What do Harvard Professors teach experienced and successful business leaders? What is it that someone who has successfully led a large organization can learn from going to Harvard for a week each year for three years?
Professor Cynthia Montgomery teaches strategy on a course titled the Entrepreneur, Owner, President (EOP) program. If you are a successful entrepreneur, owner or chief executive this book will allow you to participate in that programme from the comfort of your favourite reading chair and derive much of the benefit. What is missing is only the opportunity to interact with other successful executives.
The book aims to simulate the personal development aspect of this Harvard experience.
Montgomery’s approach presumes that you know what strategy is and have participated in and possibly even led the company’s strategy initiatives.
Her starting point is that strategy has devolved into a mechanical activity. Overtime it has becoming a ritual that focuses on formulation rather than implementation. The focus is on getting the analysis right and recording the plan. The plan is then submitted the board, and the process is complete.
The role of the Chief Executive as the leader of the strategy has faded. Divisional heads are charged with the execution and the Chief Executive gets back to the multitude of other burning issues.
While there is definitely value in engaging a professional strategy facilitator to manage the process, it is the Chief Executive how must own the strategy. It is he, or she, who must approve or disapprove the strategy. Failing to take personal ownership of the strategy is an abrogation of the duty expected of a Chief Executive.
The signoff of the strategy document is cannot be the end. Strategy never unfolds successfully without the will and commitment of the Chief Executive. The process requires constant guidance in the unfolding, and firm decision-making at critical points along the way.
What is wrong with the strategy process is the disconnection between the role of the Chief Executive and the person in the position of the Chief Executive. Strategy needs to be something deeper and more meaningful to you, the Chief Executive, she believes.
What makes this book unusually valuable is the focus on the person and personality of the Chief Executive in the strategy process. This is not a “nice to have” soft issue, it has material and financial consequences on the business that are generally overlooked.
In the first exercise described in the book, EOP participants consider an investment decision.
A highly successful, second generation hardware manufacturer Masco is sitting on a huge amount of cash. They consider investing heavily into the furniture industry where returns are typically low and the industry is relatively unsophisticated. Masco has a superb management capability that has led to great financial success. In their industry, they have taken unsophisticated products and turned them into valuable brands.
The investment Masco will need to make is in the order of $2b. What would you do?
After much consideration the majority view of the participants, (a view repeated in every EOP programme,) is to invest in the furniture industry. EOP participants are smart, bold, and courageous people, confident of their ability to deal with tough problems successfully.
Montgomery then reveals Masco’s decision. They decided to invest in the dull furniture business confident in their ability to turn it around.
However, the result of the decision was the destruction of shareholder wealth with their furniture businesses eventually sold for a mere $650m. There was significant damage to the reputations of Masco’s leadership and a loss of confidence in their ability.
What went wrong? The confidence every good strategist needs can so easily mutate into overconfidence.
Warren Buffet puts it succinctly: “When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”
Further into the book, Montgomery ask the question, “Does your company matter?” What would happen if you closed today? Would your customers suffer any real loss? How long would it take them, and how difficult would it really be, for them to find another company that could meet those needs as well as you did?
Then she presents an example of a company in the furniture industry that does matter, that would be missed if it disappeared, IKEA. This low priced, high value furniture retailer has added, and continues to add meaningfully to the lives of millions of middle class families. It affords an unrivalled style at prices they can afford that is unparalleled by any other supplier. They would be missed if they closed, they matter.
Are you the leader your company needs? “My goal in this book,” writes Montgomery, “is to help you develop the skills and sensibilities this role (of chief executive) demands, and to encourage you to answer the question for yourself.”
This is what a Harvard Professor can teach experienced and successful business leaders - to ask these hard questions.
Readability Light --+-- Serious
Insights High -+--- Low
Practical High -+--- Low
Ian Mann of Gateways consults internationally on leadership and strategy
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owner or chief executive this book will allow you to participate in that programme from the comfort of your favourite reading ch
Reviewed in the United States 🇺🇸 on April 12, 2017Reviewed in the United States 🇺🇸 on July 7, 2013
Top reviews from other countries
amit kukadia
An interesting read
Reviewed in the United Kingdom 🇬🇧 on March 8, 2021
Markus
Strategic, informative, powerful
Reviewed in the United Kingdom 🇬🇧 on March 10, 2018
