – Professor, author

“Most people don’t lead their own lives – they accept their lives.” – John P. Kotter, Leading Change

John P. Kotter, a renowned professor at Harvard Business School and a leading authority on leadership and change, introduced this quote in his influential book, Leading Change. The book, first published in 1996, has become a cornerstone for understanding how individuals and organizations navigate transformation. Kotter’s work is grounded in decades of research into why change efforts often fail and what distinguishes successful leaders from those who merely manage.

This particular quote captures a central theme in Kotter’s philosophy: the distinction between passively accepting circumstances and actively shaping one’s destiny. Through his research, Kotter observed that many people—whether in their personal lives or within organizations—tend to fall into routines, responding to external pressures and expectations rather than proactively setting their own direction. This tendency is not just a matter of comfort; it is often reinforced by organizational structures, cultural norms, and a lack of urgency or vision.

Kotter’s eight-step process for leading change begins with the need to create a sense of urgency—a deliberate push to break through complacency and inspire action. He argues that true leadership is about envisioning a better future, mobilizing people toward that vision, and empowering them to act, rather than simply maintaining the status quo. In the context of this quote, Kotter is challenging individuals and leaders alike to reflect: Are you steering your life and work with intention, or are you simply drifting along with the current?

Why This Matters:
The quote is both a diagnosis and a call to action. It suggests that the default for most people is acceptance—going along with what is, rather than striving for what could be. Kotter’s insight is that real change, whether personal or organizational, begins when individuals decide to take ownership, set their own course, and lead with purpose. This shift from acceptance to leadership is at the heart of successful transformation, innovation, and fulfillment.

In Summary:
John P. Kotter’s quote is a reflection on human nature and organizational life. It encourages self-examination and a proactive mindset, reminding us that meaningful change—whether in a company or in one’s own life—requires the courage to lead, not just accept, the path ahead

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Term: Price Elasticity

Term: Price Elasticity

Price elasticity measures how sensitive customer demand is to changes in price. By understanding whether demand for a product is elastic (highly responsive to price changes) or inelastic (less responsive), businesses can optimize pricing to maximize revenue, profit and market share. Effective use of price elasticity enables data-driven pricing decisions, supports dynamic and value-based pricing models, and helps forecast the impact of price adjustments on sales and profitability.

Comprehensive Outline of Pricing Elasticity in Pricing Strategy

1. Definition and Core Concept

  • Price elasticity of demand quantifies the responsiveness of quantity demanded to a change in price.

  • Expressed as:

    Price Elasticity of Demand=% Change in Quantity Demanded% Change in Price

  • Elastic demand: Large change in quantity for a small price change.

  • Inelastic demand: Little change in quantity for a price change.

2. Importance in Pricing Strategy

  • Guides businesses on how much they can raise or lower prices without significantly affecting demand.

  • Helps forecast revenue and profit impacts of pricing decisions.

  • Enables segmentation and tailored pricing for different products or customer groups.

3. Factors Influencing Price Elasticity

  • Availability of Substitutes: More substitutes increase elasticity.

  • Necessity vs. Luxury: Essentials tend to be inelastic; luxuries are more elastic.

  • Proportion of Income: Expensive items relative to income are more elastic.

  • Time Horizon: Elasticity increases over time as consumers adjust.

  • Brand Loyalty and Differentiation: Strong brands can reduce elasticity.

4. Pricing Strategies Based on Elasticity

Strategy When to Use Elasticity Context
Penetration Pricing To gain market share quickly High elasticity
Skimming Pricing To maximize early profits Low elasticity
Dynamic Pricing To respond to real-time demand High elasticity
Value-Based Pricing To reflect perceived value Low elasticity
Cost-Plus Pricing To cover costs with a markup Often inelastic markets
Competitive Pricing To match or beat competitors High elasticity
 

5. Practical Applications

  • Dynamic Pricing: Companies like Uber use elasticity to adjust prices in real time, balancing supply and demand.

  • Revenue Optimization: Lowering prices in elastic markets can boost sales volume and revenue; raising prices in inelastic markets can increase margins.

  • Product Segmentation: Essential goods (e.g., food, fuel) are priced with less sensitivity to demand drops, while luxury goods require careful price setting due to high elasticity.

6. Measurement and Data Requirements

  • Requires historical sales and pricing data for accurate calculation.

  • Quantitative methods: Statistical analysis, A/B testing, econometric modeling.

  • Qualitative insights: Customer surveys, market research.

7. Strategic Implications

  • Informs optimal price points for new and existing products.

  • Supports competitive positioning and differentiation.

  • Enables businesses to anticipate and react to market changes, competitor moves, and shifts in consumer preferences.

Summary:
Price elasticity is foundational to effective pricing strategy. By quantifying how demand responds to price changes, companies can make informed, data-driven decisions to optimize revenue, profit, and market position. Understanding elasticity enables the use of advanced pricing models, supports market segmentation, and helps businesses adapt to competitive and economic dynamics.

 

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Quote:  John P. Kotter – Professor, author

Quote: John P. Kotter – Professor, author

“Whenever smart and well-intentioned people avoid confronting obstacles, they disempower employees and undermine change.” – John P. Kotter, Leading Change

John P. Kotter, a renowned authority on leadership and change management, wrote Leading Change after decades of observing why organizational transformations succeed or fail. This particular quote distills a core lesson from his research: the greatest threats to progress are not always external crises or a lack of intelligence, but the reluctance of capable leaders to face uncomfortable truths and challenges head-on.

Context and Meaning

Kotter’s work emerged from the realization that many organizations, despite being filled with talented and well-meaning leaders, routinely stumble when trying to implement change. He noticed that these leaders often sidestep difficult conversations, ignore persistent roadblocks, or hope that problems will resolve themselves. This avoidance, while sometimes motivated by a desire to maintain harmony or avoid conflict, actually produces the opposite effect: it erodes trust, saps morale, and stifles initiative at all levels of the organization.

When leaders fail to confront obstacles—be they resistant managers, outdated processes, or cultural inertia—they send a message to employees that challenges are insurmountable or not worth addressing. Employees, seeing this, become disengaged and powerless, feeling that their efforts to drive change will not be supported or rewarded. Over time, this breeds cynicism and apathy, making meaningful transformation nearly impossible.

Why This Insight Matters

Kotter’s insight is rooted in his broader framework for successful change, which emphasizes urgency, open communication, and the removal of barriers. He argues that leadership is not just about setting a vision, but about actively clearing the path for others to act on that vision. When obstacles are ignored, they become institutionalized, turning into sources of frustration and resistance that can derail even the most promising initiatives.

The quote serves as both a warning and a call to action. It urges leaders to model the courage and transparency they wish to see in their organizations. By confronting challenges directly, leaders empower employees to do the same, creating a culture where change is possible and everyone feels responsible for progress.

The Broader Legacy

Kotter’s message resonates beyond the boardroom. It applies to any context where people are working together to achieve something new—whether in business, government, or community organizations. The lesson is clear: progress depends not just on intelligence or good intentions, but on the willingness to face difficulties openly and to empower others to help overcome them.

In summary, this quote encapsulates a hard-won truth from the front lines of organizational change: avoiding obstacles doesn’t protect people or projects—it undermines them. True leadership means confronting challenges, empowering teams, and clearing the way for real, lasting transformation.

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Term: Nash Equilibrium

Term: Nash Equilibrium

Nash equilibrium is a foundational concept in game theory describing a situation in which, in a game involving two or more players, no participant can improve their own outcome by changing their strategy as long as all other players keep theirs unchanged. In other words, each player’s strategy is optimal in light of the strategies chosen by others. This leads to a stable outcome where no individual has an incentive to deviate.

Related Theorist: John Nash

The concept was developed by American mathematician John Nash, who proved that every finite game has at least one Nash equilibrium (possibly involving mixed or randomized strategies). He was awarded the Nobel Prize in Economics in 1994 for this work.

Significance:
Nash equilibrium is widely used to analyze competitive and cooperative interactions in economics, business, and other fields. It provides a way to predict the decisions of players in scenarios where their choices are interdependent, such as pricing strategies between firms, negotiations, or even military standoffs. The well-known “prisoner’s dilemma” is a classic example, illustrating how rational decision-making can sometimes lead to outcomes that are not optimal for all players involved.

Key Takeaway:
In Nash equilibrium, every player’s choice is the best they can do, considering what others are doing—making it a powerful tool for analyzing strategy and competition in complex environments

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Quote:  John P. Kotter – Professor, author

Quote: John P. Kotter – Professor, author

“Nothing undermines change more than behavior by important individuals that is inconsistent with the verbal communication.” – John P. Kotter, Leading Change

John P. Kotter’s insight, “Nothing undermines change more than behavior by important individuals that is inconsistent with the verbal communication,” emerges from decades of research and observation into the successes and, more crucially, the failures of organizational change. The quote is drawn from his landmark book Leading Change, published in 1996, which has become a foundational text for leaders seeking to guide their organizations through transformation.

Kotter’s work identifies that a disconnect between what leaders say and what they do is among the most powerful barriers to lasting change. Through analyzing real-world case studies and transformation efforts, Kotter pinpointed three common failures in communicating a vision for change. The foremost, and most damaging, is this inconsistency between words and actions. When employees see leaders or influential figures contradicting their stated priorities, it sends a clear signal: the change is not truly important, sustainable, or worthy of commitment. In Kotter’s words, “Communication comes in both words and deeds. The latter is generally the most powerful form.” This is why genuine change requires leaders to embody the transformation they advocate, bridging rhetoric and reality through example.

The context for Kotter’s statement is deeply practical. In his eight-stage process for leading change, he emphasizes that broad-based engagement and empowerment only take root when people see authentic and consistent commitment from those at the top. Otherwise, skepticism grows, cynicism takes hold, and even well-designed initiatives falter as employees wait for the ‘new direction’ to pass like others before it. The quote stands as both a warning and a call to action for leaders: model the change you wish to see.

About John P. Kotter

Dr. John P. Kotter is an acclaimed authority on leadership and change management. He has spent over forty years studying how organizations transform themselves to meet new challenges, and his research has shaped the field of change leadership. Kotter is a Harvard Business School professor emeritus and the author of several best-selling books, with Leading Change widely recognized as his seminal work.

Among his most influential contributions is the “8-Step Process for Leading Change,” a framework distilled from observing and advising organizations across the globe. Kotter’s methodology continues to influence leaders in both the public and private sectors, helping them navigate the complexities of organizational change by focusing on urgency, coalition-building, vision, and—critically—authentic leadership by example.

At its core, Kotter’s work is grounded in the belief that effective change doesn’t just happen through strategic plans or inspiring speeches. It relies on leaders who embody the changes they wish to see—turning words into meaningful, visible action

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Term: Core Competence

Term: Core Competence

Core Competence refers to a unique set of skills, knowledge, or capabilities that a company possesses, which allows it to deliver unique value to customers and achieve a competitive advantage in the marketplace. This concept was introduced by C.K. Prahalad and Gary Hamel in their seminal 1990 Harvard Business Review article, “The Core Competence of the Corporation.” They argued that companies should focus on identifying and nurturing their core competencies to build long-term strategic advantage, rather than just focusing on individual products or markets.

Related Theorist: C.K. Prahalad and Gary Hamel

In the landscape of business strategy, few ideas have had as lasting an impact as “core competence.” This concept, articulated by C.K. Prahalad and Gary Hamel in their influential 1990 Harvard Business Review article, arose from the observation that many companies struggled to achieve sustained growth and innovation despite restructuring and cost-cutting throughout the 1980s. Prahalad and Hamel recognized that the real engine of long-term competitive advantage was not in organizational charts or product portfolios, but in the unique knowledge, skills, and capabilities embedded deep within an organization.

They argued that the most successful companies were those able to identify, nurture, and leverage these core competencies—essentially, the things a company could do uniquely well, often difficult for competitors to imitate. Rather than pursuing a broad range of activities or simply reacting to market pressures, companies that focused on their core competencies could create new markets, deliver exceptional customer value, and withstand shifts in the competitive landscape.

Prahalad and Hamel’s insight placed a premium on the human side of organizations: expertise, collective learning, and collaborative problem-solving became strategic assets. Their work challenged executives to think beyond products and divisions, asking instead what underlying capabilities could be stretched across markets and geographies to fuel growth. For example, a firm known for its supply chain expertise or brand power could use those competencies to move into new industries or create entirely new product categories.

Today, the idea of core competence is foundational in both academic strategy literature and practical management. It guides leaders as they assess strengths, build cross-functional teams, and prioritize investments, all in pursuit of sustainable competitive advantage. By understanding and harnessing what they do best, organizations can define their identity, differentiate themselves in crowded markets, and deliver unique value that stands the test of time

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Term: Strategic Positioning

Term: Strategic Positioning

Strategic Positioning refers to the process of creating a distinct image and identity for a company or its products/services in the minds of the target market, differentiating it from competitors. Michael Porter, a leading authority on competitive strategy, introduced this concept as part of his framework for achieving sustainable competitive advantage. Porter emphasized that strategic positioning involves making deliberate choices about which activities to perform and how to configure them to deliver unique value. This can be achieved through cost leadership, differentiation, or focus strategies (as outlined in his “Generic Strategies” model).

Related Theorist: Michael Porter

In the evolving landscape of business strategy during the late 20th century, companies grappled with the challenge of standing out in increasingly competitive and globalized markets. It was in this context that Michael E. Porter, a Harvard Business School professor, introduced the powerful concept of strategic positioning—a pivotal shift from simply competing to truly differentiating.

Porter’s work drew upon microeconomics and industrial organization theory to analyze not just the structure of industries, but also how companies could outperform their rivals by making clear, deliberate choices about the value they create and how they deliver it differently than others. Prior to Porter, much of strategic thinking centered on participating in attractive industries and responding reactively to market pressures. Porter, however, reframed the discussion: firms should proactively define their position by deciding what unique combination of activities they would pursue—and, crucially, what they would not.

This insight led to the articulation of the now-classic “Generic Strategies” model: cost leadership, differentiation, and focus. Porter’s research revealed that companies seeking to occupy a strong, defensible competitive position should commit to one of these strategies. Firms that failed to do so—who tried to “straddle” between methods—often found themselves “stuck in the middle,” lacking a clear identity or advantage. His frameworks, such as the Value Chain and the Five Forces, provided analytical tools to guide these strategic choices, moving beyond intuition to systematic, evidence-based decision making.

Strategic positioning, as Porter defined it, is more than branding or marketing spin. It is about the underlying choices that shape a firm’s identity in the marketplace: the mix of products, the nature of customer relationships, and the configuration of activities that together create distinct value. Through this lens, competitive advantage is not a product of luck or circumstance, but of intentional differentiation and operational effectiveness.

This approach transformed management thinking and remains foundational for firms seeking sustainable success. Strategic positioning continues to inform how organizations choose where to compete and how to win—emphasizing that in a crowded world, clarity of purpose, distinctiveness, and the courage to make trade-offs are the bedrock of lasting advantage

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Quote:  Tom Davenport — Academic, consultant, author

Quote: Tom Davenport — Academic, consultant, author

“AI doesn’t replace strategic thinking—it accelerates it.” — Tom Davenport — Academic, consultant, author

Tom Davenport’s quote captures the essence of the relationship between human judgment and advances in artificial intelligence. Davenport, a leading authority on analytics and business process innovation, has spent decades studying how organizations make decisions and adopt new technologies.

As AI systems have rapidly evolved—from early rule-based approaches to today’s powerful generative models—their promise is often misunderstood. Some fear AI might make human thinking obsolete, especially in complex arenas like strategy. Davenport has consistently challenged this notion. He argues that AI’s true value lies in amplifying, not eliminating, the need for rigorous, creative, and forward-looking thought. AI is a tool that enables strategists to test more ideas, analyze larger datasets, and see farther into future possibilities—but it is strategic thinking, shaped by human experience and ambition, that guides AI toward meaningful goals.

Davenport’s perspective is grounded in his extensive work with businesses and his scholarship at leading universities. In his conversations and writings, he notes that while AI democratizes access to information and automates routine analysis, a competitive edge still hinges on asking the right questions and crafting distinctive strategies. The leaders who thrive in the AI era are those who learn to harness its speed and breadth, using it to accelerate the cycles of planning, validation, and innovation rather than replace the uniquely human qualities of insight and judgment.

About Tom Davenport

Tom Davenport, born in 1954, is an influential American academic, business consultant, and author. He specializes in analytics, business process innovation, and knowledge management. Davenport is well-known for his pioneering books such as Competing on Analytics and his widely-cited research on how organizations create value from data. Affiliated with prestigious institutions, he has helped shape how leaders think about information, technology, and business transformation.

Davenport’s views on AI are informed by years of advising Fortune 500 companies, conducting academic research, and contributing to thought leadership at the intersection of technology and management. His insights have been instrumental in helping organizations adapt to the changing landscape of digital innovation, emphasizing that technology serves best when paired with human creativity, analytical rigor, and strategic vision

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Quote:  Ginni Rometty, Former IBM CEO

Quote: Ginni Rometty, Former IBM CEO

“Artificial intelligence is not a strategy, but a means to rethink your strategy.” — Ginni Rometty, Former IBM CEO

Ginni Rometty’s statement, “Artificial intelligence is not a strategy, but a means to rethink your strategy,” emerged from her front-row vantage point in one of the era’s most significant technological transformations. As the first woman to serve as chairman, president, and CEO of IBM, Rometty’s nearly four-decade career at the company offers a compelling backdrop to her insight.

Her leadership at IBM began in 2012, at a time when the company confronted industry-wide disruption driven by the rise of cloud computing, big data, and artificial intelligence. Rometty recognized early on that AI—while transformative—was not a plug-and-play solution, but a set of tools that could empower organizations to fundamentally reshape their approaches to competition, operations, and growth. This realization guided IBM’s pivot toward cognitive computing, analytics, and cloud-based solutions during her tenure.

A defining episode during Rometty’s leadership was IBM’s acquisition of the open-source powerhouse Red Hat for $34 billion—a strategic move to anchor IBM’s transition into the cloud era and enable clients to rethink how they deliver value in increasingly digital markets. Throughout these changes, Rometty was adamant: adopting technologies like AI is not an end in itself but a catalyst for critically reexamining and reinventing business strategies.

The quote distills her conviction that simply acquiring cutting-edge technology is not sufficient. Instead, success depends on leaders’ willingness to challenge old assumptions and design new strategies that fully leverage the potential of AI. Rometty’s perspective, forged by navigating IBM through turbulent shifts, underscores the necessity of using innovation to reimagine, not merely digitize, the future of enterprise.

About Ginni Rometty

Ginni Rometty, born in 1957, joined IBM as a systems engineer in 1981 and steadily advanced through key leadership roles—culminating in her appointment as CEO from 2012 to 2020. During her tenure, she spearheaded bold decisions: negotiating the purchase of PricewaterhouseCoopers’ IT consulting business in 2002, prioritizing investments in cloud, analytics, and cognitive computing, and repositioning IBM for the demands and opportunities of the modern digital landscape.

Her leadership style and vision earned her recognition among Bloomberg’s 50 Most Influential People in the World, Fortune’s “50 Most Powerful Women in Business,” and Forbes’ Top 50 Women in Tech. While her tenure included periods of financial challenge and criticism over IBM’s performance, Rometty’s overarching legacy is her focus on transformation—seeing technology as a lever for reinventing strategy, not merely executing it.

This context enriches the meaning of her quote, highlighting its origins in both lived experience and hard-won leadership insight.

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Quote:  Andrew Ng, AI guru

Quote: Andrew Ng, AI guru

“In the age of AI, strategy is no longer just about where to play; it’s about how to adapt.” — Andrew Ng, AI guru

This quote from Andrew Ng captures a profound shift in how organizations and leaders must approach strategy in the era of artificial intelligence. Traditionally, strategic planning has focused on identifying the right markets, customers, or products—the “where to play” aspect. However, as AI rapidly transforms industries, Ng argues that the ability to adapt to ongoing technological changes has become just as crucial, if not more so.

The background for this perspective stems from Ng’s deep involvement in the practical deployment of AI at scale. With advances in machine learning and automation, the competitive landscape is continuously evolving. It is no longer enough to set a single strategic direction; leaders need to develop organizational agility to embrace new technologies and iterate their models, processes, and offerings in response to rapid change. Ng’s message emphasizes that AI is not a static tool, but a disruptive force that requires companies to rethink how they respond to uncertainty and opportunity. This shift from fixed planning to adaptive learning mirrors the very nature of AI systems themselves, which are designed to learn, update, and improve over time.

Ng’s insight also reflects his broader view that AI should be used to automate routine tasks, freeing up human talent to focus on creative, strategic, and adaptive functions. As such, the modern strategic imperative is about continually repositioning and reinventing—not just staking out a position and defending it.

About Andrew Ng

Andrew Ng is one of the world’s most influential figures in artificial intelligence and machine learning. Born in 1976, he is a British-American computer scientist and technology entrepreneur. Ng co-founded Google Brain, where he played a pivotal role in advancing deep learning research, and later served as Chief Scientist at Baidu, leading a large AI group. He is also a prominent educator, co-founding Coursera and creating widely popular online courses that have democratized access to AI knowledge for millions worldwide.

Ng has consistently advocated for practical, human-centered adoption of AI. He introduced the widely referenced idea that “AI is the new electricity,” underscoring its foundational and transformative impact across industries. He has influenced both startups and established enterprises through initiatives such as Landing AI and the AI Fund, which focus on applying AI to real-world problems and fostering AI entrepreneurship.

Andrew Ng is known for his clear communication and balanced perspective on the opportunities and challenges of AI. Recognized globally for his contributions, he has been named among Time magazine’s 100 Most Influential People and continues to shape the trajectory of AI through his research, teaching, and thought leadership. His work encourages businesses and individuals alike to not only adopt AI technologies, but to cultivate the adaptability and critical thinking needed to thrive in an age of constant change.

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Quote: Daniel Kahneman, Nobel Laureate

Quote: Daniel Kahneman, Nobel Laureate

“AI is great at multitasking: it can misunderstand five tasks at once.” — Daniel Kahneman, Nobel Laureate

This wry observation from Daniel Kahneman highlights the persistent gap between expectation and reality in the deployment of artificial intelligence. As AI systems increasingly promise to perform multiple complex tasks—ranging from analyzing data and interpreting language to making recommendations—there remains a tendency to overestimate their capacity for genuine understanding. Kahneman’s quote playfully underscores how, far from being infallible, AI can compound misunderstandings when juggling several challenges simultaneously.

The context for this insight is rooted in Kahneman’s lifelong exploration of the limits of decision-making—first in humans, and, by extension, in the systems designed to emulate or augment human judgment. AI’s appeal often stems from its speed and apparent ability to handle many tasks at once. However, as with human cognition, multitasking can amplify errors if the underlying comprehension is lacking or the input data is ambiguous. Kahneman’s expertise in uncovering the predictable errors and cognitive biases that affect human reasoning makes his skepticism toward AI’s supposed multitasking prowess particularly telling. The remark serves as a reminder to remain critical and measured in evaluating AI’s true capabilities, especially in contexts where precision and nuance are essential.

About Daniel Kahneman

Daniel Kahneman (1934–2024) was an Israeli-American psychologist whose groundbreaking work revolutionized the understanding of human judgment, decision-making, and the psychology of risk. Awarded the 2002 Nobel Memorial Prize in Economic Sciences, he was recognized “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty”.

Together with collaborator Amos Tversky, Kahneman identified a series of cognitive heuristics and biases—systematic errors in thinking that affect the way people judge probabilities and make decisions. Their work led to the development of prospect theory, which challenged the traditional economic view that humans are rational actors, and established the foundation of behavioral economics.

Kahneman’s research illuminated how individuals routinely overgeneralize from small samples, fall prey to stereotyping, and exhibit overconfidence—even when handling simple probabilities. His influential book, Thinking, Fast and Slow, distilled decades of research into a compelling narrative about how the mind works, the pitfalls of intuition, and the enduring role of error in human reasoning.

In his later years, Kahneman continued to comment on the limitations of decision-making processes, increasingly turning his attention to how these limits inform the development and evaluation of artificial intelligence. His characteristic blend of humor and rigor, as exemplified in the quoted observation about AI multitasking, continues to inspire thoughtful scrutiny of technology and its role in society.

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