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If you're having a crisis of confidence about your business strategy right now, that's probably a good thing. The “new” economy has had a profound effect on the nature of business strat‐egy because it has changed the sources of sustainable above‐average returns. Michael Porter, a leading strategy thinker, characterizes the change as a movement from trying to be “better than” your competition to being “different” so that you can provide “unique value.”

A good strategy has a clear strategic bet, one that you can articulate so that everyone understands.

In the new knowledge economy, intellectual property has become an important strategic issue. However, in many firms, the management of intellectual property (IP) is still divorced from business strategy. People still think that “managing IP strategically” means having an IP strategy rather than managing IP according to business strategy. We argue that intellectual property is strategic only to the extent that it links to the firm’s core capabilities and that not all intellectual property is core to business strategy. We present a model for identifying the function of intellectual property in a firm’s business strategy and present specific recommendations for protecting, valuing and generating IP from a strategic point of view.

This chapter examines the linkage between strategy and ethics in business.

We examine the implicit assumptions underlying the “business‐as‐war” versus the “business as value creation” models of business strategy. Drawing on the work of sociologists, we lay out the consequences those implicit assumptions have on the conduct of business.

We find that the “business‐as‐war” mindset sees corporations as sovereign states engaged in battle against other sovereign states, while the “value creation” mindset sees corporations as institutions engaged in an ongoing journey toward realizing potential, both in terms of capability and service. We further show how these two mindsets evoke different moral systems – a “guardian syndrome” for the “business‐as‐war” mindset and a “commercial syndrome” for the “value creation” mindset. Since both mindsets represent legitimate, though divergent moralities, we conclude that the recent crises in American business do not reflect the lack of morality or ethics. Rather, they reflect an application of an inappropriate morality/ethic dictated by the wrong model of business strategy.

This chapter serves executives by advocating a strategic mindset that that is more conducive to ethical business activity, and at the same time, is better suited to meeting the profit imperative and pressure from Wall Street. This chapter serves policy makers by showing that ethical reforms are unlikely to be effective if they simply add stiffer penalties without “changing the game” that executives are playing.