Eric J. Van den Steen

Associate Professor of Business Administration

Eric Van den Steen is an Associate Professor of Business Administration in the Strategy Unit. Professor Van den Steen's research studies the interaction between strategy and organization, and how both are shaped by managers' fundamental beliefs, vision, and potential strategic disagreements. His latest work focuses on the nature of strategy and of competitive advantage and how they interact with organization and leadership. He has also written on corporate culture, knowledge management, corporate governance, sources of managerial overoptimism, and the role of strategic disagreement in driving mergers and acquisitions.

Professor Van den Steen has taught the first-year Strategy course and developed the second-year elective Creating and Sustaining Competitive Advantage. In HBS executive education, he has taught in the Leadership Best Practices program and currently teaches the strategy component of the Program for Leadership Development.

Prior to joining the Business School, Professor Van den Steen was on the faculty of MIT's Sloan School of Management. He worked as a consultant, first at Arthur D. Little and later at McKinsey & Company, and holds a MS in Mechanical Engineering from the KULeuven (Belgium), an MBA from the University of Chicago, and a PhD from the Stanford Graduate School of Business.

Journal Articles

  1. Overconfidence by Bayesian Rational Agents

    This paper derives two mechanisms through which Bayesian-rational individuals with differing priors will tend to be relatively overconfident about their estimates and predictions, in the sense of overestimating the precision of these estimates. The intuition behind one mechanism is slightly ironic: in trying to update optimally, Bayesian agents overweight information of which they overestimate the precision and underweight in the opposite case. This causes overall an overestimation of the precision of the final estimate, which tends to increase as agents get more data.

    Keywords: Decision Choices and Conditions; Forecasting and Prediction; Knowledge Acquisition; Risk Management; Prejudice and Bias;

    Citation:

    Van den Steen, Eric J. "Overconfidence by Bayesian Rational Agents." Management Science 57, no. 5 (May 2011): 884–896. View Details
  2. On the Origin of Shared Beliefs (and Corporate Culture)

    This article shows how corporate culture, in the sense of shared beliefs and values, originates (often unintentionally) through screening, self-sorting, and manager-directed joint learning. It shows that such culture will be stronger among more important employees and in older and more successful firms where employees make important decisions and the manager has strong beliefs. It further shows how a manager's beliefs influence culture, how culture persists despite turnover, and why the suggested link between culture and performance may be a case of inverse causality. It finally shows that, from an outsider's perspective, organizations may tend to over-invest in corporate culture.

    Keywords: Organizational Culture; Learning; Values and Beliefs; Employees; Decisions; Power and Influence; Performance; Perspective;

    Citation:

    Van den Steen, Eric J. "On the Origin of Shared Beliefs (and Corporate Culture)." RAND Journal of Economics 41, no. 4 (winter 2010): 617–648. View Details
  3. Culture Clash: The Costs and Benefits of Homogeneity

    This paper develops an economic theory of the costs and benefits of corporate culture-in the sense of shared beliefs and values in order to study the effects of "culture clash" in mergers and acquisitions. I first use a simple analytical framework to show that shared beliefs lead to more delegation, less monitoring, higher utility (or satisfaction), higher execution effort (or motivation), faster coordination, less influence activities, and more communication, but also to less experimentation and less information collection. When two firms that are each internally homogenous but different from each other merge, the results translate to specific predictions on how the change in homogeneity will affect firm behavior. This paper's predictions can also serve more generally as a test for the theory of culture as shared beliefs.

    Keywords: Cost vs Benefits; Organizational Culture; Economics; Information Management; Forecasting and Prediction; Values and Beliefs; Mergers and Acquisitions; Framework; Satisfaction; Motivation and Incentives; Power and Influence; Communication;

    Citation:

    Van den Steen, Eric. "Culture Clash: The Costs and Benefits of Homogeneity." Management Science 56, no. 10 (October 2010): 1718–1738. View Details
  4. Interpersonal Authority in a Theory of the Firm

    This paper develops a theory of the firm in which a firm's centralized asset ownership and low-powered incentives give the manager, as an equilibrium outcome, interpersonal authority over employees (in a world with open disagreement). The paper thus provides micro-foundations for the idea that bringing a project inside the firm gives the manager control over that project, while explaining concentrated asset ownership, low-powered incentives, and centralized authority as typical characteristics of firms. The paper also leads to new perspectives on the firm as a legal entity and on the relationship between the Knightian and Coasian views of the firm. (JEL L22, D23, D81)

    Keywords: Theory; Assets; Ownership; Motivation and Incentives; Governance Controls; Power and Influence; Projects; Perspective; Employees;

    Citation:

    Van den Steen, Eric J. "Interpersonal Authority in a Theory of the Firm." American Economic Review 100, no. 1 (March 2010): 466–490. View Details
  5. Managing Know-How

    We study how firms can use a knowledge management system to optimally leverage employee-generated know-how. In particular, we consider the following practical strategic questions for the manager of a knowledge-intensive firm: should her firm develop a formal knowledge system? And if so, how should it be managed, particularly in terms of what information to record? We find that firms benefit more from a knowledge system when they are larger, face the same issues more frequently, have higher turnover, and face problems about which there is less general knowledge. In terms of what information to record, a key insight is that recording moderately successful practices can be counter-productive, since doing so may inefficiently reduce employees' incentives to experiment. This "strong-form competency trap" forces firms into an exploration-exploitation trade-off. Firms that value a knowledge system most should also be most selective in recording information. We further find that recording successes is more valuable than recording failures, which supports firms' focus on best practice. Beyond these main principles, we also show that it may be optimal to disseminate know-how on a plant-level but not on a firm-level, and that recording back-up solutions is most valuable at medium levels of environmental change.

    Keywords: Change; Employees; Information; Knowledge Management; Outcome or Result; Practice; Problems and Challenges; Motivation and Incentives; System; Value;

    Citation:

    Lee, Deishin, and Eric J. Van den Steen. "Managing Know-How." Management Science 56, no. 2 (February 2010): 270–285. (Articles in Advance published online on November 25, 2009.) View Details
  6. Disagreement and the Allocation of Control

    This article studies the allocation of control when there is disagreement—in the sense of differing priors—about the right course of action. People then value control rights since they believe that their decisions are better than those of others. More disagreement (due to, e.g., fundamental uncertainty) increases the value that players attach to control. The article shows that all income and control of a project should then be concentrated in one hand: income rights should go more to people with more control since such people value income higher (because they have a higher opinion of the decisions made); control rights should go more to people with more income since they care more (and believe that they make better decisions). Different projects may be optimally "owned" by different people. Furthermore—with residual income exogenously allocated—complementary decisions should be more co-located, whereas substitute decisions should be more distributed. Confident people with a lot at stake should—in a wide range of settings—get more control.

    Keywords: Governance Controls; Projects; Decisions; Value; Agreements and Arrangements;

    Citation:

    Van den Steen, Eric J. "Disagreement and the Allocation of Control." Journal of Law, Economics & Organization 26, no. 2 (August 2010): 385–426. (Advance Access published online on December 3, 2008.) View Details
  7. Authority versus Persuasion

    This paper studies a manager's trade-off between using persuasion and using interpersonal authority to get an employee to 'do the right thing' from the manager's perspective (when the manager and employee disagree on the right course of action). It shows that persuasion and authority are complements at low levels of effectiveness but substitutes at high levels. Furthermore, the manager will rely more on persuasion when employee motivation is more important for the execution of the project, when the employee has strong intrinsic or extrinsic incentives, and, for a wide range of settings, when the manager is more confident about the right course of action.

    Keywords: Employee Relationship Management; Managerial Roles; Projects; Motivation and Incentives; Power and Influence;

    Citation:

    Van den Steen, Eric J. "Authority versus Persuasion." American Economic Review: Papers and Proceedings 99, no. 2 (May 2009): 448–453. View Details
  8. Organizational Beliefs and Managerial Vision

    Can managers have an impact on their firm that goes beyond their direct actions and decisions? This article shows that a manager with strong beliefs about the right course of action will attract, through sorting in the labor market, employees with similar beliefs. This alignment of beliefs gives direction to the firm and has important implications for incentives and coordination. The article then defines vision, in accordance with the management literature, as a strong belief about the right course of action, and shows that it may be optimal to hire managers with such strong beliefs. Vision will be most important when uncertainty is high and actions are difficult to contract on.

    Keywords: Organizations; Goals and Objectives; Decisions; Labor; Markets; Employees; Motivation and Incentives; Recruitment; Risk and Uncertainty; Values and Beliefs;

    Citation:

    Van den Steen, Eric J. "Organizational Beliefs and Managerial Vision." Journal of Law, Economics & Organization 21, no. 1 (April 2005): 256–283. (Reprinted in The Economics of Organisation and Bureaucracy, Peter M. Jackson (ed.), Edward Elgar (Cheltenham, UK), 2013.) View Details
  9. Rational Overoptimism (and Other Biases)

    Rational agents with differing priors tend to be overoptimistic about their chances of success. In particular, an agent who tries to choose the action that is most likely to succeed, is more likely to choose an action of which he overestimated, rather than underestimated, the likelihood of success. After studying the comparative statics of this mechanism, I show that it also causes agents to attribute failure to exogenous factors but success to their own choice of action, to disproportionately believe that they will outperform others, to overestimate the precision of their estimates, and to overestimate their control over the outcome.

    Keywords: Prejudice and Bias; Decision Choices and Conditions; Performance Expectations; Outcome or Result; Opportunities; Risk and Uncertainty; Failure; Success; Management Analysis, Tools, and Techniques; Personal Characteristics; Values and Beliefs; Ethics;

    Citation:

    Van den Steen, Eric J. "Rational Overoptimism (and Other Biases)." American Economic Review 94, no. 4 (September 2004): 1141–1151. View Details

Book Chapters

  1. Human Capital and Corporate Governance

    Keywords: Human Capital; Corporate Governance;

    Citation:

    Van den Steen, Eric J., and John Roberts. "Human Capital and Corporate Governance." In Corporate Governance: Essays in Honor of Horst Albach, edited by Horst Albach and Joachim Schwalbach, 128–144. Publications of the Society for Economics and Management at Humboldt University Berlin. Berlin: Springer-Verlag, 2001. View Details

Working Papers

  1. A Formal Theory of Strategy

    What makes a decision strategic? When is strategy most important? This paper studies the structure and value of strategy (in its everyday sense), starting from a (functional) definition of strategy as "the smallest set of (core) choices to optimally guide the other choices." This definition captures the idea of strategy as the core of an intended course of action that is potentially flexible and adaptive. It coincides with the equilibrium outcome of a "strategy formulation game" where a person can—at a cost—look ahead, investigate, and announce a small set of choices to the rest of the organization. Starting from that definition, the paper studies what makes a decision "strategic" and what makes strategy important, considering commitment, irreversibility, and persistence of a choice; the presence of uncertainty (and the type of uncertainty); the number and strength of interactions and the centrality of a choice; its level and importance; the need for specific capabilities; and competition and dynamics. It shows, for example, that irreversibility does not make a decision more strategic but makes strategy more valuable, that long-range strategies will be more concise, that a choice of what not to do can be very strategic, and that a strategy "bet" can be valuable. It shows how strategy endogenously creates a hierarchy among decisions. And it also shows how understanding the structure of strategy may enable a strategist to develop the optimal strategy in a very parsimonious way.

    Keywords: Strategy; Framework; Value;

    Citation:

    Van den Steen, Eric. "A Formal Theory of Strategy." Harvard Business School Working Paper, No. 14-058, December 2013. View Details
  2. Strategy and the Strategist: How it Matters Who Develops the Strategy

    This paper studies how strategy—formally defined as "the smallest set of (core) choices to optimally guide the other choices"—relates to the strategist, for example, whether an optimal strategy should depend on who is CEO. The paper first studies why different people may systematically consider different decisions "strategic"—with marketing people developing a marketing-centric strategy and favoring the marketing side of business—and derives two rational mechanisms for this outcome, one confidence-based and the other implementation-based. It then studies why it matters that it is the CEO and important decision makers (rather than an outsider) who formulate the strategy and shows that outsider-strategists often face a tradeoff between the quality of a strategy and its likelihood of implementation, whereas the CEO's involvement helps implementation because it generates commitment, thus linking strategy formulation and implementation. In some sense, the paper explains why strategy is the quintessential responsibility of the CEO. Moreover, it shows that the optimal strategy should depend on who is CEO. It then turns that question around and studies strategy as a tool for exerting leadership, asking when the set of strategic decisions are exactly the decisions a CEO should control to give effective guidance. It finally shows how a CEO's vision, in the sense of a strong belief, about strategic decisions makes it more likely that the CEO will propose a strategy and that this strategy will be implemented. But strong vision about the wrong decisions, such as subordinate or others' decisions, may be detrimental to strategy and its implementation.

    Keywords: Strategic Planning; Business Strategy;

    Citation:

    Van den Steen, Eric. "Strategy and the Strategist: How it Matters Who Develops the Strategy." Harvard Business School Working Paper, No. 14-057, December 2013. View Details
  3. Too Motivated?

    I show that an agent's motivation to do well (objectively) may be unambiguously bad in a world with differing priors, i.e., when people openly disagree on the optimal course of action. The reason is that an agent who is strongly motivated is more likely to follow his own view of what should be done. As a result, the agent is more willing to disobey his principal's orders when the two of them disagree on the right course of action.

    This effect has a number of implications. First of all, agents who are subject to authority will have low-powered incentive pay. Second, intrinsically motivated agents will be more likely to disobey and less likely to be subject to authority. Firms with intrinsically motivated agents will need to rely on other methods than authority for coordination. Moreover, an increase in intrinsic motivation may decrease all players' expected utility, so that it may be optimal for a firm to look for employees with low intrinsic motivation. Finally, subjective performance pay may be optimal, even when the true outcome of the project is perfectly measurable and contractible.

    Through this analysis, the paper identifies an important difference between differing priors and private benefits (or private information): with differing priors, pay-for-performance can create agency problems rather than solving them.

    Keywords: Governance Controls; Employees; Wages; Measurement and Metrics; Outcome or Result; Performance; Agency Theory; Motivation and Incentives;

    Citation:

    Van den Steen, Eric J. "Too Motivated?" Sloan School of Management Working Paper, No. 4547-05, April 2006. (Available at SSRN.) View Details
  4. The Limits of Authority: Motivation versus Coordination

    This paper studies the effects of open disagreement on motivation and coordination. It shows how, in the presence of differing priors, motivation and coordination impose conflicting demands on the allocation of authority, leading to a trade-off between the two.

    The paper first derives a new mechanism for delegation: since the agent thinks, by revealed preference, that his own decisions are better than those of the principal, delegation will motivate him to exert more effort when effort and correct decisions are complements. A need for implementation effort will thus lead to more decentralization. The opposite is true when effort and decisions are substitutes.

    Delegation, however, reduces coordination when people disagree on the right course of action. The paper shows that, with differing priors, the firm needs to rely more on authority (as opposed to incentives) to solve coordination problems, relative to the case with private benefits. An interesting side-result here is that the principal will actively enforce her decisions only at intermediate levels of the need for coordination.

    The combination of the two main results implies a trade-off between motivation and coordination, both on a firm level and across firms. I derive the motivation-coordination possibility frontier and show the equilibrium distribution of effort versus coordination. I finally argue that strong culture, in the sense of homogeneity, is one (costly) way to relax the trade-off.

    Keywords: Decisions; Governance Controls; Organizational Culture; Agency Theory; Conflict and Resolution; Motivation and Incentives;

    Citation:

    Van den Steen, Eric J. "The Limits of Authority: Motivation versus Coordination." Sloan School of Management Working Paper, No. 4626-06, January 2006. (Available at SSRN.) View Details

Cases and Teaching Materials

  1. Airgas, Inc.

    In 2013, Airgas was the market leader in packaged industrial gas distribution. Recent acquisitions had made it into a larger player in upstream gas production as well, where it competed with Praxair and Air Products. Should Airgas continue building a position in gas production or divest these activities?

    Keywords: Strategy; Competitive Advantage; Competitive Strategy; Competency and Skills; Value Creation;

    Citation:

    Van den Steen, Eric, and Jason Karl. "Airgas, Inc." Harvard Business School Case 714-517, June 2014. View Details
  2. Performance and Value Analysis

    This note introduces the Performance and Value Analysis (PVA) framework, an integrated framework to analyze strategic performance (i.e., performance corrected for temporary and random effects). This framework (quantitatively) decomposes a firm's performance into 3 consistent parts—common performance, value creation advantage, and bargaining advantage—and then provides frameworks to analyze each.

    Keywords: Strategic Analysis; economic analysis; competitive advantage; sustainable competitive advantage; strategic planning; strategy; value creation; Value Capture; Strategy; Competitive Advantage; Strategic Planning; Competitive Strategy; Competency and Skills; Competition; Value Creation;

    Citation:

    Van den Steen, Eric. "Performance and Value Analysis." Harvard Business School Technical Note 714-490, March 2014. View Details
  3. Red Bull

    Despite facing giants like Coke, Pepsi, and Budweiser—with obvious potential sources of competitive advantage—Red Bull had established itself as the U.S. market leader in energy drinks. By 2008, however, Red Bull's dominance was challenged as Monster drinks surpassed it in volume. The case considers judo strategy both from the perspective of a small player (when up-start Red Bull faces Coke, Pepsi, and Bud) and as a large player (when market leader Red Bull faces up-start Monster).

    Keywords: Judo strategy; Judo economics; sustainable competitive advantage; imitation; Strategy; Competitive Strategy; Competitive Advantage; Market Entry and Exit; Food and Beverage Industry; United States;

    Citation:

    Van den Steen, Eric J., and Carin-Isabel Knoop. "Red Bull." Harvard Business School Case 714-401, March 2014. (Revised June 2014.) View Details
  4. Sustainability of Competitive Advantage

    This note introduces a framework for analyzing the sustainability of competitive advantage. (While it applies more broadly, it was developed as a component of the PVA framework.)

    Keywords: Strategy; Competitive Advantage; Monopoly;

    Citation:

    Van den Steen, Eric. "Sustainability of Competitive Advantage." Harvard Business School Technical Note 714-489, March 2014. View Details
  5. Drivers of Value Capture

    This note introduces a framework for analyzing value capture (through bargaining and pricing) and bargaining advantage (or value capture advantage), i.e., a firm's (superior) ability to capture a share from the value it helps create.

    Keywords: Strategy; Competitive Advantage; Competition; Competitive Strategy;

    Citation:

    Van den Steen, Eric. "Drivers of Value Capture." Harvard Business School Technical Note 714-488, March 2014. View Details
  6. Drivers of Value Creation

    This note introduces a concise but comprehensive framework for analyzing value creation and value creation advantage, i.e., a firm's superior ability to increase the spread (or gap) between its offering's customer value (or WTP) and supplier cost (or WTS). (While the framework applies more broadly, it was developed as a component of the PVA framework.)

    Keywords: Strategy; Competitive Advantage; Value Creation;

    Citation:

    Van den Steen, Eric. "Drivers of Value Creation." Harvard Business School Technical Note 714-487, March 2014. View Details
  7. Creating and Sustaining Competitive Advantage

    This note gives an overview (for instructors) of the MBA elective course "Creating and Sustaining Competitive Advantage" (CSCA). The course gives students a deep dive on competitive advantage, on its relation to overall strategic performance (defined as performance corrected for temporary and random effects), and on the role of strategy (as a management tool) and of people in creating and sustaining competitive advantage. The note discusses the concepts and the frameworks introduced in the course; walks through the course outline; and discusses concisely each case and how it is used.

    Keywords: strategy; Strategic Analysis; Strategic Theory; economic analysis; competitive advantage; sustainable competitive advantage; value creation; Value Capture; Performance and Value Analysis; strategy and leadership; Strategy; Competitive Advantage; Competition; Competitive Strategy; Value Creation; Values and Beliefs; Leadership;

    Citation:

    Van den Steen, Eric. "Creating and Sustaining Competitive Advantage." Harvard Business School Course Overview Note 714-491, March 2014. View Details
  8. Tesla Motors

    In mid-2013, Tesla Motors was riding a wave of success: It had launched its first really mass-produced car—the model S—to rave reviews, had recently raised first-year production targets, and had started taking orders for its next car, the Model X. Tesla seemed to be on its way to defying the skeptics and becoming the first US company to enter the car industry with a mass-produced car since WWII and the first to successfully launch a fully electric car. Or was it not?

    Keywords: Technological Innovation; Production; Product Launch; Business Strategy; Auto Industry; United States;

    Citation:

    Van den Steen, Eric. "Tesla Motors." Harvard Business School Teaching Note 714-483, March 2014. View Details
  9. Aldi: The Dark Horse Discounter

    In 2013, Aldi—the world's 8th largest retailer—planned to accelerate its US expansion. Aldi was a German-based hard discounter that sold a limited assortment of private-label groceries and household items in barebones stores. Despite its presence with 1200 stores in 32 states, Aldi was still relatively unknown in the US. But it was often cited as one of the reasons for Walmart's exit from Germany. Could it compete with Walmart in the US, Walmart's home market?

    Keywords: Competitive Advantage; Competitive Strategy; Strategy; Value Creation; Values and Beliefs;

    Citation:

    Van den Steen, Eric J., and David Lane. "Aldi: The Dark Horse Discounter." Harvard Business School Case 714-474, February 2014. View Details
  10. Tesla Motors

    In mid-2013, Tesla Motors was riding a wave of success: It had launched its first really mass-produced car—the model S—to rave reviews; had recently raised first-year production targets; and had started taking orders for its next car, the Model X. Tesla seemed to be on its way to defying the skeptics and becoming the first US company to enter the car industry with a mass-produced car since WWII and the first to successfully launch a fully electric car. Or was it not?

    Keywords: Barriers to entry; economic analysis; Learning Curve; Economies of Scale; competitive advantage; innovation; Market entry; sustainable competitive advantage; vision; strategy and leadership; Strategy; Competitive Strategy; Market Entry and Exit; Technological Innovation; Values and Beliefs; Leadership; Learning; Economics; Auto Industry;

    Citation:

    Van den Steen, Eric. "Tesla Motors." Harvard Business School Case 714-413, August 2013. (Revised January 2014.) View Details
  11. Competition Simulator Exercise: Questions

    In the Competition Simulator Exercise, students explore through trial and error some important economic foundations of competitive strategy and managerial economics. In particular, the simulator lets students explore horizontal differentiation with and without price setting, strategic complements and substitutes and their implications for commitment and for first-mover advantage, the effect of the number of competitors on the competitiveness of a market, capacity limitations and judo economics, natural monopoly and the effect of market size, technology choice as entry deterrence, endogenous economies of scale, and capacity limitation in commodity markets.

    Keywords: competition; economics; game theory; competitive strategy; marketing strategy; Economics of strategy; Economics of competition; Competition; Economics; Game Theory; Competitive Strategy; Marketing Strategy;

    Citation:

    Van den Steen, Eric. "Competition Simulator Exercise: Questions." Harvard Business School Technical Note 714-406, July 2013. View Details
  12. Strategic Complements and Substitutes

    The framework of strategic complements and substitutes can help companies anticipate competitors' responses. It is particularly helpful in deciding on price- or capacity-commitments (or pre-emption), but it can provide more general guidance for analyzing the potential impact of commitments and pre-emption.

    Keywords: competition; economics; game theory; competitive strategy; strategic substitutes; strategic complements; puppy dog strategy; Competitive Strategy; Game Theory; Strategy; Economics;

    Citation:

    Van den Steen, Eric. "Strategic Complements and Substitutes." Harvard Business School Technical Note 713-542, June 2013. (Revised March 2014.) View Details
  13. Competition Simulator Exercise

    In the Competition Simulator Exercise, students explore through trial and error some important economic foundations of competitive strategy and managerial economics. In particular, the nine simulator exercises let students explore horizontal differentiation with and without price setting, strategic complements and substitutes and their implications for commitment and for first-mover advantage, the effect of the number of competitors on the competitiveness of a market, capacity limitations and judo economics, natural monopoly and the effect of market size, technology choice as entry deterrence, endogenous economies of scale, and capacity limitation in commodity markets. It can be used to introduce these concepts without necessarily relying on a lot of math or as an intuitive complement to a more mathematical exposition.

    Keywords: competition; economics; game theory; competitive strategy; Competition; Economics; Game Theory; Competitive Strategy; Marketing Strategy;

    Citation:

    Van den Steen, Eric J. "Competition Simulator Exercise." Harvard Business School Exercise 713-804, June 2013. (Revised July 2014.) View Details
  14. Strategy and the Strategist

    This short case presents a series of brief accounts, observations, and quotations that challenge students to think about the role of the CEO — and of the CEO's (possibly strong) beliefs and convictions — in strategy. It focuses in particular on three issues and their practical implications: 1) when and why it is important that the strategy publicly reflects the (possibly strong) beliefs of the CEO and management; 2) whether and when you want the strategist (CEO or management) to have strong beliefs; and 3) why people tend to develop strategies in line with their background and past successes, and what the implications are.

    Keywords: Belief systems; strategy; Strategic Analysis; competitive advantage; leadership; values; vision; strategy and leadership; Strategy; Leadership; Values and Beliefs;

    Citation:

    Van den Steen, Eric. "Strategy and the Strategist." Harvard Business School Case 713-533, May 2013. (Revised March 2014.) View Details
  15. Formulating Strategy

    This note introduces a framework for formulating strategy that helps a manager identify which decisions are strategic—and thus which decisions to focus on (both when developing strategy and when executing it)—and that provides a practical test for whether a particular set of choices is a strategy. The framework is based on the definition of strategy as "the smallest set of choices to optimally guide the other choices."

    Keywords: strategy; Formulating Strategy; Strategic Theory; Strategy Test; Strategic Analysis; Strategy; Strategic Planning;

    Citation:

    Van den Steen, Eric. "Formulating Strategy." Harvard Business School Technical Note 712-500, June 2012. (Revised March 2014.) View Details
  16. Competition Simulator Exercise: Instructions

    In the Competition Simulator Exercise, students explore through trial and error some important economic foundations of competitive strategy and managerial economics. In particular, the nine simulator exercises let students explore horizontal differentiation with and without price setting, strategic complements and substitutes and their implications for commitment and for first-mover advantage, the effect of the number of competitors on the competitiveness of a market, capacity limitations and judo economics, natural monopoly and the effect of market size, technology choice as entry deterrence, endogenous economies of scale, and capacity limitation in commodity markets. It can be used to introduce these concepts without necessarily relying on a lot of math or as an intuitive complement to a more mathematical exposition.

    Keywords: Competitive Strategy; Economics; Strategy; Game Theory;

    Citation:

    Van den Steen, Eric. "Competition Simulator Exercise: Instructions." Harvard Business School Exercise 712-498, June 2012. (Revised July 2013.) View Details
  17. Akamai's Edge (A)

    In 2009, Paul Sagan, CEO of Akamai, the leading online content delivery network with a 60% market share, needs to decide how to respond to aggressive entry in its market, whether and how to pursue the explosive growth in online video, and whether to stay with its distributed network model or move towards its competitors' more centralized design.

    Keywords: Competitive Advantage; Market Entry and Exit; Business Model; Competitive Strategy; Network Effects; Values and Beliefs; Business Strategy; Internet;

    Citation:

    Van den Steen, Eric. "Akamai's Edge (A)." Harvard Business School Case 712-455, December 2011. (Revised April 2013.) View Details
  18. Akamai's Edge (B)

    In 2009, Paul Sagan, CEO of Akamai, the leading online content delivery network with a 60% market share, needs to decide how to respond to aggressive market entry, whether and how to pursue the explosive growth in online video, and whether to stay with Akamai's distributed network model or move towards its competitors' more centralized design.

    Keywords: Market Entry and Exit; Competitive Advantage; Network Effects;

    Citation:

    Van den Steen, Eric. "Akamai's Edge (B)." Harvard Business School Supplement 712-456, December 2011. (Revised April 2013.) View Details
  19. Bananas (A)

    As owner and CEO, Wim Van der Borght had grown Bananas in 8 years from a 4.5 million euro company into a 40 million euro group of companies with a range of field marketing activities in Belgium and the Netherlands. The core of the group consisted of two companies — Bananas and Demonstrate — which were operationally completely independent and acted as competitors in the market. The two companies had different strengths and different cultures. In August 2008, Wim needed to decide on the right degree of interaction or integration of Bananas and Demonstrate. He also wanted to expand the companies' activities to a more comprehensive marketing offering and needed to consider international expansion opportunities.

    Keywords: competitive advantage; sustainable competitive advantage; growth strategy; organizational culture; strategy; Strategic Analysis; PVA; Culture as Commitment; mergers and acquisitions; Competitive Advantage; Organizational Culture; Growth and Development Strategy; Competitive Strategy; Mergers and Acquisitions; Strategy; Corporate Strategy; Belgium;

    Citation:

    Van den Steen, Eric. "Bananas (A)." Harvard Business School Case 712-451, December 2011. (Revised June 2013.) View Details
  20. Bananas (B)

    As owner and CEO, Wim Van der Borght had grown Bananas in 8 years from a 4.5 million euro company into a 40 million euro group of companies with a range of field marketing activities in Belgium and the Netherlands. The core of the group consisted of two companies — Bananas and Demonstrate — which were operationally completely independent and acted as competitors in the market. The two companies had different strengths and different cultures. In August 2008, Wim needed to decide on the right degree of interaction or integration of Bananas and Demonstrate. He also wanted to expand the companies' activities to a more comprehensive marketing offering and needed to consider international expansion opportunities.

    Keywords: competitive advantage; culture; Competitive Advantage; Organizational Culture; Growth and Development Strategy;

    Citation:

    Van den Steen, Eric. "Bananas (B)." Harvard Business School Supplement 712-452, December 2011. (Revised June 2013.) View Details
  21. Akamai Technologies

    As the leading content delivery network, Akamai helps Internet companies deliver Web site content to end users with fewer delays and lower costs. Describes the strategic management challenges facing Akamai in early 2004. The company is poised to offer its next generation of services for enterprise customers, which will allow them to run Internet-enabled applications ("Web services")—on demand, with minimal capital investment—from Akamai's network of 15,000 servers located in ISP facilities at the Internet's "edge"—close to end users. Many large enterprise software companies have developed proprietary platforms for creating and managing Web services. Akamai must decide which of these software companies would be attractive partners and whether it can and should remain uncommitted to a platform as it helps customers deploy Web services. A rewritten version of an earlier case.

    Keywords: Market Platforms; Partners and Partnerships; Strategy; Internet; Technology Networks;

    Citation:

    Edelman, Benjamin, Thomas R. Eisenmann, and Eric J. Van den Steen. "Akamai Technologies." Harvard Business School Case 804-158, March 2004. (Revised June 2010.) (request a courtesy copy.) View Details
  22. Microsoft's Search

    In 2008, executives at Microsoft must decide how to compete against Google in the market for Internet search and advertising. The case describes how Microsoft has responded to a set of competitive threats in the past, how Google has gained a dominant position in Internet search and advertising, and what Microsoft has done so far in its as-yet-unsuccessful effort to catch up with Google. The case then challenges students to construct a strategy that will allow Microsoft to achieve its objectives in the evolving market for search and advertising.

    Keywords: Online Advertising; Competitive Strategy; Internet; Search Technology; United States;

    Citation:

    Rivkin, Jan W., and Eric J. Van den Steen. "Microsoft's Search." Harvard Business School Case 709-461, January 2009. View Details

Other Publications and Materials