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The purpose of this paper is to provide an interview with Rita Gunther McGrath, Columbia Business School Professor, and author of The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business.

The paper takes the form of an interview.

In the following interview, Rita Gunther McGrath discusses the demise of traditional strategy practices, proposing a more flexible approach in response to the volatile environment in which we live.

McGrath signals the end of sustainable competitive advantage, suggesting that businesses must organize for the “waves of transient advantage” that are now commonplace.

The purpose of this article is to provide an interview with innovation guru Rita Gunther McGrath. In this interview, McGrath offers her own perspective on the new competitive landscape, which she refers to as the “transient advantage economy,” and she sets out to help strategists more fully understand its implications and better navigate its major challenges.

In a world where strategy development itself needs to become more and more a process of innovation and discovery, few are better qualified to offer deep insight and practical help. McGrath is a Professor at Columbia Business School and a globally renowned expert on strategy in uncertain environments.

The “transient‐advantage economy,” that promises to leave few if any businesses unaffected, calls for an entirely new strategy playbook.

Deeply ingrained structures and systems designed to extract maximum value from a competitive advantage become a liability when the environment requires instead the capacity to surf through waves of short‐lived opportunities.

From the way we handle innovation, to resource allocation, to change, to the leadership mind‐set and even the management of individual careers, the transient advantage economy calls for a radical rethinking of how we create strategies and manage organizations.

The article introduces the authors’ “ Imagination Premium™” metric which assesses the confidence of the investing community in a business’ growth strategy.

The article explains how the Imagination Premium is calculated and applies it to several cases--Amazon, Tesla and Buffalo Wild Wings.

Amazon’s implied value of growth was nearly four times its value from operations, a result completely consistent with its “profits are optional” motto. Amazon is a prototypical example of a company that is built to thrive in the ‘transient advantage economy.

Sky-high expectations for growth can be dashed by external events over which businesses have little control as Tesla found out. Unless a business can show, as Amazon has historically done, that it can turn expectations into gold-spun reality, lofty investor expectations can become a liability.

By applying the Imagination Premium concept to successful and problematic cases the authors illustrate the risks and advantages of a bold growth-before-profits strategy.

The authors offer a new metric for assessing a company's potential for growth that CEO's and leadership teams can actively manage.

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.

For a CEO, TIP provides support for an argument that investments in future growth are well warranted.

A negative TIP signals that investors will not even pay for the capitalized value of current cash flow and this usually leads to activist investors, hostile acquisition threats and C-suite turnover.

The article shows executives how to drive the premium investors will pay for corporate growth initiatives. One of the first things strategists can do to manage their company's TIP is a portfolio analysis that looks at how uncertain each current investment is, and whether the whole portfolio is one growth investors will reward with an increased TIP.

The reality of organizing new growth ventures is that every place to locate them in the organization has pros and cons.

Using a set of seven archetypes, executives can figure out which location solution fits the initiative and the parent company best.

Organizations pursuing ventures have a choice of how much separation/distance to insert between ongoing operations and the new business.

The “right” place to locate a venture also depends on such factors as the situation of the parent organization, the level of innovation maturity the parent organization has and the form and functions of the venture.

One of the most critical decisions that executives need to make as they contemplate getting started with setting up an innovation/growth function within their organizations is where, organizationally, it belongs. Seven alternatives are analyzed.

In this Masterclass Prof Leavy considers some game changing advice about how to manage the fundamental challenges of the spread of hyper-competition and speed at which knowledge advantages now typically erode. His intent is to advance the dialogue among the corporate strategy, innovation, leadership and entrepreneurship functions.

The concepts and tools of three new books are studied closely: in The End of Competitive Advantage, strategy and innovation guru Rita Gunther McGrath offers a strategy playbook for what she calls the new “transient advantage economy; in Accelerate, change leadership researcher, John Kotter, makes the case for developing a new “strategy operating system” to run in tandem with the traditional “performance operating system,” so that renewal can become continuous rather than episodic; and in The Good Struggle, leadership and ethics expert, Joseph Badarraco turns to five enduring questions of responsible leadership and looks for the emerging answers that might offer the most valuable guidance to leaders now having to operate in today’s recombinant environment.

The perspectives provided can help leaders raise the odds of working successfully and responsibly in the exciting, uncertain, recombinant, market-driven world that now surrounds us all.

Clearly, not only do companies have to be become ever more adaptable, but ever more innovative. Lessons in how to do so are offered and exemplars are examined.

The article looks at three management compentencies-strategy making, organization building and enlightened leadership – in the context of the disruptive, hypercompetitive environment of transient advantage.

In the current recession, cost cutting alone will not enable companies to survive the recession and thrive beyond it. Companies need fresh ideas on how to continue their internal corporate venturing activities, but at lower cost and reduced exposure to risk. This paper aims to investigate this issue.

To provide corporate leaders with guidance on best practices for managing growth ventures, Strategy & Leadership interviewed internationally recognized authority, Rita G. McGrath, co‐author of Discovery‐driven Growth.

McGrath offers many tips and insights – from how to address customers' needs to building an organization capable of routinely producing discovery‐driven growth.

Companies want to be extracting resources from flat, slow‐growth or increasingly irrelevant lines of business in order to redirect them toward more valuable, higher‐growth and higher potential areas. Growth ventures can help companies identify where the future resources should go, as well as create a culture of constant investment in the future.

McGrath discusses important tools and techniques she and her colleagues have developed for assessing and managing discovery‐driven growth projects.

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.

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 percent a year for ten years in a row. These ten “outliers” have out-performed competitors while adapting to rapidly changing market forces.

Organizations that have mastered transient-advantage environments have learned to continually free up resources from old advantages in order to fund the development of new ones. Additionally, innovation is continuous, mainstream and part of everyone's job.

The 5,000 companies analyzed included every publicly traded firm on any stock exchange with a market capitalization of over $1 billion. The article studies the practices of the ten most successful over ten years.

The most successful firms, over the entire study period, had no dramatic downsizings, restructurings or sell-offs.

The author found that the key leadership and management challenge is maintaining an organizational system that can manage the complementary forces of innovation and stability.