Customer Reviews

Failsafe Strategies: Profit and Grow from Risks that Others Avoid

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As Arthur Anton, President/CEO, Swagelok succintly put it "Chatterjee helps you take a fresh look at your company's current business model and gives you a roadmap to implement change to align your everyday operations and long-term strategic planning. This book is a must-read for anyone involved in operations and trying to grow a business." This book sets the foundation for creative ways to leverage existing resources more effectively and mitigate risks.

Academics and practitioners spent years developing frameworks for competitive and industry analysis among many others. One important piece of strategy has been missing - it's risk. Sayan Chatterjee provides readers with an excellent framework that links other common strategy analysis frameworks with risk. The strength of the book is a solid outline of subjects and questions to improve your thinking about risk as a function of strategy. This should help you to be a step ahead of the competition, leveraging the "other" strategic options that are typically not considered by classic strategy options. In highly-competitive, commodity businesses, that's usually what strategies focus on.

It is your responsibility, as a business owner or senior manager, to lead your company into the future by identifying and seizing possibilities. Failsafe Strategy helps you understand the risk factor within a market place and the strategic steps a company can take to enhance its competitive position. This is a must have book on strategy.

Winning through failure is possible if you have the right strategy. This book will help you to formulate such strategy. It will enable you to think differently about risk and failure, how to overcome and use them as opportunities. Examples given in this book are very practical, easy to understand and immensely interesting. Every one can learn something from this book regardless of his/her background.
Excellent book. MAKES YOU THINK! I enjoy reading it very much. Most of you will.

This is not a book that simply describes other successful strategies. This book tells you how to develop your own strategy from ground up and anticipate what can go wrong during execution. This allows you to not rely on execution but design a strategy for executability. Great methodology!

Let's not kid ourselves. There's no such thing as a 'failsafe strategy'-except, perhaps, in management utopia. Every strategy, big or small, and no matter how well thought out, runs the risk of tripping over some stumbling-block (Murphy didn't get so famous for nothing). So why is Chatterjee, a professor of Management Policy at Case Western's Weatherhead School of Management, promising the impossible? Well, as it turns out, he isn't. Chatterjee's premise is simple: in a bid to avoid risks, companies often miss out on high-return opportunities. But there are ways to analyse and understand risks, and come up with strategies that, so to speak, skirt the risks and yet deliver value.

First, "conceptualise multiple business models that can exploit the same opportunity." He calls this framework "outcome-to-objective", which juxtaposes the company's current capabilities with its strategic objective. Chatterjee takes the reader through a detailed approach to building a low-risk strategy. He uses several case studies, but is honest enough to admit that these weren't developed using any of his theories. Instead, these can be used as "exercises" to help "re-create these strategies" with the methodology.

The final chapter, on developing multiple routes to reach the strategic goal, is interesting. Here, Chatterjee details three different "migration paths" a company could adopt. The first, "become the Kingmaker", is about how companies that aren't yet market leaders can embed themselves with the dominant player in such a way that they become the driving force in the leader's success. The second, "frontal assault", is about taking on the incumbent head on with a better product. And the third, interestingly called "hide your weakness", urges companies to keep working on their weakness till the time is opportune to take on the market leader.

So should you read this book? Yes, if your business is getting increasingly complex and risky. After all, as Chatterjee says, risk is fundamental to doing business. But you needn't let it overwhelm you.

Is anything truly "failsafe" these days? No, but giving Chatterjee some poetic license, at least in terms of expounding on theories, strategies can certainly be made safer. That's the author's goal, and he brings in 15 years of research in his capacity as a professor of management policy at the Weatherhead School of Management at case Western Reserve University.

A basic theme in this direct and readable book (for an academic, the author's' prose is remarkably free of cant or jargon) is that to reduce risk, you need clarity about where the risks are, and create choices or options in tackling those risks. These can be present in the design of the strategy - which can predispose it to failure - or during execution, Chatterjee notes, adding that during design, companies often miss out on strategies that can avoid or minimize capability risks.

Chatterjee sagely notes that too often, "after the fact" academic analysis of successful business strategies don't adequately convey the reality of how they were developed. He presents a host of short, accessible examples, tied to his points, involving such companies as Bank One, Sony, JetBlue and Continental Airlines, Cisco Systems, FedEx Corp., and many more. Failsafe Strategies is a thoughtful and useful addition to the growing literature on risk.

This is a great book on strategy and innovation... of products, services, and your entire company. Bottom line: Buy this book. Not only can you immediately implement the tools described, but it will also serve as an excellent reference tool. It is well worth the time invested to read it. Consider it a[n]... option on your career with limitless upside.

There are many actionable checklists, as well as excellent case studies and comments. Lots of footnotes and a well-developed bibliography.

Minutes after you buy this book you could use their checklists to improve your product and service offerings.

Most highly recommended.

I bought this book on the advice from a friend and was pleasantly surprised. As a founder/CEO of one of the largest software outsourcing company in Chisinau, Republic of Moldova, I found the book to be a great combination of well-researched information and street-smart insights on strategy. In a book category dominated by jargon and fads, it is refreshing to find a business text that dispenses wisdom and useful analysis in a manner that reflects today's real business issues and competitive concern. A "Must Have" book for anyone chartered with the task of developing pre-emptive strategies in the frenzied and fast paced business markets.

In summary, this is a readable, practical, useful, and insightful book - you will not get tired of it. Clearly 5 Stars!

If an organization becomes successful, it avoids the very risks it took on that led it to success. If a successful organization decides to make serious changes, it needs to have great skill in assessing, managing, and measuring risk and its effects as those changes are planned and executed or they risk damaging or destroying their organization. When an organization is in trouble, too often the reaction is to do something - anything - because the building is on fire. So, they end up jumping from the fortieth floor onto the pavement of marketplace oblivion.

"Failsafe Strategies" offers some very helpful methods of understanding how to view risk as an avenue to growth and success rather than an unknowable danger to avoid. Prof. Chatterjee provides not only case studies, but also analysis of what the companies did well and what they did poorly in their attempts to take on strategic risk.

He daringly takes on Enron at the end. Popular notion has that company as a fraud from beginning to end. In fact, the author states, it was very successful at trading natural gas, but its desire for growth led it into businesses it did not understand well and ended up using accounting fraud to mask its failures.

As an entrepreneur, I live in a world of risks all the time. This book provided me with a couple of insights and models I will use. One of my problems with case study analyses, however, is that they are often simplistic in their statement of what caused what and what flowed from where. For example, I found the assessment of why IBM failed with OS/2 and Microsoft won with Windows lacking because it did not fully explore the operating contracts that Microsoft forced on PC manufacturers that were later abandoned under pressure from the courts.

There are also a few strange typos that should have been caught in editing. On page 48 in a nice discussion on JetBlue, the text states that their CASM (cost per air service mile) is an industry low of $6.43. Hmmmm, it really should have been $0.0643 or 6.43 cents per air service mile. If it were dollars, they would have been out of business nearly immediately. Also, the text praises JetBlue's new fleet and its effects on their costs, yet it ignores the reality of accounting effects that a new airline uses to their benefit, but how they come to bite them in a few years. How is JetBlue going to manage that?

Another typo was on page 59 in discussing the very real cost advantages of Sony Playstation using CDs instead of Nintendo's expensive cartridges. The book states that the blank CDs were $5 - $10 each for blanks. That is an impossibly high price for the cost of an individual blank CD unless they are somehow made to unique specifications (which would negate the reason for using them). Probably the cost should have been $0.50 to $1.00 for blanks even in the early days of Playstation.

Terrific subject and a pretty good book. I think the author provides good observations and helpful analyses. The book could have benefited from a bit of tightening of focus in the presentation of its points and certainly the typos should have been caught. They undermine the confidence of the reader in the book.

“This book develops a set of concepts that allow you to design business models where the risk can be reduced to practical proportions. The risks in any business come from not knowing the demand, threat from competition, and not having the appropriate capabilities. The basic theme repeated over and over again is that to reduce risk, you need to have clarity regarding where the risks are and create choice, or options, in tackling those risks. We use numerous examples of business strategies to illustrate the concepts. But more to the point, the concepts developed in this book enable you to quickly visualize successful strategies as well as avoid the common pitfalls. However, by no means are we claiming that the strategies we use as examples were developed using our frameworks. We are very aware of academic ‘after the fact’ analysis of famous strategies that in no way portrays the reality of how those strategies were developed. Notable examples are Honda, Wal-Mart, and Southwest. This is where our book differs. Rather than looking backward to try to understand these famous strategies, which is often the case with academic analysis, we use these examples as ‘exercises’ to help you re-create these strategies using our framework and methodology – a process that should help you internalize our concepts faster (from the Introduction).”

In this context, Sayan Chatterjee divides this excellent book into two broad sections-ten chapters and an Appendix. He briefly summarizes each of them as following:

I. THE FIRST SECTION develops concepts that allow a firm to clearly understand the nature of the risks in a given business.

1. In the first chapter, we explore the choice dimensions when designing a strategy – how to identify multiple business models. By identifying multiple business models, you will be able to minimize competitive risks by essentially changing the rules of the game.

2. This brings us to the final concept, which you will explore further in Chapter 2. Even if you manage to reduce competitive risks by identifying a competitive logic that is distinctly different from competitors, you are still vulnerable to capability risks.

3. In Chapter 3, we revisit the choice dimensions that allows you to consider different capability configurations that can deliver the same core objectives without making the mistakes made by Continental CALite. This will help you understand how elements of a successful strategy from one business can be applied to just about any business without undue capability risks.

4. In Chapter 4, we will review the different options to reduce capability risks that we have seen so far with some more examples. These options are using an existing or off-the-shelf capability and investment in capabilities that affect part of the value chain, sometimes in order to outsource the risky capabilities. Thus Lilly, Cisco, FedEx Custom Critical, and Sony PlayStation have outsourced the critical parts of their value chains contrary to conventional wisdom.

5. In Chapter 5, you will consider some techniques for reducing capability risks at the operational level.

6. In Chapter 6, we describe the characteristics of organizations that are the best suited to benefit from the types of frameworks described in this book.

II. THE SECOND SECTION expands the framework developed in the first section to growth and diversification strategies.

7. In Chapter 7, we look at generic strategies for adapting to a market.

8. In Chapter 8, you will consider entry strategies based on low price. You also will consider the market characteristics that reduce the risks of such a strategy. In particular, you examine one of the foremost proponents of the low-price strategies, Dell Computer, and how it has leveraged its low-cost operations into many markets by under pricing incumbents. Firms contemplating a low-price entry strategy can learn some important lessons from Dell.

9. In Chapter 9, you will look at the risk factors in shaping a market from scratch. These strategies take a long time to come to fruition, involve much bigger bets, and are inherently more risky. The strategies are usually also the most profitable and most long-lasting.

10. In Chapter 10, you look at managing these risks in a more dynamic context. You will see how to identify choices not only when designing a strategy, but how to keep the options open and defer commitments. By keeping options open, you will be able to commit resources when you have the best understanding of the risks.

III. THE APPENDIX presents a detailed analysis of the rise and fall of Enron using the risk management lens.

Finally, S. Chatterjee says that “Most management books use examples of past successes and failures to justify their frameworks. Of course, this is necessary, and we have also done that to a large extent. However, we have also gone out on a limb and made predictions about the strategies of the best companies in the world. Some of these predictions are not favorable, but if we believe in our frameworks, the true test will have to come in their predictive ability and not by looking in the rearview mirror. Imagine if someone had predicted Enron’s problems in 1999!”

Strongly recommended.