Best Business Books
2017: Strategy
Leonard
Sherman
If You’re in a Dogfight, Become a Cat: Strategies for Long-Term Growth(Columbia Business School Publishing, 2017)
If You’re in a Dogfight, Become a Cat: Strategies for Long-Term Growth(Columbia Business School Publishing, 2017)
Olivia
Fox Cabane and Judah Pollack
The Net and the Butterfly: The Art and Practice of Breakthrough Thinking (Portfolio/Penguin, 2017)
The Net and the Butterfly: The Art and Practice of Breakthrough Thinking (Portfolio/Penguin, 2017)
Heidi
K. Gardner
Smart Collaboration: How Professionals and Their Firms Succeed by Breaking Down Silos (Harvard Business Review Press, 2017)
Smart Collaboration: How Professionals and Their Firms Succeed by Breaking Down Silos (Harvard Business Review Press, 2017)
In the
business world, conventional wisdom holds that market leaders eventually
succumb to the law of large numbers, the law of competition, and the law of competitive
advantage. But in the most compelling business book on strategy this year, If You’re in a Dogfight, Become a
Cat: Strategies for Long-Term Growth, Leonard Sherman assembles a
convincing brief that the slowdowns companies face as they become successful
and attract imitators are not inevitable.
A faculty member at Columbia Business School
and a career consultant, Sherman builds a persuasive case that it’s possible to
achieve and sustain the great desideratum of business: long-term
profitable growth. And he does so by telling many fascinating stories of
companies that found — and haven’t yet lost — the holy grail, among them
JetBlue, Southwest Airlines, IKEA, and, inevitably, Apple.
Sherman argues that companies have to
reimagine what they are and thus what they are capable of — hence the
dog/cat imagery. He writes that “most companies [pursue] predictable…strategies
within well-established business boundaries,” which over time “leads to a
blurring of meaningful differentiation between companies competing on the same
terms for the same customers.” Instead of by running faster, you “break away
from the pack by redefining one or more of the boundaries that
historically constrained industry behaviors” and by consistently renewing
your product and service portfolios.
Like a skilled arborist, Sherman prunes back
the ungainly, overgrown tree that strategy has become since it entered the
corporate mainstream in the middle of the last century. He saws off a number of
dead branches, including the many prescriptions that emerged from the countless
searches for excellence, greatness, and the secrets of success. What’s left
behind is an expertly trimmed tree of knowledge that brilliantly summarizes and
integrates what’s been learned about strategy over the last 60 years.
The many success stories in this book tell us
that the key to sustained, profitable growth is an innovative idea that solves
an important problem with a novel solution. For example, the Ford Motor Company
went from being just another carmaker in 1910 to being the market leader in
1920, with a 60 percent market share. As Sherman points out, Ford’s strategy of
“democratizing the automobile” with one model (the Model T) and one color
(black) made on a moving assembly line and sold through third-party dealerships
was a very big idea at a time when the market for the horseless carriage was
limited to the wealthy.
In fact, having a big idea explains every
success Sherman identifies, including Cirque du Soleil (staging a circus
without animals), Costco (selling bulk packaged goods, but to members only),
Netflix (renting movies by monthly subscription), Southwest Airlines (competing
with bus, auto, and train travel), Swatch (positioning watches as timely,
affordable fashion accessories), CrossFit (creating gyms for elite athletes),
and IBM (serving as your corporate/IT partner). Each of these companies created
strategies that enabled it to turn its big ideas into long-term profitable
growth. And their growth will eventually stall if those ideas are widely copied
or made obsolete, and are not replaced with new ones. This is why Ford is once
again just another car company: Every automaker in the world has copied its
once-innovative business model, and Ford has yet to create another idea that is
big enough (sorry, but an electronic liftgate on the back of an SUV doesn’t
qualify!) to fuel profitable, breakaway growth.
Sherman offers an interesting list of reasons
that “continuous disruptive renewal” remains the exception, rather than the
rule. Essentially, he writes, companies are like dogs, especially older ones:
They are easily distracted, are prone to foibles, and find new tricks difficult
to learn. They focus on customers and competitors, they have resource
constraints, and they suffer from misplaced pride and overconfidence. But the
real issue at most companies is the tendency for leaders to overdelegate the
job of innovation and strategic renewal. This is why companies are so prone to
what Sherman calls feature replication and performance augmentation. These approaches
are often the best that middle managers can come up with when leaders abdicate
innovation. The crucial difference at companies such as Apple (at least under
Steve Jobs) and Amazon is the active, everyday involvement of their CEO in
leading and pushing for breakthrough strategic innovation, not just renewing
the company’s current products and services, or how it makes, sells, and
delivers them.
I do have some problems with parts of
Sherman’s argument. In a chapter entitled “There’s No Such Thing as a Bad
Industry,” he argues that being average dooms you to poor profitability. But of
course, there are plenty of “bad industries.” The author himself gives us
two great examples: wine and airlines. In addition, the chapter “Why Are We in
Business?” is a misleading lecture based on several untruths and an obviously
biased selection of facts — the reader can skip it entirely without losing any
of the book’s fine benefits. And the chapter “Where Do Great Ideas Come From?”
suggests that they come from modern frameworks and methodologies, though none
of these explain where the ideas behind the strategy successes in his
book actually came from.
On the
whole, however, Dogfight is full of insights, and Sherman
argues convincingly that it’s possible to find meaningful differentiation in
any industry. He shrewdly notes that too many boards lack sufficient
understanding of their company’s strategy and that too many leaders conflate
budgeting with planning. But the book’s most important contribution is the
marriage of strategy and innovation. Sherman rightly makes the case that if you
want to avoid dogfights and become a cat, the latter is central to renewing the
former.
Butterfly Effect
How do
you make your company better at innovation? You might start by reading The Net and the Butterfly: The Art and
Practice of Breakthrough Thinking. The subtitle notwithstanding, the
book is really about the science and practice of how we can use our inherent
creativity to generate new ideas. The authors — Olivia Fox Cabane and Judah Pollack, who worked at Stanford
University’s StartX program — use our latest understanding of brain biology to
describe how breakthrough thinking actually happens, and how to make it happen
when you need it. “Breakthroughs, like butterflies, may fly an unpredictable
path, but it is possible to capture them if we build the right net,” they
write.
As Dogfight does, The
Net and the Butterfly provides many fascinating examples of iconic
innovations, such as the original “eureka” moment experienced by Archimedes,
the inspiration that led to round-shot ammunition, the lock-stitch sewing
machine, the Wright brothers’ wing-warping breakthrough, the opening riff for
the Rolling Stones’ “Satisfaction,” Velcro, pacemakers, Teflon, and, yes,
Ford’s moving assembly line. How these inventions came about had little to do
with design thinking, disruptive innovation, blue oceans, or any of the other
methodologies offered up by consulting firms, innovation gurus, and business
school faculty. It had everything to do with the structure and behavior of our
brains, say the authors.
In place of the now-disproved analytical
left brain/creative right brain theory, the authors give us EN/DN. Our
executive network (EN) is goal oriented and action oriented. We use it when we
are focused on tasks, and on using our expertise to solve problems we’ve seen
before. The default network (DN) is our meandering mode of thinking, during
which we are most able and likely to make new connections between the
seemingly unconnected (the authors’ examples include termite towers inspiring
self-cooling buildings and bakeries’ conveyor belts inspiring Ford’s moving
assembly line). The EN provides the analytical focus to define the problem, and
the DN provides the “associative, nonlinear” thinking that is essential to
sparking a creative solution to the problem.
Oscillating between the EN and the DN is what
enables us to generate breakthrough ideas. This explains the research that
tells us creativity is enhanced by alternating between cognitively challenging
work and activities with low cognitive load, such as riding a bike. It explains
why when I ask executives where they get their best ideas, I never hear “at my
desk” or “in a brainstorming session.” The number one answer is “in the
shower.” In fact, the authors tell us, the best activity for creativity is
walking. This seems to be the single common habit of great innovators in all,
ahem, walks of life, including Charles Dickens, Beethoven, Tchaikovsky,
Immanuel Kant, Werner Heisenberg, and Steve Jobs.
Citing neuroscience, the authors build a
compelling argument that anyone can become more creative. And they provide
powerful prescriptions and an enormous toolbox to help readers do just that.
For example, your DN is most active when you are falling asleep and waking up.
These times are called, respectively, the hypnagogic and hypnopompic states of
semi-consciousness, and you can practice inducing yourself into them. Other
tips in the book include how to get the most from brainstorming and how to feed
your DN with an ever-richer body of facts, stories, knowledge, and experiences.
Visual thinking and practicing the “relaxation response” to calm the
parasympathetic nervous system are just a subset of the many techniques
sprinkled throughout and then helpfully consolidated into an appendix.
Most of the book’s second half is devoted to
what Fox Cabane and Pollack believe are the three great killers of creativity:
the fear of failure, the experience of failure, and the pain of uncertainty.
Most companies, the authors argue, would see a measurable increase in
innovation just by increasing their employees’ ability to cope with and manage
the real anxiety and actual pain they feel in connection with the prospect and
experience of both failure and uncertainty. The authors dispense with the usual
clichés about embracing failure and uncertainty, and instead proffer more
practical advice — such as reframing, detaching, naming, personifying your
inner critic, practicing responsibility transfer, and “loading your certainty
bucket.”
Despite its dead-serious content and at times
scientific language, the book is an easy read with a good sense of humor. And
is it well organized for those who don’t have time to read every word, with key
takeaways at the end of each chapter and two appendixes at the end of the book,
one on exercises and another on science.
Working Together
Collaboration
is a too frequently overlooked practice of successful companies. Without it,
strategy, innovation, and execution have little hope. That becomes abundantly
clear when reading Smart
Collaboration: How Professionals and Their Firms Succeed by Breaking Down Silos,
by Heidi K. Gardner.
A fellow at Harvard Law School, previously a
faculty member at Harvard Business School, and before that a consultant at
McKinsey & Company, Gardner has conducted deep research into law practices,
consultancies, accountancies, and engineering firms. But her conclusions apply
to any company in which specialized expertise is paramount and complex
challenges cross internal boundaries — which is to say, every company.
It
turns out that smart — defined as efficient and effective — collaboration pays
off, and that can be proved. For the market-facing parts of your business,
Gardner argues, the payoff comes in the form of more insight into your
customers’ needs and priorities, more differentiated products and services,
fewer chances of selling or fulfillment mishaps, and greater numbers of loyal
alumni who will send business your way. Smart Collaboration really
comes alive in the final chapter, which covers the top 11 reasons customers
like it when you are a smart collaborator. My favorite: If customers see
that you can collaborate well internally, they’ll assume that you’ll be a great
collaborator with them. Another good one: Customers hate cross-selling; great
collaborators bring bigger, better solutions, not a bigger menu.
From a talent perspective, Gardner
powerfully demonstrates through her extensive research — 10 years of data
on eight firms — that smarter collaboration creates more committed, motivated,
knowledgeable, confident, trusting, and innovative staff. It also leads to
fewer whole-group defections, lower individual attrition, and fewer burnouts.
The result is greater staff productivity and lower costs of attracting,
on-boarding, integrating, developing, and retaining staff.
Smart collaboration has some daunting
barriers. These include insufficient levels of trust and confidence, inadequate
knowledge of the company’s capabilities and offerings, and the high costs of
coordinating across geographies, generations, cultures, functions, and sectors.
Gardner shows us not only how to build a business case for investing in smart
collaboration, but also how to get it. Her suggestions include setting up knowledge
contests, establishing customer councils, implementing customer laddering
(assigning different members of your firm to different staff in your customer’s
organization), holding virtual tours for distant colleagues, having internal
brokers to clear the internal market for demand and supply of expertise, and
holding visible celebrations of collaboration successes.
Several chapters are devoted to how to help
particular types of staff — the “solo experts,” the “seasoned collaborators,”
the “rainmakers” — use collaboration to grow professionally and build a bigger
book of business, responsibilities, or followers. But Gardner’s wisdom is most
evident when talking about compensation. In a spot-on section, she writes that
companies should measure inputs, not just outputs, to reinforce the behavior
they want; avoid individualistic and time-based metrics; prioritize intrinsic
motivators (such as recognition and development) over extrinsic motivators
(money); have a single profit pool; and use frameworks and guidance, not
formulas, to determine pay. Above all, ensure that your compensation system
doesn’t harm your company’s ability to simultaneously collaborate and hold
itself accountable.
This is a timely book because the demand for
specialization and the complexity of making companies more than just the sum of
their parts will only grow. In a world of dog-eat-dog competition where markets
move in the unpredictable pattern of butterflies, it helps to remember Benjamin
Franklin’s famous maxim: “We must, indeed, all hang together, or most assuredly
we shall all hang separately.”
by Ken Favaro
https://www.strategy-business.com/article/Best-Business-Books-2017-Strategy
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