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An Excellent Book That Distills Strategy to Its Essence
on May 10, 2012
"The Strategist" is an outstanding book that simplifies strategy to its essence and provides a simple yet powerful framework. Highly recommended. Detailed thoughts below:
-I first came across Professor Cynthia Montgomery's work in 2005 when I read "Competing on Resources", an influential Harvard Business Review article that married internally focused resource-based view of a firm with Michael Porter's Five-Forces externally focused framework.
-More recently, I heard more about her work from a friend who recently graduated from Harvard's Enterpreneur, Owner, President (EOP) program.
-The best thing about the book is that it distills strategy into a framework that is simple to understand but very rigorous nevertheless. According to the book, a good strategy entails the following:
1. DRIVEN FROM THE VERY TOP, and cannot be left to strategic planning departments or consultants. It is the fundamental job of the CEO to develop and implement strategy. Note the focus on implementation: Without effective implementation, strategy is nothing. As she says: "Many people believe that a strategist's primary job is thinking. It isn't. The number-one job is putting together an agenda and putting in place the organization to carry it out."
2. A COMPELLING PURPOSE, which tells you where a company will play, how it will play, and what it will accomplish. Without this, employees, customers, and investors alike remain confused about a company's mission, and work off of assumptions. As she asks, "If your company disappeared today, would the world be different tomorrow?" This is illustrated with a variety of examples from companies such as Four Seasons, Nike, and Google. What I like about this is that she is not dogmatic about the format or the length of the purpose; rather, she wants to make sure that the elements above are covered. (A good related article is "Can You Say What Your Strategy Is", a Harvard Business Review piece co-authored by David Collis, who was Professor Montgomery's collaborator on the aforementioned "Competing on Resources" article. [...])
3. A SYSTEM OF VALUE CREATION, comprised of mutually reinforcing parts - a system of resources and activities that work together and reinforce each other ("coordinated, internally consistent, and interlocking"). She presents the "Strategy Wheel" framework to develop this value creation system. What I liked about this was that the framework is not dogmatic and can be adapted to one's industry or firm quite easily. (A good related reading is "Good Strategy, Bad Strategy" by Richard Rumelt, which also focuses on a series of coordinated actions that must be implemented for an effective strategy. http://www.amazon.com/Good-Strategy-Bad-Difference-Matters/dp/0307886239)
-The book contains compelling case studies of Masco, a manufacturer of bathroom fixtures, that tried to get into furniture manufacturing (go figure) and Gucci's near-death experience and subsequent resurrection. These case studies are then tied back to the LEADER DRIVEN-COMPELLING PURPOSE-VALUE CREATION SYSTEM framework.
-As a bonus: at less than 200 pages, this book is an easy read.
I would highly recommend it.