MANAGEMENT SPECIAL ........................ GENERATION FLUX'S SECRET WEAPON (3)

GENERATION FLUX'S SECRET WEAPON (3)

In a world of rapid change and great uncertainty, the greatest competitive advantage of all may be at your very core.

FOLLOW AN INSIDE-OUT STRATEGY

"Purpose is at the essence of why firms exist," says Hirotaka Takeuchi, a management professor at Harvard Business School. "There is nothing mushy about it--it is pure strategy. Purpose is very idealistic, but at the same time very practical."

Takeuchi is not the boldest-faced name at Harvard--yet. But his research offers a compelling model for mission-based business culture. Takeuchi espouses what he calls an "inside-out approach" to business strategy. With a more traditional "outside-in approach," he says, you begin by assessing the outside environment, the state of the industry and the competitive field, in order to determine the most advantageous positioning for your company. Business schools have been stressing this approach for years, but Takeuchi believes it is too narrow.

At a company built on an inside-out strategy, he explains, "the beliefs and ideals of management become the core. Why does the firm exist?" The research Takeuchi has done with Ikujiro Nonaka at Hitotsubashi University in Tokyo shows that the key differentiator between enterprises is how they envision their futures. "A very bland mission doesn't resonate," he explains. A dynamic, long-term plan requires a mission that's clear, focused, and invaluable: "Look at what Walt Disney wanted: 'to create timeless, universal family entertainment,'" Takeuchi continues. "If you have those five words, there's no doubt in the mind of employees or anyone else what you're about."

This might sound touchy-feely to business leaders trained to prefer quantifiable metrics like sales growth and operating margin. Takeuchi doesn't care. "Consultants argue that strategy comes from big data," he says, "but it really comes from the heart." You can hear the cynics groan. But what if Takeuchi is right? What if an inside-out strategy creates more creative, resilient companies than those following the old outside-in approach?

BY ROBERT SAFIAN