ENHANCING SMART GROWTH BY COMPETITIVE ADAPTABILITY For any smart urban system adopting the SmartBalances approach, a city’s value-growth enhancement could be driven by a its unique capabilities to 1) manage competitive conditions based on its agile managerial flexibility, 2) promote external adaptability through its decisional latitude, and 3) exploit creative disequilibria to better deal or cope with frequent systemic disturbances. 1) Managing Competitive Conditions Michael E. Porter (1980) describes how a firm’s future strategic choices can lead to its unique competitive advantage based on its current position amid the five external forces: 1) strengths and weaknesses vis-à-vis its direct competitors within the same industry, 2) bargaining power over its upstream suppliers, 3) bargaining power over its downstream customers, 4) opportunities and threats from new challengers, and 5) opportunities and threats from substitute products or services. The resultant generic competitive strategies include 1) price-based advantage from economies of scale, 2) quality-based advantage from economies of scope, and 3) segment-based advantage from commanding underserved markets. Nevertheless, such a competitive-strategy model assumes that the firm reacts to the industrial structures that are stably dynamic (less frequent changes) and market conditions that are relatively predictable (few sudden changes). When either the industrial structures or the market conditions are neither stable nor predictable, the firm’s optimal strategic positions would never be sustainable. An ideal way to make a city competitive is to change the conditions underlying any one of those five external forces in the city’s favor so that its strategic position on the value chain remains dynamically advantageous at all times. For an existing city with rigid structures or restrictive conditions, the induced changes would be either very costly or strategically ineffectual. For a newly built city, however, some crucial conditions can be managed to influence such external forces thereby changing its strategic position to achieve it competitive advantages. The role of the public-planner cluster would then be highly important in this competitive-condition management exercise as it could selectively change the bargaining powers of some upstream or downstream participants as well as manipulate the participants’ entry or exit barriers through legal and regulatory modifications (i.e., deregulation and reregulation). 2) Promoting External Adaptability The Reform and Opening-up Policy of China that was first implemented in 1978 is a good example of how a country is prepared to embrace dynamic forces from both domestic and international sources and learn how to adapt towards them accordingly (strategically and competitively). Unlike the ideal way to manage the competitive conditions in favor of the city mentioned above, the way to promote adaptability such as managerial and decisional latitudes to deal or cope with external changes seems to be a more practical approach. If proactively managing competitive conditions were akin to the “first-mover advantage,” concurrently promoting external adaptability should have been considered as the “co-mover advantage” rather than being treated as the “second-mover advantage” in which generic competitive strategies are reactive towards the five external forces prescribed by Porter. The key for an urban system to become externally adaptive is to know how to deal with frequent disequilibria so that all of its value clusters are able to either exploit any external imbalance as it occurs to enhance its value growth or avoid committing any strategic error that could potentially slow the growth down. Sensitivity, scenario, simulation, and stress-testing analyses are among the proven strategic exercises that the public-planner cluster should regularly perform, just like what all aviators and pilots are required to train in the simulators before flying their real airplanes. 3) Exploiting Creative Disequilibria In spite of the differences in their approaches, both managing competitive conditions and promoting external adaptability are not mutually exclusive; they could be, and should be, combined for a purpose to smartly enhance value growth for an urban setting. The tasks of managing competitive conditions should fall upon the public-planner cluster while those of promoting external adaptability should be assumed by the private-business cluster, with the passive-resident and active-workforce clusters being the ones whose attitude, behavior, culture, and decisions (ABCD) would be altered along with structural changes and external shifts. A disequilibrium that happens in the urban system should be more welcome than rejected as there always exist opportunities for improvement and growth from a current status quo. Fear of losses or frustration about risks could be lessened when all plans to manage competitive conditions, promote external adaptability, and encourage ABCD changes have been clearly laid out into which all participants could contribute their creativity, and all courses of actions have been monitored and charged to those who are accountable. Take a demographical influx as an example, which undoubtedly results in different scenarios of disequilibrium. While an infrastructural project is expected to handle, say, double the population density on the city’s current level, the challenges lie in how each disequilibrium scenario could be exploited in such a way that the infrastructural utilization is still optimized and the incremental value derived from a migratory influx outweighs its costs and risks. This exercise necessitates constant data analyses performed on the interactions between predicted scenarios and creative strategies to exploit any ensuing opportunity or mitigating any emerging threat with the highest standards of strategic governance, managerial transparency, and decisional accountability.
Posted on: Sun, 21 Dec 2014 12:56:45 +0000
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