Business schools contain the word both business and school. These ingenious little books written by Harvard show that one of the world’s most known business schools is pretty good at doing both of them. The title of the book gives you essentially all that you need to know. These are a collection of the ten most read articles that have been published by HBR on strategy.
Management, leadership, strategy, strategic management, corporate strategy, strategic business unit, sustainable competitive advantage, product innovation, market diversification, corporate culture, Harvard Business Review.
Hence, you will find articles by Michael Porter, James Collins, Clayton Christensen, Kim and Mauborgne, Kaplan and Norton, and many other people. The collection includes such classics, such as “What is Strategy” by Michael Porter and also this “The Five Competitive Forces that Shape Strategy.” Collins and Porras show how you can build a vision of a company, and then an article co-written by Clayton Christensen will tell you how a company might reinvent its business model. There are articles on balanced scorecards and their strategic use, how you can make strategy into great performance, and of course, one of the most well-known articles, “Blue Ocean Strategy,” written by Kim and Mauborgne, which tells companies how they should go about finding new markets when competition becomes too fierce in current ones. Harvard does an excellent job on binding these articles together. Of course, all of them are classic articles and therefore readily available. If you are a poor student, you can actually quite just as easily get them by going on the databases that your business school has available for you in the library (and don’t worry, it’s not stealing, your school pays a small fortune each year so that you might have the right to print these out). If you are a business person, of course, with a little bit more money but less time to go about doing the research, the articles are brought together in a nice little book, which makes an easy read for a plane or a train journey. They certainly give some ideas about how you might reorganize your business, have a more effective strategy, or how a company might measure its performance more successfully.
Many of the articles of course have been turned into books themselves, so that somebody wanting to go on and read more about Michael Porter’s theory or the Blue Oceans Strategy can then go from there to read other books, which have been written on the subject. Personally, I find these books a great distraction from the endless films that you are served on transatlantic plane journeys. Most business people will tell you that it is during these trips that they actually get time to think about their strategy, the strategy of the company and how they might make changes to improve performance. Having books like this to read will certainly give you a whole host of ideas for doing such. The complicated part, of course, comes when the plane lands and you have to put those ideas into practice.
Interesting quotes from the book:
*Michael Porter’s “What is Strategy?”
The root of the problem is the failure to distinguish between operational effectiveness and strategy. Operational effectiveness and strategy are both essential to superior performance.
Operational effectiveness (OE) means performing similar activities better than rivals perform them. Strategic positioning means performing different activities from rivals’ or performing similar activities in different ways.
Southwest Airlines serves price- and convenience-sensitive travelers. But the essence of strategy in the activities – choosing to perform activities differently or to perform different activities than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand competition.
Ikea targets young furniture buyers who want style at low cost.
Strategic positions emerge from three distinct sources, which are not mutually exclusive and often overlap.
Strategy is the creation of a unique and valuable position, involving a different set of activities.
False trade-offs between cost and quality occur primarily when there is redundant or wasted effort, poor control or accuracy, or weak coordination. Simultaneous improvement of cost and differentiation is possible only when a company begins far behind the productivity frontier or when the frontier shifts outward.
*James Collins’ and Jerry Porras’ “Building Your Company’s Vision”
Companies tend to have only a few core values, usually between three and five.
Nike has not (to our knowledge) formally articulated a statement of its core purpose. Yet, according to our observations, Nike has a powerful core purpose that permeates the entire organization: to experience the emotion of competition, winning, and crushing competitors.
Setting the BHAG that far into the future requires thinking beyond the current capabilities of the organization and the current environment. Indeed, inventing such a goal forces an executive team to be visionary, rather than just strategic or tactical. A BHAG should not be a sure bet – it will have perhaps only a 50% to 70% probability of success – but the organization must believe that it can reach the goal anyway.
*Mark Johnson’s, Clayton Christensen’s, and Henning Kagermann’s “Reinventing Your Business Model”
Apple’s approach worked like Gillette’s famous blades-and-razor model in reverse: Apple essentially gave away the ‘blades’ (low-margin iTunes music) to lock in purchase of the ‘razor’ (the high-margin iPod).
Procter & Gamble developed a number of what it calls ‘disruptive market innovations’ with such products as the Swiffer disposable mop and duster and Febreze.
*Orit Gadiesh’s and James Gilbert’s “Transforming Corner-Office Strategy into Frontline Action”
Within a single company, it’s tricky to achieve both decentralized decision making and coherent strategic action. Still, some companies – think GE, America Online, Vanguard, Dell, Wal-Mart, Southwest Airlines, and eBay – have done just that. These companies employ what we call a strategic principle, a memorable and actionable phrase that distills a company’s corporate strategy into its unique essence and communicates it throughout the organization.
*Michael Mankins’ and Richard Steele’s “Turning Strategy into Great Performance”
In our experience, less than 15% of companies make it a regular practice to go back and compare the business’s results with the performance forecast for each unit in its prior years’ strategic plans.
To be productive, the dialogue between the corporate center and the business units about market trends and assumptions must be conducted within a rigorous framework.
Without rigorous framework to link a business’s performance in the product markets with its financial performance over time, it is very difficult for top management to ascertain whether the financial projections that accompany a business unit’s strategic plan are reasonable and realistically achievable.
The Swiss pharmaceutical giant Roche goes as far as to turn its business plans into detailed performance contracts that clearly specify the steps needed and the risks that must be managed to achieve the plans. These contracts all include a ‘delivery agenda’ that lists the five to ten critical priorities with the greatest impact on performance. Chairman and CEO Franz Humer and his leadership team make sure “everyone at Roche understands exactly what we have agreed to do at a strategic level and that our strategy gets translated into clear execution priorities.”
Other Book Reviews
CIO.in: “What’s also remarkable is that for a compilation of articles on strategy that appeared in the Harvard Business Review from 1996 till 2008, it still retains its freshness. In fact, given the economic climate, its insights are especially relevant, since the authors essentially go over what qualifies as strategy (and what doesn’t), how to formulate it and, finally, implement it effectively.”
First Friday Book Synopsis: “The reader learns how to understand what strategy is and isn’t as well as what it does and (doesn’t) do, and, how to manage/leverage the five competitive forces that shape strategy (Michael E. Porter); also, how to build a company’s vision (James C. Collins and Jerry I. Porras), how to reinvent a business model (Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann), how to formulate and then execute a “blue ocean strategy.””
Jeff for Banks: “What I liked about the book: 1. Covers, in good detail, disciplines such as strategy development, strategy execution, decision rights, balanced scorecards, and vision…”
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|Steve Jobs’ favourite book. Any more questions?||Nobel Prize winner and one of the best sellers this year. A must read for any business student.||The all time classic book on strategy and still a good read 30 years on.|
|The New Age of Innovation is one of C.K.Prahalad great works.||One of the best strategy books I have read in a long time.||Classic book that gives the ins and outs of creating new markets.|