Chapter Nine: Firm-Level Learning
Summary from the book page 169-170

As the Cervantes quote at the beginning of the chapter suggests, learning is not without "inconveniences". He mentions "dizziness in the head" and "weakness in the stomach" among others. Our view is that it is more costly not to do the learning.

The "three C's" in this chapter are the types of learning that inform the strategy choices that firms get to make. That type of learning can be one of the great points of leverage in mitigating the problems inherent in the seven patterns and turning them into opportunities for growth.

Customer learning, for example, will help firms rely less on factor conditions as they learn that they are often competing from within a poor "five forces," with high rivalry and little ability to influence customer behavior. Understanding costs and competitors has the effect of improving relative position, by understanding the sources of sustainable competitive advantages, and fundamental weaknesses that need to be worked on. The combination of all three C's allow firms to make a decision about their capacity and the desirability to forward integrate, and provide the basis for interfirm cooperation.

Perhaps the most innovative use of this type of firm-level learning is the capacity to inform the government-private sector dialogue about the realities of the international competitive context, which provides an opportunity to overcome paternalistic behavior. That does not mean that government should use that information to take an overtly interventionist role; however, at present so much of the dialogue between the government and the private sector is colored by poor information that the results is often negative attributions and defensiveness.

Improved, strategic-type learning could focus a country's leaders on creating sustainable, non-imitatable advantages that can position local firms closer to end-users. The benefits will include the formation of international alliances and the creation of high and rising value for increasingly sophisticated customers who are willing to pay more money for the unique value they perceive. Learning like this creates informed choice, which improves competitive positioning, and turns the seven patterns into sources of advantage.

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