Strategy Lesson from History: Be Ready to Adapt
In his fascinating review of the best writing on business strategy, Walter Kiechel III guides his readers through the relatively recent history of “Strategy” as a business concept and corporate planning tool. It emerged in the 1960s from a corporate culture in which business leaders “felt themselves largely at the mercy of market forces, with little of the knowledge they would need to truly determine their own future.”
In Strategy and Structure: Chapters in the History of the American Industrial Enterprise, first published in 1962 by MIT Press, author Alfred D. Chandler Jr. first established the principle for which he is remembered: “Structure follows strategy” and “A strategy is a response to changes in a business’s environment.”
Kiechel next credits Kenneth R. Andrews, and his 1971 book The Concept of Corporate Strategy, with the definition of Strategy that has driven much modern-day perspective: “the pattern of major objectives, purposes or goals and essential policies and plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.” Andrews went on to include a long list of criteria for evaluating a strategy, many of which have clearly been ignored in light of recent corporate failures. These criteria are now back in the spotlight as bank regulators and corporate watchdogs ask probing questions about sufficiency of available resources, risk versus reward, management communication with those who must implement their strategy, and alignment of values with goals.
The evolution of Strategy continued with Michael E. Porter’s 1980 publication of Competitive Strategy: Techniques for Analyzing Industries and Competitors, in which he most famously stated that Strategy involves only three alternatives: 1) Cost leadership; 2) Differentiation; or 3) Niche domination. He warned that companies trying to do all three were doomed.
Backlash to this came from the bestseller In Search of Excellence: Lessons from America’s Best-Run Companies by Thomas J. Peters and Robert H. Waterman, Jr.. Despite the embarrassment that many of the companies cited by them as “best-run” failed to live up to expectations in the years following the book’s publication, Kiechel reminds us that Peters and Waterman introduced the essential concept that Strategy must include consideration of “human energies and aspirations” as well as “an exercise in numbers and charts.
As business cycles have exposed the strengths and weaknesses of different theories, the temptation to abandon strategic planning as a viable tool is tempting. Kiechel concludes, “Probably the hottest term in discussions these days is adaptive.”
So what is an organization supposed to do? Many leaders say their most formidable challenge is deciding how to guide their organization through iceberg-littered channels and wondering if they’ll ever get back to open seas again. They face unhappy choices and wonder how to scale back for efficiency without stripping their organization of the human and physical assets it needs to grow again when the economy turns around.
AvoLead is the leadership consultancy with the tools to equip leaders facing these and other challenges. Besides having professionals with Change Readiness GaugeTM certification that enables them to help their clients survive and thrive, AvoLead offers workshops such as Leadership Resilience: Leveraging Your Strength in Turbulent Times. Call us today at (919) 450-8930 to find out how to put our expertise to work for your organization.
 Kiechel III, Walter, “Seven Chapters of Strategic Wisdom.” strategy+business magazine, Spring 2010, Issue 58, February, 2010: http://www.strategy-business.com/article/10109.
Photo credit: Jeu d’échecs en pierre” by Pascal Thauvin, via stock.xchng
Tags: adaptive, Alfred D. Chandler Jr., business strategy, Change Readiness Gauge, Heroclitus, In Search of Excellence, Kenneth R. Andrews, leadership resilience, Michael E. Porter, Robert H. Waterman Jr., strategy, Thomas J. Peters, Walter Kiechel