Management and Strategy Thinkers

SOURCE: KOCH, R. (2000). The Financial Times guide to strategy (Second Edition). London: Pearson Education.
(Entries are selected and slightly edited by D. P. Dash)

ANDREWS, KENNETH

Probably responsible, more than any other single person, for the most influential model of strategy.

The classic model is what Henry Mintzberg calls the 'Design School' or 'Strategy formation as a process of conception': the outcome of thinking, using a very simple model. At the heart of it is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) diagnostic, taught to generations of business school students and well known throughout industry everywhere in the world.

In 1965, Ken Andrews edited and wrote the renowned Harvard Business School textbook Business Policy: Text and Cases. This has been the standard text for many strategy courses up to today. In 1971, Andrews wrote The Concept of Corporate Strategy for practising managers.

Its model requires executives, and particularly the chief executive, to think initially about two streams: an external appraisal, comprising threats and opportunities in the environment; and an internal appraisal of the strengths and weaknesses of the organization, and therefore its distinctive competencies. Strategic options are then constructed and evaluated according to four components of strategy:

* what a company MIGHT DO – the market opportunities
* what it CAN DO – its corporate competencies and resources
* what it WANTS TO DO – the aspirations of the key executives
* what it SHOULD DO – its social responsibilities

One strategy is then chosen, with particular emphasis on the fit between external opportunities and the firm's own competencies, and then promulgated by the chief executive and implemented. The organization's structure should be modified, if necessary, to facilitate the implementation of the strategy.

The model has many virtues, including simplicity; the idea of fit between what the organization can do and what the outside world wants; the way in which it forces strategy to be explicitly considered; and the primacy to which the model elevates strategy. It strikes a nice balance between analysis and intuition, allows full rein to creativity, and yet takes account of external and internal realities. The model also works, in the sense that it is easy to understand and use; if this were not true, the model would not have become so influential.

Sadly, the model also has some grave flows, and looks increasingly dated. It is top-down, which is not wholly bad, but certainly unfashionable, and in many circumstances inappropriate. It assumes that the chief executive (or other strategists) can know the organization's strengths and weaknesses, largely as a result of a cerebral process. Where is the scope here for external perspectives, for data collection, for economic analysis, or for experimentation to see if the market agrees with the hypothesis? Moreover, the assumption that structure should follow strategy is too clear-cut, and often wrong: strategy is often determined by structure, and the best solution is, perhaps, to allow strategy and structure to shape each other.

The promulgation of one strategy is also questionable: this can lead to inflexibility. It is usually best to let strategy emerge from a process--sometimes quite a long one--of experimentation, thinking, and action, where the market is actively involved in determining the outcome. The Andrews model runs the serious risk of detaching thinking from action: there are those who think, and those who do. The best strategies usually come from mixing the two processes, so that the operating managers in the thick of business do the thinking as well as the acting.

Perhaps the most serious objection to the model, however, is that is it too vacuous. The procedure is there, but the model gives little helpful guidance on how to evaluate the strengths, weaknesses, opportunities and threats. Having sat through hundreds of sessions where managers, with no further help, try to divine the SWOT elements, I can only say that they usually come up with the wrong answers.
ANSOFF, H. IGOR (b. 1918)

Russian-American engineer, mathematician, military strategist, and operations researcher, Ansoff wrote the highly acclaimed book Corporate Strategy in 1965. The book is quite readable and provides a model for deriving a corporate strategy. The model assumes that the purpose of a firm is to maximize long term profitability (return on investment) and then gives a host of checklists and charts for deriving objectives, assessing SYNERGY between different parts of the firm (functions and businesses), appraising the firm's COMPETENCE profile and deciding how to expand (how to diversify, how to assess whether entry to an industry is likely to give the desired RoI, whether to acquire or go for organic growth, and how to weigh alternatives taking into account a large number of highlighted factors). He stresses the need for a 'common thread' for all a company's businesses it if is to add value to them.

Re-reading Corporate Strategy today is disappointing. The book has not aged well, the methodology overwhelms the substance, and it is difficult to gain much insight from the mechanistic procedures suggested. The concept of competitive advantage is not introduced systematically until page 161 (out of a total of 191 pages in my edition) and is then given only four and a half pages. On the other hand the book's checklists are useful for analysts who want to known whether they have looked at everything they should, for example in conducting an industry analysis. The ANSOFF MATRIX is definitely a useful framework for considering expansion into new areas.

Since 1965, Ansoff has written at least five full-length books on strategic management. The later Ansoff is much more contingent in his prescriptions.
ARGYRIS, CHRIS (b. 1923)

One of the best and longest-running examples of the humanizing forces in American business academia. Since 1971 Argyris has been a Professor at Harvard Business School; before that he was at Yale. He is very much the New England preppy prof: tall, thin, mild, with a voice described as 'reedy with a slight European tinge'. He is also a formidable organizational psychologist who was banging the drum about organizational learning many decades before the theme became fashionable.

Argyris' great virtue is his extensive research into how executives and organizations learn – or fail to. He is therefore a patron saint of the 'Strategy as Learning' school. His key books are the 1957 classic Personality and Organization, and the two written with Donald Schön, Theory in Practice (1974) and Organizational Learning (1978).

Argyris' research highlights the extent to which most managers behave defensively and refuse to engage their emotions. 'I concluded,' he wrote about one study of senior management, 'that [they] unknowingly behaved in such a way as not to encourage risk-taking, openness, expression of feelings, and cohesive, trusting relationships.'

Argyris and Schön invented the ideas of single-loop and double-loop organizational learning. Single-loop learning detects errors and keeps the organization on track. Double-loop learning questions whether the strategy is right and enables executives to reflect critically on what they do, and teaches them how to learn from others: how to break down the defences that block learning.
BARNARD, CHESTER (1886–1961)

An industrialist who thought deeply about management. Barnard spent his entire working life with American Telephone and Telegraph. He is known for his hugely influential 1938 book The Functions of the Executive, and for being one of the first to articulate the view that corporate leaders have to manage and inspire the values of their firm.

Barnard saw that organizations were not simply rational instruments trying to carry out defined goals. They were also communities, and 'in a community all acts of individuals and organizations are directly or indirectly interconnected and interdependent'.

Many writers claim that Barnard was ahead of his time in recognizing and promoting the ethical and value-based nature of organizations. In my view he was an authoritarian idealist. Try these two chilling quotes from Barnard.

'The most important single contribution required of the executive… is loyalty, domination by the organization personality.'
'Executive responsibility… requires not merely conformance to a complex code of morals but also the creation of moral codes for others.'

Barnard should serve as a warning for all strategists: the ethical integrity of a corporation and a distinctive culture can be great competitive strengths, but when taken to an extreme, cultural conformity can stifle debate, cut off learning, and lead to a tyrannical order. Both the appeal and the dangers of such organizations should not be underestimated.
CHANDLER, ALFRED (b. 1918)

Influential American economic historian whose book Strategy and Structure (1962) was based on studying major US corporations between 1850 and 1920. He is important for having made three points clearly:

1. He highlighted the close relationship between strategy and structure, and said that firms should first determine their strategy, then their structure. This was more unusual for the emphasis on strategy than the sequencing because very few writers had paid attention to strategy: it is almost completely lacking in the earlier theorists such as Taylor and Weber.

2. He believed that the role of the salaried manager and technician was vital, and talked about the 'visible hand' of management coordinating the flow of product to customers more efficiently than Adam Smith's 'invisible hand' of the market. This is an early recognition that corporations, in their internal dealings, may achieve unique efficiencies.

3. He was an advocate of decentralization in large corporations, contributing to the divisionalisation and decentralization trend of the 1960s and 1970s. He praised Alfred SLOAN's decentralization of General Motors in the 1920s before Sloan published his book (in 1963), and was influential in the transformation of AT & T in the 1980s from a production-based bureaucracy to a marketing-oriented organization.

Chandler provided much of the vocabulary for the subsequent management debate: it is still very much a live issue whether strategy should follow structure.
DE GEUS, ARIE

A Dutch executive with Shell for 38 years, including stints as coordinator for all of Shell's operations in Africa and South Asia, and as head of planning. De Geus has recently reinvented himself as a writer and business academic. His name is now associated with the idea of 'learning organization'. His 1977 book The Learning Organization explored the idea that companies are really 'alive'; they are not just money-making machines, and should have their own sense of identity, purpose and self-direction.

Arie de Geus points out that most large multinational corporations live for only 40-50 years, considerably less than human life-spans. 'Companies die,' he claims, 'because their managers focus on the economic activity of producing goods and services, and they forget that their organization's true nature is that of a community of humans.'

Here the idea of the learning organization is taken further. The organization should not just learn; it should also set its own priorities and perpetuate itself. 'Like all organisms,' de Geus writes, 'the living company exists primarily for its own survival and improvement: to fulfil its potential and to become as great as it can be… the real purpose of a living company is to survive and thrive in the long run…'.

De Geus identifies certain characteristics of companies that live a long time, including the ability to learn, tolerance, diffusion of power, a clear self-identity, conservatism in finance, and trust among the organization's members. 'If companies can meet those conditions, I believe that average corporate life expectancy will begin to rise, and all humanity will benefit as a result,' he concludes.

Well! On the plus side, companies are 'alive' and are 'self-organizing systems' in the same ways that cities, economies, and markets are. I find De Geus's basic propositions questionable. Is it necessarily a good thing if companies live a long time and pay attention to their own perpetuation?
DEMING, W. EDWARDS (1900–1993)

American originator of the quality revolution: acted as a consultant to many major Japanese firms in the late 1940s and 1950s and was the single greatest external influence on Japanese industry – until Deming, Japanese goods were inferior. He became known in America only in the 1980s, when he helped to stem the tide of superior Japanese imports into the West that he had earlier contributed towards. He was a statistician who emphasized the importance of the consumer ('the consumer is the most important part of the production line') and that reducing variation was the key to superior profitability.
DRUCKER, PETER F. (b. 1909)

Defies classification: never really a strategist, it is safest to say that Drucker is a business philosopher, and the sharpest and most influential commentator that business has ever seen. His father was chief economist in the Austrian civil service. Drucker moved to England in the late 1920s and worked there as a clerk, journalist and economist, before emigrating to USA in 1937. There he became a noted consultant, writer, and academic.

After a prolonged flirtation with the managerialist school, Drucker came, by the 1950s, to a renewed faith in market forces and the primary of the customer. In 1954, in The Practice of Management, he declared magisterially: 'There is only one valid definition of business purpose: to create a customer. Markets are not created by God, nature, or economic forces, but by businessmen.'

Therefore, the purpose of business lies outside itself, it is a means to the enrichment of customers and society. From then on, Drucker's statements proved infallible: he was the first to advocate decentralization of large corporations; he invented the 'knowledge worker' decades before the idea became fashionable; did the same with privatization; he was the first to insist that government should, steer rather than do: and one of the first to acknowledge that the large corporation had had its day.

Considering his long innings and large tally of books (at least 15), and the appropriately high esteem in which he is held, it is salutary to reflect that Drucker actually says remarkably little about strategy. His main contribution is the idea of the 'theory of the business':

'These are the assumptions that shape any organization's behaviour, dictate its decisions about what to do and what not to do, and define what the organization considers meaningful results. These assumptions are about markets. They are about customers and competitors, their values and behaviour. They are about technology and its dynamics, about a company's strengths and weaknesses. These assumptions are about what a company gets paid for. They are what I call a company's theory of the business.'

I find this a compelling concept, and one very relevant to strategy. Any organization not only has distinctive competencies but also distinctive beliefs and formulae. The way that the business looks at the world, if you like, the firm's distinctive ideology, is as important or more so than any explicit strategy. A firm's theory of the business may contain a tremendous amount of insight, or none at all. The fit of this theory with the business environment – that is, the degree to which the firm's theory of the business strikes a market and economic chord – may be as important to the firm's success as the strength of its core competencies or its market positions. Drucker did not exactly say this, but he would have done, had he ever deigned to write a book on strategy.

If this is true, a firm's success rests heavily on those who exercise ideological sway over it – which gives an unfashionable weight to its past and present leaders, and especially its founder. This may help to explain why, despite all the advantages of accumulated wealth and expertise, firms wane as surely as they wax. The shelf-life of ideology is generally no more than a few decades, pretty much that of the typical large company.
GHOSHAL, SUMANTRA (1948-2004)

Ghoshal, who hails from India, has been at London Business School since 1994; previously he was at INSEAD and MIT. He is noted for two books written with Christopher Bartlett from Harvard Business School: Managing Across Borders (1989) and The Individualized Corporation (1997). In the former, Bartlett and Ghoshal put forward the model of the TRANSNATIONAL firm: one that is locally responsive but has global scale and expertise, and that can transfer that expertise effectively, cheaply, and fast. The Individualized Corporation takes a justified sideswipe at many top US corporations and observes that we have not yet found a good new model to take the place of the divisionalized corporation, even though the latter has clearly had its day.

Ghoshal comments elsewhere that 'the oppressive atmosphere in most large companies resembles downtown Calcutta in summer'. His remedy is 'stretch and discipline' as at Intel, where there is both confrontation and disagreement in meetings, but common commitment at the end of meetings to the action decided. To avoid the Calcutta torpor, Ghoshal advocates the 3Ps: purpose ('the company is also a social institution'), process ('the organization as a set of roles and institutions') and people ('helping individuals to become the best that they can be').

It is odd, but significant, that Ghoshal, who calls himself 'a plain vanilla strategy man', has come to think that the real problem with strategy is how to structure organizations and how to implement the strategy through people: 'You cannot manage third generation strategies through second generation organizations with first generation managers.'
HAMEL, GARY (b. 1954)

An American based in California, from where he runs an international strategy consulting firm, but retains a visiting professorship at London Business School. Hamel is best known for his work with C. K. Prahalad on STRATEGIC INTENT, CORE COMPETENCIES, and for their 1994 bestseller, Competing for the Future.

Hamel is a proponent of the resource-based theory of the firm and therefore an advocate of 'opportunity share' rather than narrowly-defined 'market share.' He favours creative and revolutionary strategy, with passion, imagination, and emotion putting reason and analysis in the shade.

In a 1996 Harvard Business Review article, Hamel argued for 'strategy as revolution'. Industries divide, he says, into the rule-makers – such as IBM, Xerox, and Coca-Cola; the rule-takers – such as Fujitsu, McDonnell Douglas, and Avis, 'peasants who only keep what the Lord doesn't want'; and the rule-breakers – including IKEA, Body Shop, Swatch, and Southwest Airlines. The rule-breakers are revolutionaries who overturn the 'curse of incrementalism', rewrite industry rules, and overthrow industry boundaries.

Rules-breakers have to both 'stretch' and 'leverage'. Stretch is 'a misfit between resources and aspirations'. But it must be accompanied by skills in leveraging limited resources, by concentrating resources on a limited focus, accumulating resources through alliances and a campaign of knowledge extraction, complementing resources by blending them, conserving resources, and recovering resources from the market as quickly as possible. Most fundamentally, however, rule-breakers have to do things differently.
HANDY, CHARLES (b. 1932)

Handy's main concerns are the philosophy of business and its place in society, and the future of work. The son of an Irish Protestant clergyman, and in former incarnations a manager for Shell in Malaysia, an economist and an academic at London Business School and MIT, Charles Handy has turned into a surprise success as an author of 'where next' books, of which the best may have been one of the earliest, The Age of Unreason, published in 1989.

Gary HAMEL pays appropriate tribute to Handy: 'Charles is one of the few management writers who can step entirely outside the world of management and then look back in ….[yielding] an uncompromising and unorthodox perspective which will discomfort and enlighten… Where most business authors are intent on giving you the “how”, Professor Handy forces us to ask “why?”'

Although Handy is well worth reading, he has little to say directly about strategy. The most valuable contribution he has made there probably lies in his concept of the federal firm, where the Centre co-ordinates, influences, and advises, but doesn't decide things. The Centre really is at the middle of things and is concerned with long term strategy, but is not a head office in disguise. Wouldn't it be nice to see quite a few such firms? Sadly, Handy does not provide a long list of examples.
KANTER, ROSABETH MOSS (b. 1943)

US sociologist, Harvard Business School professor and editor of the Harvard Business Review and the driving force behind empowerment as a change management crusade. Three of her books are well-known: Men and Women of the Corporation (1977) criticized the way that human talent was cramped within bureaucratic structures, hurting both the corporation and the individuals. Kanter proposed career development mechanisms to move more women (and some other 'powerless' groups) into more senior jobs, and also urged empowering strategies leading to flatter structures and autonomous work groups. The Change Masters (1983) profiled companies that were good at innovation and identified their underlying characteristics. The most significant finding was that such firms have an 'integrative' view of the world and were iconoclastic; firms poor at innovation were analytical, compartmentalised, 'segmentalist' and conservative. The book developed the theme that individuals should be made more powerful, but within a framework of common corporate purpose. When Giants Learn to Dance (1989) stresses the need for even giant corporations to become 'post-entrepreneurial': demonstrating all the attributes of an entrepreneur such as flexibility, responsiveness, and personal initiative, but combining this with the discipline of a large firm and the realisation of SYNERGY between different parts of the firm by having a vision of the firm overall and where it can go. In a striking metaphor, Kanter talks about the dancing elephant: 'the power of an elephant with the agility of a dancer'. Another useful phrase is 'the corporation as a switchboard, where a small centre helps to direct other parts of the organization to realise synergies'. She also invents PAL, 'pool resources with others, ally to exploit an opportunity, or link systems in a partnership'. The wise corporation becomes PALs with customers, suppliers, joint venture partners and outside contractors. The company of the future will be lean but not mean, able to do more with less (fewer layers), but operating within a framework of shared values.

During the 1990s, Kanter wrote three books, The Challenge of Organizational Change (with B. Stein and T. D. Jick, 1992); World Class: Thriving locally in the global economy (1995); and Rosabeth Moss Kanter on the Frontiers of Management (1997).
LEVITT, THEODORE (b. 1925)

German-born American marketing guru, professor at Harvard Business School. Wrote the legendary Harvard Business Review article on 'Marketing Myopia' in 1960: it has since sold half a million reprints. The article said that firms and industries should be 'customer-satisfying' rather than 'goods-producing' in their orientation: marketing-led not production-led. Levitt said it was not good enough to meet customer demand with a new product and then believe that the key to continued success was low cost production. He criticised 'Fordism' for giving the customer what was thought to be good for him, rather than continually being alert to what the customer wants. Hence Ford's decline in the face of General Motors' policy of offering cars in any colour and later in the face of the compact car from Japan and Europe. He also castigated the myopia of the US railroad industry in thinking that it was in the railroad business (a production-led view) rather than transport: if it had had the latter view it would have diversified into airlines and not seen its business wither.

Levitt was wholly right and perhaps partly wrong. He was well ahead of his time in telling firms to be customer-obsessed. But his railroads example and others he gave were simplistic and possibly wrong. What expertise or cost sharing did the railroads have for entering the airline business? Perhaps they should have been experts at marketing transport to passengers, expertise that would have been transferable. But they weren't, and if Penn Central had bought an airline it would have gone bust much quicker than it did. The criticism was right, the remedy doubtful.

More recently, Levitt has become a prophet of global brands. His work is fun to read, stimulating and bursting with ideas – we should not complain if some of them are a bit incredible.
MINTZBERG, HENRY (b. 1939)

According to Tom PETERS, 'perhaps the world's premier management thinker'. Professor Henry Mintzberg of McGill University in Montreal, and of INSEAD, is certainly one of the world's foremost experts on strategy and is highly respected for his willingness to engage in detailed empirical research and also his keen and sceptical intellect. He is however, a little bit of an elusive butterfly: his exact position on many issues is hard to pin down, even though he is an avid collector, classifier, and debunker of the views of others.

Mintzberg made his name as early as 1973 with The Nature of Managerial Work, which noted the messy reality in which managers were immersed, and destroyed the idea that they were principally planners or rational analysts. Strategy emerged on the run: it was rarely planned.

Mintzberg deserves great thanks for helping to destroy the theory and practice of strategic planning, and substituting the idea, which he published in the Harvard Business Review in 1987, that strategy should be “crafted'. A potter at her wheel mixes thought and action, guiding the clay, responding to how it shapes itself, sensing rather than analysing. If strategy should be crafted, there can be no hard distinction between developing it and implementing it. Crafting requires those who are closest to the material to be involved in strategy development, ensuring that the strategy is flexible and responds to events and market needs as they unfold.

In 1998, Mintzberg (with co-authors Bruce Ahlstrad and Joseph Lampel) published Strategy Safari, an elaboration of the ten schools of strategy Mintzberg had described earlier. It is a detailed and scholarly review. For the academically-inclined, there is a tremendous amount of useful meat in this book, but do not attempt to swallow it all in one sitting.

Gary HAMEL has given five reasons why he likes Mintzberg: 'He is a world class iconoclast. He loves the messy world of real companies. He is a master story teller. He is conceptual and pragmatic. He doesn't believe in easy answers.' Both Hamel and Mintzberg are anti-establishment characters, colourful revolutionaries in a sea of grey.
OHMAE, KENICHI (b. 1943)

Brilliant, un-Japanese, Japanese, whose book The Mind of the Strategist (published in Japan in 1975, but not in the US until 1982) remains one of the best on strategy, and who contributed towards the development of Toyota's JUST-IN-TIME system. An analyst who gives a higher place to intuition and insight, Ohmae was among the first to drive everything from the customer, and place the customer at the heart of the firm's value system: 'customer-based strategies are the basis of all strategy'. The Mind of the Strategist is an eloquent plea for creative, customer-based strategies, while giving a large number of hints and prompts in the form of analytical diagnoses and examples of unconventional strategies successfully pursued by JAPANESE COMPANIES.

In recent years, notably in his landmark 1990 book, The Borderless World, and in The End of the Nation State (1995), Ohmae has turned his attention to the way the world's largest companies are creating what he calls the ILE (Inter-Linked Economy) of the US, Europe and Japan/Asia, based largely on the need to meet the requirements of demanding global consumers. He argues persuasively the case for inevitable GLOBALISATION, albeit based on LOCAL GLOBALISATION rather than UNIVERSAL PRODUCTS, a process being slowed down but not stopped by the rearguard actions of protectionists, bureaucrats, and governments around the world. The companies forcing the change are becoming multilocals rather than multinationals. According to Ohmae, 'nothing is “overseas” any longer'; the word is banned from Honda's vocabulary, for example, 'because [Honda] sees itself as equidistant from all customers'. Multilocals must become 'insiders' to each important market (a process he describes usefully as INSIDERISATION) and be driven by a determination to serve customers better wherever they are: 'Global players must have the engine and knowledge to propel themselves. They must be directly familiar with the key markets. That knowledge is the secret of success in the borderless world.'
PORTER, MICHAEL (b. 1947)

The second highest paid management lecturer after Tom Peters: Harvard Business School professor, consultant, and the star of corporate strategy worldwide. Porter even talks about the 'Porter brand'. In two books, Competitive Strategy: Techniques for Analysing Industries and Competitors (1980) and Competitive Advantage (1985), Porter summaries and builds on the main concepts of corporate strategy. A brilliant synthesizer, formulator, and packager, Porter defines two kinds of competitive advantage: low cost and differentiation. He places a firm in the context of its industry and identifies the firm's value chain (all the ways it adds value from start to finish by value activities) systematically. Since the mid 1980s he has looked at global competition and the comparative advantage of nations, building on work done earlier by Ira MAGAZINER. He stresses the need for clusters of mutually supporting industries (see also KEIRETSU) and comes as close as a mainstream American could to recommending industrial policy: The Competitive Advantage of Nations (1990) should be compulsory reading for all politicians. Like Peters, Porter has come up with some useful and insightful strategic prescriptions, including:

* sell to the most demanding buyers, as they will set standards for your people
* seek buyers with the most difficult needs, so they become your R & D lab
* establish norms exceeding the world's toughest regulations
* source from the world's best suppliers: scour the world for them
* treat employees as permanent partners
* use outstanding competitors as motivators.

Porter's Competitive Strategy (1980) codified how to gain competitive advantage. His analysis suggests four diagnostic components of looking at any specific competitor:

* Future goals: what are they trying to achieve, including their ambitions in terms of market leadership and technology?
* Assumptions: how does the competitor perceive himself, and what assumptions does he make about the industry and his competition?
* Current Strategy
* Opportunities: what do they think they have?

Armed with this framework, one can then construct scenarios about competitors' possible reactions to any action by one's firm.
PRAHALAD, C. K. (b. 1941)

Best known for his collaboration with Gary HAMEL and the idea of CORE COMPETENCY, STRATEGIC INTENT, and STRETCH AND LEVERAGE. C. K. Prahalad is a long-serving professor at the University of Michigan's business school, and a consultant to many international corporations, including AT&T, Motorola, and Philips. Prahalad became Hamel's mentor after Hamel quit his hospital administration job to take a Ph.D. in International Business at Michigan in 1978. 'We shared a deep dissatisfaction with the mechanistic way strategy was carried out,' Hamel recalls.

Hamel and Prahalad's most important collaboration was their 1994 bestseller, Competing for the Future. The book is a plea for multi-faceted strategy, going beyond analysis and searching for purpose, both emotional and passionate. They caution against excessive simplicity: 'We like to believe we can break strategy down to Five Forces or Seven Ss. But you can't. Strategy is extraordinarily emotional and demanding. It is not a ritual or a once-a-year exercise, though that is what it has become. We have set the bar too low.' They denounce downsizing as 'corporate anorexia', commenting that 'a company surrenders today's business when it gets smaller faster than it gets better. A company surrenders tomorrow's business when it gets better without getting different.'

Prahalad has also collaborated with Yves Dox, an INSEAD professor, resulting in their influential 1987 book, The Multinational Mission: Balancing local responsiveness and global vision.
QUINN, JAMES BRIAN

A former strategy consultant, long associated with the Amos Tuck School of Management, who started in the 1960s by advocating a formal systems planning approach. Quinn changed his mind, however, as a result of extensive research he undertook in the late 1970s, when he went into Chrysler, Exxon, Pilkington, and Xerox to observe how strategy really was developed and implemented. The results, published in 1980, came in his important book, Strategies for Change: Logical Incrementalism. 'Logical incrementalism' is a useful concept, and not just a euphemism for 'muddling through'. According to Quinn: 'The real strategy tends to evolve as internal decisions and external events flow together to create a new, widely shared consensus for action….in well-run organizations, managers pro-actively guide these streams of actions and events incrementally toward conscious strategies.'

Quinn's model is sort-of-top-down, but in a loose and semi-political, semi-learning way. The chief executive and other senior managers work towards a picture of where they want to go, even before they can describe it; they nudge their people towards the goal, but will shift the targets along the way, experimenting, holding off irrevocable decisions until more information is available, corralling (getting like-minded people together) and cajoling support for new ideas, and defining an increasing precise strategy. This process – what Mintzberg has characterised as 'strategy on the run' – 'allows executives to blend analysis, organizational politics, and individual needs into a cohesive new direction'.

In the firms Quinn researched, financial analysis and quantitative modeling were not useful, and process of strategy formulation merged with that of implementation into one 'continuous, pulsing dynamic... successful managers who operate with logical incrementalism build the seeds of understanding, identity, and commitment into the very processes that create their strategies. By the time the strategy begins to crystallise in focus, pieces of it are already being implemented. Through their strategic formulation processes, they have built a momentum and psychological commitment to the strategy, which causes it to flow toward flexible implementation.'
RIES, AL

A non-academic consultant and writer, who has made his name as a marketing expert. Yet, though his name does not appear in Mintzberg et al.'s comprehensive Strategy Safari, Ries is one of the exponents of business strategy. His 1996 book, Focus, is a formidable polemic in favour of keeping whole corporations, as well as individual business units, focused on one special market and approach to business.

Ries documents the 'unfocusing' of corporate America in the 1980s and early 1990s. Companies, driven by managerial hubris, extended their product lines, entered new businesses, and often made disastrous acquisitions: 'diversification'. But now managers are reaping the whirlwind, and those who have offended the gods of focus are being eased out of the executive suite.

Globalisation implies specialisation. 'The large the market, the more specialisation that takes place,' Ries argues. 'Like amoebas dividing in a petri dish business can be viewed as an ever-dividing sea of categories.' Cars used to be cars; now there are a large number of specialist producers. As in evolution by natural selection, species divide to form new species. 'The surge of SPINOFFS and sell-offs is proof positive that the age of diversification and the age of conglomerisation are finally over. We have entered the age of focus.' A sequel to Focus is Future Focus (2000). Ries is a joy to read.
SCHEIN, EDGAR H. (b. 1928)

A distinguished and commercially astute American social psychologist based at MIT. Schein is 'well networked', having worked with and been influenced by Doug McGregor, as well as having close links with Warren Bennis, Chris ARGRIS, and Charles HANDY, whom he taught. Schein was one of the first to focus on process consulting, the title of his 1969 book, which involves looking at how a firm operates and its CULTURE and helping it be more effective, rather than supplying expert content-oriented consulting. Schein has been influential for the past 20 years, and has added three concepts to management language: Process Consulting, the Psychological Contract, and the Career Anchor.

The 'psychological contract' is the bargain struck between employees and the firm, covering not only the normal economic contractual terms but more broadly what each expects of the other. Unless the terms of the psychological contract are understood (at least intuitively) by each side, the basis for a long term relationship does not exist, and there may be unexpected friction in the short term. The psychological contract relates to trust and expected patterns of behaviour.

The 'career anchor' is the self-image of an individual in an organization that holds him or her in place. Early on in a career the individual may develop (or fail to develop) a sense of worth, satisfaction, and confidence in his or her role in the organization. Without the anchor, the individual may strive for a new role inside or outside the organization.

Schein was an early writer on corporate culture, which he defines as 'what [an organization] has learned as a total social unit over the course of its history'. He stressed the importance of VALUES, modes of behaviour, and artefacts (the external manifestations of a firm's culture, such as Mars' white coats and clocking-in, IBM's white shirts, open-plan or compartmentalised offices, the way that people in the firm talk to each other, and so on). Schein emphasises also the role of leadership in change management. His best books are: Process Consultation (1969); Organizational Culture and Leadership (1985, 1992); and Career Anchors: Discovering your real values (1990).
SENGE, PETER M. (b. 1947)

Originally an engineer, studies social systems at MIT and is director of the Center for Organizational Learning there. Senge is best known for his 1990 work. The Fifth Discipline, subtitled The art and practice of the learning organization, and its sequel, The Fifth Discipline Fieldbook: Strategies and tools for building a learning organization (1994), which he co-authored with C. Roberts, R. Ross, B. Smith and A. Kleiner. He is responsible more than anyone else for adapting the ideas of 'systems thinking', particularly the idea of Jay Forrester from MIT, into management thinking. The five disciplines are: personal mastery; mental models; building shard vision; team learning; and systems thinking. 'Systems thinking,' Senge writes, 'is the fifth discipline. It is the discipline that integrates the disciplines, fusing them into a coherent body of theory and practice.'

Senge has popularised the idea that organizations need to learn collectively, forming a collective vision that takes account of how everything is connected to everything else. But defining the learning organization is tough: Senge offers not so much a product or a concept as a process, reminiscent of the much older 'process consulting' model championed by Ed SCHEIN. This makes it difficult to assess how successful Senge's work has been, and whether the 'learning organization' is more than a nice aspiration or a consulting fad.

The idea that organizations' success is dependent on their ability to learn collectively must be substantially correct, but helping an organization learn is difficult to describe and even more difficult to do. I feel there is a real danger, in the Senge approach, of ignoring content and structure. What the organization learns may be more important than how it does so; the learning needs to be steered according to a clear rationale. And making the corporation simpler and smaller may dramatically multiply the chances of functional learning. See Arie DE GEUS.
SLOAN, ALFRED P. (1875–1966)

One of the very few industrialists to be referred to as an authority on management; head of General Motors from 1923 to 1955; author of My Years with General Motors (1963); and notable for three reasons. First, he virtually invented the decentralised, divisionalised firm, establishing what he called federal decentralisation, when he transformed General Motors in the early 1920s from a mass of untidy and overlapping entities, with sporadic and ineffective central control, into eight separate divisions (five car divisions and three component divisions) which were treated as though they were separate businesses, but which were subject to professional controls on finance and policy from the Centre.

Second, Sloan changed the structure of the car industry and its SEGMENTATION, and provided a model for how other firms could do the same. When he took over, there were just two car segments in the US: the mass market, dominated by the black Ford Model T, which had 60 per cent of the total car market volume; and the very low-volume, high-class market. Sloan aimed to plug the gap between these two markets by creating five price and performance segments, with the aim that these five markets should be dominated by one of the new five GM car ranges: the Chevrolet, Oldsmobile, Pontiac, Buick, and Cadillac (this represented a range rationalisation for GM from eight competing models). He turned Ford's no-choice policy on its head by introducing a range of colours and features so that cars could be 'customised' at relatively little extra cost, and he introduced new models each year to encourage trading up.

The segmentation fitted neatly with the divisionalisation: each of the five car segments and models had its own division, thus inventing the idea of the Strategic Business Unit (SBU) about 50 years before GE actually articulated it.

Sloan's third innovation was to establish the three component divisions as separate profit centres that supplied not only the five car divisions but also outside customers. Again, this concept had to wait 50-70 years before its virtues became fully appreciated.

Sloan is fascinating because he had a foot in the old management camp of scientific management, drawing on many of the nineteenth century ideas of Henri Fayol, as well as anticipating some of the tenets of very contemporary theory, including decentralization, segmentation as a basis for organization, and the value of creative dissent. The latter side can, however, be exaggerated. Sloan was at heart a mechanistic autocrat who was also a marketing genius, and to expect him to be a liberation manager into the bargain is to expect too much. MIT named its business school after him, a fitting tribute for both.
SOURCE: KOCH, R. (2000). The Financial Times guide to strategy (Second Edition). London: Pearson Education.