Rita Dorothea Gunther McGrath

• Ph.D., University of Pennsylvania
• Professor (Associate) at Columbia University

Purpose The authors offer a new metric for assessing a company's potential for growth that CEO's and leadership teams can actively manage. Design/methodology/approach The Imagination Premium metric reflects the value of a company's equity, beyond what can be readily explained by its ability to throw off cash. Findings For a CEO, TIP provides supp...

Russell Ackoff's iconoclastic journey through the scholarly world illustrates just how far ahead of his time he was, and how much we all still owe him. His influence was so fundamental that today we accept his once‐controversial ideas as taken for granted realities. Every time you try to grasp the complexities of an interdependent system, try to un...

Purpose The article introduces the authors’ “ Imagination Premium™” metric which assesses the confidence of the investing community in a business’ growth strategy. Design/methodology/approach The article explains how the Imagination Premium is calculated and applies it to several cases--Amazon, Tesla and Buffalo Wild Wings. Findings Amazon’s impl...

The Discovery-Driven Planning is a management tool for innovative projects and selection. Ian MacMillan and Rita Gunther McGrath are the authors of this methodology, published in 1995 in the Harvard Business Review . Since that, they worked on the opportunities and application in different cases, for different goals.

Ian C. MacMillan, originally from Africa, is a seminal figure in forging the contours of the present-day field of entrepreneurship. He was the first to empirically explore topics such as venture capital decision making; entrepreneurial networks; cultural influences on entrepreneurial behavior; and many issues in corporate venturing. Through the cre...

Purpose – The author identified a set of companies that have figured out how to cope, even to thrive, within the new transient advantage economy and explains how they did it. Design/methodology/approach – Her research team analyzed nearly 5,000 companies. Of that whole population, only ten companies were able to grow their net income by at least 5...

The article presents advice for businesses on how to achieve a sustainable competitive edge over rival businesses in the twenty-first century. It argues that traditional ideas regarding business strategy have become outdated and irrelevant as the focus on standard definitions of success have become less relevant. Topics include the need for corpora...

How do acquisitions of competitors by new entrants or by other existing competitors affect a firm's performance, and how should a firm respond to such competitive actions? Acquisition research argues that because acquisitions cause consolidation, which can lead to collusive synergies, acquisitions by rivals will lead to decreased competitive intens...

The risks that challenge new ventures fall into two categories: (a) execution and strategy risks arising from failures of the management team, and (b) risks arising from events beyond the control of the management team and not discernable by them at the time key decisions must be made. This paper concerns the latter, external events that emerge unb...

Business life has always featured the unpredictable, the surprising, and the unexpected. But in today's hyperconnected world, complexity is the norm. Systems that used to be separate are now intertwined and interdependent, and knowing the starting conditions is no guide to predicting outcomes; too many continuously changing interactive elements are...

It's hardly news that business leaders work in increasingly uncertain environments, where failures are bound to be more common than successes. Yet if you ask executives how well, on a scale of one to 10, their organizations learn from failure, you'll often get a sheepish "Two-or maybe three" in response. Such organizations are missing a big opportu...

Research on general market entry usually focuses on large enterprises. Often, however, small entrants can alter the competitive dynamics of an industry. This volume brings together the most prominent thought leaders and the best research on the asymmetric entrant-incumbent dynamics. The ideas presented offer a more nuanced perspective on how, when,...

In the beginning was the corporation. Or so it seems, as it is pointed out in the first chapter of this handbook. However, the “modern industrial corporation” is a relatively recent invention in historical terms. Chandler (1990) dates its emergence to the last-half of the nineteenth century, when advances in transportation and communications both e...

The business model concept offers strategists a fresh way to consider their options in uncertain, fast-moving and unpredictable environments. In contrast to conventional assumptions, recognizing that more new business models are both feasible and actionable than ever before is creating unprecedented opportunities for today's organizations. However,...

Our longitudinal study of the entire population of internal corporate ventures within a large European electronics manufacturer finds that the conventional focus in the corporate venturing literature to evaluate ventures based on business growth and financial performance may be misguided. Instead, we found that ventures are temporary conduits for c...

Two professors who have studied how leaders regain momentum in uncertain times suggest four ways to get your employees to face their fear, outrun hesitant competitors, and seize advantage.

Recessions are a good time to disengage from businesses and practices that are weak and under pressure. A discovery-driven approach would be favorable that emphasizes searching for the right answers and reducing the assumptions-to-knowledge ratio. There are three practices of keeping the core business relevant, initiating the renewal process, evalu...

Elizabeth Warren and Amelia Tyagi argue that consumer credit should be made as safe as any other product. Paul Collier and Jean-Louis Warnholz reveal an increasingly investment-friendly climate in sub-Saharan Africa. Amy J.C. Cuddy asserts that warmth and competence are not mutually exclusive. John Sviokla predicts a surge of peer-to-peer lending i...

The article presents an overview of the status of the discipline of management science. There are indications the field is thriving. Membership in the Academy of Management has nearly doubled from 1998-2007. Masters of Business Administration (MBA) degrees granted have more than tripled from 1975-2000, and books on management-related topics have en...

The high failure rate among new business ventures is usually chalked up to the fundamental uncertainty of the process. In actuality, say McGrath and Keil, flawed ways of assessing and managing ventures may account for the disappointing amount of value they generate. Instead of taking the go/no-go approach, whereby a project either advances toward l...

The purpose of this paper is to argue that the destiny of the firm is closely linked to the evolution of product class in the industry and show that product-class evolution is driven by the variation, retention and selection of dominant designs in the context of lumpy markets. The paper demonstrates that business strategy decisions cannot be undert...

Existing methodologies offer little help in selecting among uncertain technology investments. However, Discovery Driven Planning in conjunction with Real Options Discipline allows managers to make aggressive investments while maintaining fiduciary responsibility. Discovery Driven Planning provides an effective way to plan investments when there is...

If company leaders were granted a single wish, it would surely be for a reliable way to create new growth businesses. Business practitioners'overwhelming interest in this subject prompted the authors to conduct a three-year study of organizational growth--specifically, to find out which growth strategies were most successful. They discovered, somew...

Una empresa no puede ser mejor que sus rivales si compite del mismo modo que ellos. Rediseñe los impulsores del beneficio de su empresa y podrá dejar de imitar para convertirse en el rey de la selva. Construir un modelo mejor -- Estrategias para reinventar el mercado -- El lenguaje del crecimiento -- Una alineación rentable -- Ocho pasos hacia el c...

Success in technology development depends increasingly on speed to profitable commercialization. This calls for a new type of technology development management. As projects move from opportunity creation through market entry through commercial takeoff, the technology manager needs to perform nine integrative roles at three distinct levels: the vent...

Real options reasoning (ROR) is a conceptual approach to strategic investment that takes into account the value of preserving the right to make future choices under uncertain conditions. In this study, we explore firms' motivations to invest in a new option. We find, based on an analysis of a large sample of patents by firms active in the pharmaceu...

Four characterizations of options exist: (1) as a component of total firm value, (2) as specific projects, (3) as choices, and (4) as a heuristic for strategic investment. Option value exists when two conditions apply: future choices and potential for proprietary access to outcomes. Narrower boundary conditions are inconsistent with theory and inco...

Competition among multinationals these days is likely to be a three-dimensional game of global chess: The moves an organization makes in one market are designed to achieve goals in another in ways that aren't immediately apparent to its rivals. The authors--all management professors-call this approach "competing under strategic interdependence," or...

Uncertain, but promising, R&D projects should be treated as one of three types of real options, depending on their degree of technical and market uncertainty. Positioning options are designed to preserve a company's future right to compete in a highly uncertain technological arena. Scouting options are used to create information about customer need...

This book chapter explores how real options reasoningcan be systematically applied to a range of entrepreneurial problems as well asgenerating issues for research in entrepreneurship and strategy. Strategy andentrepreneurship researchers share a common interest in economic performanceand economic change. The lack of consensus for precise definition...

The transition from an economy based on materials to an economy based on flows of information has created considerable challenges for organization design by unfettering many organizational aspects from physical constraints. We view the resulting new organizational forms as coping with four core issues: interdependence, disembodiment, velocity, and...

When adaptation requires innovation, or the creation of variety, exploration is crucial. High levels of exploration thus imply variance-seeking rather than mean-seeking learning processes. In a study of 56 new business development projects, given high exploration, organizational learning was more effective when the projects operated with autonomy w...

OVERVIEW: Real options reasoning is a logic for funding projects that maximizes learning and access to upside opportunities while containing costs and downside risk. Although it has considerable advantages over conventional approaches, the tools for using it remain scarce. This article describes a method for assessing uncertain projects that approx...

Although failure in entrepreneurship is pervasive, theory often reflects an equally pervasive antifailure bias. Here, I use real options reasoning to develop a more balanced perspective on the role of entrepreneurial failure in wealth creation, which emphasizes managing uncertainty by pursuing high-variance outcomes but investing only if conditions...

Firms competing in multiple markets find equilibrium through spheres of influence and mutual forbearance, but imperfect competitive information may give one firm an incentive to influence rivals' behavior and uncover information. We suggest that a firm's resource allocations can divert competitors' resource allocations, enhancing the firm's own sph...

Dichotomies abound in conceptualizing complex phenomena such as globalization. Drawing on complexity theory and convergent patterns in other disciplines, we argue for abandonment of misleading dichotomies in favor of sustained dialectic. The dialectic view suggests limitations in often-used constructs in organization theory, such as fitness and det...

In this article I extend real options theory to technology positioning projects and specify how the relationship between boundary conditions and uncertainty influences the value of a technology option, as well as the appropriate timing of its exercise. I also take a strategic perspective on uncertainty itself, concluding that option value can be am...

Most profitable strategies are built on differentiation: offering customers something they value that competitors don't have. But most companies concentrate only on their products or services. In fact, a company can differentiate itself every point where it comes in contact with its customers--from the moment customers realize they need a product o...

This study investigates and demonstrates the mediating effect of job satisfaction between team deftness and team comprehension and the performance of 168 project teams involved in major innovation projects for their companies.The study demonstrates that there are at least three independent facets of job satisfaction: instrumental satisfaction with...

Despite the consistency with which the theoretical and normative connections between human resource management practices and firm-level performance outcomes are made, empirical studies that link the two are sparse. This paper presents results from a study of 319 business units that addresses this gap. Hypotheses are derived from a resource-based pe...

Four antecedents, it is argued, are necessary precursors for a firm to capture rents from innovation. The antecedents are causal understanding; innovation team proficiency; emergence and mobilization of new competences; and creation of competitive advantages, each of which are conceptually distinct and precisely defined in the paper. These construc...

New ventures represent opportunities to create or renew competitive advantages for established firms by expanding their pools of competences. In undertakings as uncertain as new ventures, however, disappointment is virtually inevitable. The implications of this conclusion are explored at both the strategic and the operational levels of the organiza...

In this paper, competence is defined in operational terms as the degree to which the firm or its subunits can reliably meet or exceed objectives. Two antecedents to competence (and thus competitive advantage) are then developed and defined. These are the ‘comprehension’ of the management team working on developing competence and the ‘deftness’ of t...

In this article, we argue that the resource-based perspective on strategy offers a useful basis for understanding the contributions to the firm of corporate ventures.The heart of the resource-based view of the firm lies in arguments set forth by Penrose and by Nelson and Winter. Penrose (1959) argued that differential mechanisms for resource combin...

Progress in the resource-based approach to strategy faces three obstacles: (1) lack of acceptable definitions and operationalization of key constructs, in particular of organizational competence; (2) lack of measures and (3) ill-specified relationships between constructs. Addressing these gaps motivates this research with respect to both the conseq...

Vast resources are expended to promote entrepreneurial activities. These efforts often simplistically transfer programs that have worked in one culture to a different culture, with disappointing results. This study begins to identify facets of culture that are enduring, and therefore likely to reject interventions, as well as those that are more li...

ABSTRACT : This paper looks at how well Finland performs in high growth entrepreneurship and uses data from the Global Entrepreneurship monitor to benchmark Finland against other European countries. It is found that Finland’s prevalence rate of high growth entrepreneurial activity lags significantly behind most of its European and all of its Scandi...

The professed objective of corporate venturing is generating new combinations of productive resources. Despite this, we continue to measure results in purely financial terms. An alternative, closer to the spirit with which corporate venturing is undertaken, is offered. It considers firm value, market value and competitive insulation in a multidimen...

Exxon Mobil and ConocoPhillips stock price has been predicted using the difference between core and headline CPI in the United States. Linear trends in the CPI difference allow accurate prediction of the prices at a five to ten-year horizon.

Triantis for useful comments on an earlier version of the paper. The usual disclaimer applies.