Spender
arrives at this position by comparing the quantitative planning
techniques popular in organizations after World War II—which were
mostly developed by the military during the war—with the more
subjective, less rigid strategic methodologies that appeared in the
1980s and that are now widespread in the business world. In the
earlier era, the dominant idea was to match a firm’s resources to
the market’s demands. The company’s business model was tailored
to customer needs, suppliers’ offerings, labor availability,
logistics, and the like. If a mismatch occurred, the resulting
inefficiencies would reduce profit and threaten the firm’s
survival.
By
contrast, explains Spender, the modern strategy process must be a
much more forward-looking activity, because efficiency is no longer
enough to deliver a decisive strategic advantage in many industries;
instead, a so-called monopoly-based strategic advantage is needed. He
cites Apple’s dominance of the tablet business to illustrate the
overwhelming necessity of innovation as a means of securing
sustainable, above-normal profits, “especially where the ‘windows
of competitive advantage’ seem to be opening and closing with
increasing speed.”
Business
Strategy does
an extremely thorough job of surveying the consulting tools and
academic economic models and theories available to corporate
strategists. The book describes in some detail the salient facets of
the most essential methodologies and concepts, including SWOT,
Porter’s five forces, the experience curve, the balanced scorecard,
the value chain, horizontal and vertical integration, and more. But
again and again, Spender returns to the notion that companies must
avoid letting these tools stymie their flexibility by
over-objectifying decision making. Ultimately, he argues, added value
stems from the strategist’s choices—the entrepreneur’s
imagination and judgment—not from reams of analysis or data-based
conclusions.
By
way of example, Spender compares two strategic milestones: IBM’s
decision in the 1940s to turn down the patents and processes for
electrophotography developed by Chester Carlson, which became the
basis of the Xerox machine, and Intel’s ceding of the DRAM market
to low-cost Japanese competitors in the 1980s in order to focus on
microprocessors. Based on market conditions at the time, IBM believed
the customer base for electrophotography was too small and chose to
sit on the sidelines; Intel, meanwhile, decided it could build a
monopolistic position in microprocessors when neither the market
potential nor the manufacturing challenges were well understood. In
Spender’s view, IBM hewed to the safety of the known to its
detriment, whereas Intel rode the wave of strategic risk by using
data analyses as the basis of a calculated leap into the unknown and
unknowable.
Spender
devotes a chapter in the book to the role of executives in
communicating the organization’s strategy to employees so that it
is effectively executed. And although he delves deeply into a variety
of techniques for disseminating a company’s strategic program
(rhetorical, formal and informal, group and individual), he concedes
that if successful strategies—and, indeed, successful companies—are
built on imagination, motivating people to collaborate requires
equally inspired approaches. As Spender advises: “The rhetorical
practice that shapes the creative actions of others is precisely what
makes the modern firm possible.”
Executives
will ignore at their peril the fundamental message of Business
Strategy:
Once-popular mechanistic planning methodologies no longer work; they
have been replaced by innovation-based models that demand flexibility
and creativity. A choice to use anything less, Spender argues, is the
precursor of corporate atrophy.
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