Wednesday, February 17, 2010

Strategy Distilled: The Best Chapters

Walter Kiechel III’s article, “Seven Chapters of Strategic Wisdom,” in the recent issue of strategy + business magazine notes that there were 74,000 books on business strategy on Amazon.com in October 2009, most of which would “work better as articles of, say, 3,000 words,” and all of which are designed to get managers to create strategy that is punchy enough that “an employee woken by flashlight at 2 a.m. and quizzed on the subject should be able to spell it out in a minute or two.”

74,000 books, 300 pages+ per book to teach us a process that is all about distillation, focus and impact.  Kiechel asks, “Why should anyone require 400 pages to explain what a strategy is or how to create one?” 

His solution is to take not the seven best books, but the seven best chapters from books about strategy and summarize their key teachings.

Here's a quick summary:

Chapter 1, from Alfred D. Chandler Jr.’s Strategy and Structure: Chapters in the History of the American Industrial Enterprise (1961).  Besides being the first to really define a working strategy (long-term, responsive to the environment, set by leaders), Chandler’s key teaching was:  Structure follows strategy.  Companies need to reorganize themselves to meet their strategic goals, not vice versa.  

Chapter 2, from Kenneth R. Andrews’ The Concept of Corporate Strategy (1971).  Key teaching: Strategy defines what business the company is in.   It indicates the company’s choice of markets, products, channels, financing and profit objectives.

Chapter 3, from Michael E. Porter’s Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980).  Key teaching:  The main point of strategy is to achieve competitive advantage, and there are three ways to do this: overall cost leadership, differentiation and focus. This is what would be called a “positionist” view, followed closely by:

Chapter 4, from Peters’ and Waterman’s In Search of Excellence (1982).  Key teaching:  Strategy grows organically.  In other words, strategy is less about position than human energy and execution; you set a course, run into reality, make corrections and execute like heck.  (This is the "emergent" school vs. the "positionist" approach.)

Chapter 5, from Richard N. Foster’s Innovation: The Attacker’s Advantage (1986).  Key teaching: Behind many successful strategies is an exercise in pattern recognition.  Foster described the “S-curve” of emerging technology and posits that curves usually come in succession.  Kiechel says “Every strategist should have in her or his desk drawer a copy of Foster’s chart.”

Chapter 6, from Andy Grove’s Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company (1996).  Key teaching: Attack yourself.  Migrate to a new business, even if it means blowing up the old business.  Understand your competitive advantage and recognize when it is no more.

And finally, chapter 7, from Henry Mintzberg’s The Rise and Fall of Strategic Planning (1994).  Key teaching:  Don’t bother writing a plan.  Forecasts are nonsense, strategy cannot be isolated from the field, and detached, analytic processes cannot possibly capture a living, breathing strategy.

Mintzberg is an interesting read with very good warnings about the limits of planning, but--I don’t think so.  The act of planning is at least as important as the plan itself.  Mintzberg gets a footnote (in my edition), but not a chapter.

Kiechel finishes up his article with a discussion of some of the new trends in planning—making people and their talents a basis for strategy, incorporating network analysis (see here), and making strategy adaptive.

All good stuff but: No Drucker?