A few years ago a book came out with a napkin on the cover and the promise of teaching its reader the power of visual thinking. I was interested in buying the book until I thumbed through it one day at Barnes and Noble and found 300 pages of mostly dense text, all designed to teach me the power of visual thinking.
I heard the bass drum loud and clear, and since then have avoided the book, despite its seductive cover. I don’t think I’m up for that much irony.
Such is the premise of Walter Kiechel III’s article, “Seven Chapters of Strategic Wisdom,” in the recent issue of strategy + business magazine. (I would recommend this Jan/Feb issue across the board, by the way; China
Kiechel 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. (Seven, of course, is two beyond what I can remember, but it’s not a bad number.)
Here, then, is a distilled, focused summary (with a little high impact, punchy commentary, of course):
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 strategy (long-term, responsive to the environment, set by leaders), Chandler
Structure follows strategy. Companies need to reorganize themselves to meet their strategic goals, not vice versa. (By the way, if you are going to read Chandler, you need to have his Pulitzer Prize-winning The Visible Hand.)
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.
I first encountered this idea, I think, in Ted Levitt’s Marketing Myopia. After our business school section read it we spent the next two months deciding—3 cases a day, five days a week—that none of the companies that we read about knew what business they were in. It’s like the kid who hits the piggy bank with the hammer. . .(you remember)!
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. (You cannot live without this book.) 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 is less about position than human energy and execution; you set a course, run into reality, make corrections and execute like heck. Strategy grows organically. (This is the "emergent" school vs. the "positionist" approach.)
Me, I burned my copy of In Search Of. . ., once I read that it was slapped together for a last minute presentation, the result of a second-rate, anecdotal research project, and didn’t stand-up to time. (The “excellent” companies turned out to be something less than.) And, while I do believe strategy grows organically, I am more inclined to Porter’s view that you set a strategy based on everything you know and then execute against it, innovating periodically (say, through Scenario Planning) but not constantly.
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.”
My “punchy comment” is only that this talks more about a technology strategy in particular than strategy in general, which needs to respond to trends and events that may have little or nothing to do with technology. For me, in any event, Kiechel got off to a great start with his early chapters, but Peters and Waterman get thrown in the trash, and Foster is a footnote.
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.
This is great stuff, but a generation after Drucker and Chandler first discussed the concept. To Grove's credit, he actually did it--and showed how very difficult it can be. (For an excruciating current example, see Microsoft here.)
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 strategic canon? One of only seven chapters? I don’t think so. The act of planning is at least as important as the plan itself. Mintzberg gets a footnote, 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.
I guess, when I actually lay-out Kiechel’s seven chapters, I am underwhelmed. Instead, let me try distilling the 74,000 strategy books down to a handful of questions which, if you can answer them, will get you most of the way there. These are trivial questions with non-trivial answers that will, hopefully, talk you out of as many businesses as they will talk you into.
This is an old list and, I suppose, were I to edit it today I might add something highlighting competitive costing and industry cost curves (since they are so critical in a technology-driven world, though captured in the gap analysis), and maybe something from the Innovator's Dilemma, the central principle of which catches us (well, me anyway) off-guard on a regular basis. There'd be nothing specifically about the web and social networking because, based on what I've seen thus far, they respond to the the same strategic principles as the pre-2.0 world. But I'd love to add one question in the margins, which I think has become essential in terms of company process: "How do we innovate?"
Finally, I would recommend anything else you would want to read by Drucker. But you already knew that.
(Please feel free to write me for a copy of the mindmap.)
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