BOOK REVIEW: “What is Strategy – and does it matter?” by Richard Whittington (2000)

Key words
Strategy, brief history of strategy, corporate, international trade, IBM, technology, resource-based of the firm, knowledge-based view of the firm, Apple, Walkman, Intel, Andy Grove, leadership, Japan, France, USA, UK

Summary

Richard Whittington, who has published extensively on strategy, offers a fascinating discussion on some of the key issues in strategic management. The book requires some background knowledge of the subject (perhaps not the first book to read then if you are new to this discipline) and then invites you to develop a personal view.

This is quite a useful book then once you have mastered some of the key elements of strategy. The book states clearly that it is designed more for a graduate or advanced undergraduate level.

Some keys facts:
The word ‘seduction’ comes from the Latin word “ducere”, to lead.

Only a quarter of the Japanese companies described ‘good short-term profits’ as their objective

Pascale ( 1982) reports that the Japanese do not even have a phrase for ‘corporate strategy’

When, in 1982, it launched its first personal computers, IBM predicted a market of 300,000 worldwide; a decade later, the installed base was 110 million. (Tate, 1991)

Interesting quotes from the book:

“If the secrets of corporate strategy could be acquired for $50, then we would not pay our top managers so much.”

“Theories are important. They contain our basic assumptions about key relationships in business life. Theories tell us what to look out for, what our first steps should be and what to expect as a result of our actions.”

As (Intel) CEO Andy Grove observed: ‘Don’t ask managersWhat is your strategy?” Look at what they do!”

“For all the contemporary talk of globalization, the peculiarities of local histories and local societies still matter.…most large companies are hardly global at all. The Gestrin et al. (2000) survey of more than 200 Fortunate Global 500 large corporations finds that on average roughly 60% of their turnover and their assets were still concentrated in their home markets.”

Hampden-Turner and Trompenaars (1993) report that American attitudes stand out consistently from many of their competitors’. When asked whether the only goal of a company was profit, 40 percent of American executives answered yes, against only 8 percent from Japan and 11 percent from Singapore

“It’s easy to exaggerate the significance of top management and to ignore the less advertised influence of middle managerial initiative or inertia.” See also The Innovator’s Dilemma by Clayton Christensen for this.

There is not even an equivalent word to ‘leadership’ in the French language (Le Monde 13 October 1990: 5)

36 percent of British chief executives had been educated at one of the top twenty public schools (Eton, Winchester, Harrow, etc.), while one third had been to Oxford or Cambridge.

Ecole Polytechnique, the Ecole Natioale d’Administration and the HEC- accounted for 57 percent of all French chief executives

Ecole Polytechnique, the Ecole Natioale d’Administration and the leading business school HEC- accounted for 57 percent of all French chief executives. These three institutions recruit about 0.01 percent of each generation of young French people. Bauer and Bertin-Mourot were unable to trace an equivalent institutional elite in Germany. None the less, 45 percent of the top 200 German managers held doctorates

Mintzberg and Waters (1990) point out that we conventionally assume that decisions represent commitments to future actions.

Rumelt (1991) has famously shown that industry factors typically explained 9-16 percent of variations in profit, against 44-46 percent for firm specific (business unit) factors. Rumelt (1991) concluded that industry didn’t matter very much.

IBM pioneered in the use of the FUD factor in the computer industry during the 1960s and 1970s. Innovation was clearly manipulated so that its customers were constantly in sufficient ‘fear, uncertainty and doubt’ to keep them locked in with the reassuring bulk of ‘Big Blue’.

Between 1980 and 1999, annual world exports more than tripled to a total value of $55,600 billion (International Monetary Fund 2000). Foreign direct investment multiplied more than ten times over the two decades, reaching $566 billion by 1998 (Miyake and Thomsen 2000)

Doyle and his colleagues found that four out of five of the Japanese managers gave aggressive growth or market domination as their strategic objective, against only half of the American managers and one-fifth of the British managers.

Only a quarter of the Japanese companies described ‘good short-term profits’ as their objective, against four-fifths of their American and British competitors. (Doyle et al. 1992)

“Apple’s Macintosh computers fulfilled the company’s dream: in the phrase of the company’s passionate founder, Steve Jobs, to make ‘insanely great computers’. But preventing anybody else making them nearly destroyed the company.”

Other information

The four perspectives on strategy

  Classic Processual Evolutionary Systemic
Strategy Formal Crafted Efficient Embedded
Rationale Profit maximization Vague Survival Local
Focus Internal (plans) Internal (politics/ cognitions) External (markets) External (societies)
Processes Analytical Beginning/ learning Darwininan Social
Key influences Economics/ military Psychology Economics/ biology Sociology
Key authors Chandler; Ansoff; Porter Cyert & March, Mintzberg, Pettigrew Hannan & Freeman; Williamson Granovetter; Whitley
Emergence 1960s 1970s 1980s 1990s

 Business School  Grenoble EM  International Affairs   Higher Education   ESC Grenoble   Strategy  Blog  Global Ed   Graduate Business School    Mark Thomas

See also:

   

Other Book Review

Book Review – What is Strategy, and Does it Matter?

MBA Online Program: Strengths – In the first section, Whittington breaks down and defines each model using interesting real-world examples, such as the Internet investment bubble. He also explores the models’ relation to cultural differences, comparing how Americans and Europeans approach strategy.”

    

Great book. Advocates the creation of a learning organization as a way of achieving sustainable competitive advantage over your competitors. The story of the ups and downs of Starbucks and why Howard Schultz decided to return as CEO. Steve Jobs’ favourite book. Any more questions.

 

Learn about The IKEA Effect, The Baby Jessica Effect and why large bonuses make CEOs less effective. One of the best strategy books I have read in a long time. An excellent outline of some of the fundamental issues in strategic management. The book is short and generally to the point.

7 Comments

Filed under Book Review, France, Great Britain, Higher Education, Management, Strategy, USA

7 responses to “BOOK REVIEW: “What is Strategy – and does it matter?” by Richard Whittington (2000)

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