Strategy dynamics frameworks capture, quantitatively, the interactions between improved functionality, pricing, marketing, as wellas those amongst different groups of customers. Much of this integrates long-established principles, such as experience-curve-driven falls in unit cost, technology-diffusion models, and the complementary effect of multiple competitors driving the industry dynamic.

One key feature of this is that word-of-mouth effects may well be way less important than threshold effects in driving the take-off tipping point. [Note that a continued percentage growth rate does not constitute a tipping point, even if they mean sales growth goes from 10 to 100 to 1000 to 10,000 units in successive periods].

Does this distinction actually matter to strategic business management? Well, if you think your market’s dynamic is driven by one mechanism when it’s actually driven by something quite different, you will likely do entirely the wrong things to encourage and exploit it, so I guess it does.

This is explained in Chapter 6 of Strategic Management Dynamics. The following figure shows the kind of dynamic that results from this kind of analysis – note the specifics re scale and timing of the development. Right-click and ‘save target as’ to get the image out so you can see it full-scale.

This is an intrisically unsustainable activity, but the headline reminds me of some discussions with the David Bent of Forum for the Future, which is working hard to help businesses ‘make the case’ for including sustainability in their strategies and investment. FftF takes a broad view of this, based on its ‘Five Capitals’ model, which covers what it describes as Natural, Human, Social, Manufactured and Financial ‘capitals’.

To include this in an organisation’s strategic business management, the strategy dynamics approach would treat these just as any other accumulating asset-stocks, making the model considerably more usable and amenable to forming the foundation of any business case. The key structure as regards environmental sustainability is the three-stock chain from [a] natural resources, to [b] manufactured goods, to [c] waste. The chain can work in two ways.

• For ‘consumables’ like oil the natural resource is depleted and moves straight to an accumulation of waste.
• For ‘durables’ like metals the natural resource is converted into manufactured goods and then into waste.

The distinction is not absolute, since some items are durable for such a short time [e.g. clothing] that on the time-scale of sustainability issues they are effectively consumable. The value of the structure is the clarity it brings to the key movements in the system – as in all policy and strategy issues, it’s the flow-rates that are critical, i.e. tons per year moving forward and back between these three states.

It’s pretty easy to build on this core model of the environmental system of which a business is a part to work out how changes in strategy might make its activity more sustainability-compliant [if not totally so] and deliver investor benefits.

Remember, though, that sound strategic business management requires keeping control of capabilities critical to competitive advantage .. we just need to be clear what those are!