The Lords of Strategy: The Secret Intellectual History of the New Corporate World (Kiechel, 2010)

The Lords of Strategy: The Secret Intellectual History of the New Corporate World (Kiechel, 2010)

Imagine, if you can, the world of business - without corporate strategy.

Remarkably, fifty years ago that's the way it was. Businesses made plans, certainly, but without understanding the underlying dynamics of competition, costs, and customers. It was like trying to design a large-scale engineering project without knowing the laws of physics.

But in the 1960s, four mavericks and their posses instigated a profound shift in thinking that turbocharged business as never before, with implications far beyond what even they imagined. In The Lords of Strategy, renowned business journalist and editor Walter Kiechel tells, for the first time, the story of the four men who invented corporate strategy as we know it and set in motion the modern, multibillion-dollar consulting industry:

- Bruce Henderson, founder of Boston Consulting Group
- Bill Bain, creator of Bain & Company
- Fred Gluck, longtime Managing Director of McKinsey & Company
- Michael Porter, Harvard Business School professor

Providing a window into how to think about strategy today, Kiechel tells their story with novelistic flair. At times inspiring, at times nearly terrifying, this book is a revealing account of how these iconoclasts and the organizations they led revolutionized the way we think about business, changed the very soul of the corporation, and transformed the way we work.

p.1 This is a story... of the bit-by-bit creation of the first comprehensive paradigm that pulled together all the elements most vital for a company to take into account if it is to compete, win, and survive.

p.4 Part of the argument of this book is that corporate strategy as something that needs to be figured out, a case to be cracked, is relatively new in the world.

p.25 Harvard's Pankaj Ghemawat notes that the New Jersey Bell executive Chester Baranard in his 1938 classic, The Functions of the Executive, had recommended paying attention to "strategic factors." In 1950, Fortune's John MacDonald... published Strategy in Poker, Business, and War.

p.53 Zakon figured out that the success of Weyerhaeuser's competitors came from the fact that timber was what would come to be called a renewable resource.

p.81-82 [I told them] "If you're going to play a game, for your life, with a guy who has an IQ of one hundred and ten, do you want to play tic-tac-toe, or checkers, or chess? It's going to be chess... How many chess books are you going to look at, how many old master games? Either you're a lot smarter, or you're a lot better prepared and you think a lot more strategically."

p.122 "[Michael Porter speaking] What I've come to see as my greatest gift is the ability to take an extraordinarily complex, integrated, multidimensional problem and get arms around it conceptually in a way that helps, that informs and empowers practitioners to actually do things."

p.124 Structure in turn shapes the conduct of the players and the choices they make and can make, which in turn determines their performance, not just their profitability but also... their efficiency and innovativeness.

p.195 As he [Michael Porter] wrote in an introduction to the 1998 edition [of his book Competitive Advantage], at the heart of the book is its conception of a company as consisting of all the "discrete activities" it performs - "processing orders, calling on customers, assembling products, and training employees" - activities more sharply defined than traditional "functions" like marketing or R&D "are what generate cost and create value for buyers; they are the basic units of competitive advantage."

p.197 The value chain, with its supporting analytic apparatus, may be the last central, universal concept in the intellectual history of strategy... in the sense that it has to be taken into account in any company's deliberations on what it should be doing. [Michael Porter's book] Competitive Advantage... represents a compendium almost breathtaking in its reach of the best thinking on strategy up until then

p.251 The point of operational effectiveness is to outdo your rivals on all the activities that result in greater value for customers, which enables you to deliver a superior product for which you can charge more or to offer them what they can get elsewhere at a cheaper price... "Strategic positioning means performing different activities from rivals' or performing similar activities in different ways."

p.251 the essence of strategy, is to be different.

p.252 While you have to choose... just choosing a positioning isn't enough. You have to go on choosing, recognizing that there are trade-offs entailed in going down one path rather than the other.

p.284 where was a company to seek an edge enduring enough to build a strategy around?

p.293 people engage in transactions, broadly defined, that may be competitive, or may be cooperative, but what emerges is a network.

p.320 How is strategy likely to change to meet this, the latest round of challenges? Put the question to consultants from BCG, Bain, McKinsey, and other firms, and you will find the same word coming up in the answers from each: strategy will necessarily become more adaptive.

p.321 Instead of headquarters dictating a strategy based on "analysis, prediction, and deduction," the goal would be to set "optimal conditions for the continuous emergence of superior strategies through an adaptive - or evolutionary - process."

p.331 Every day, in offices and plants across the face of the earth, thousands labor to forge strategy for their companies and, even more difficult, to implement their designs.

[back cover] The strategists of the title are practical visionaries who discovered that ideas, even more than capital or technology, make the world of business go 'round... Sylvia Nassar, ...author, A Beautiful Mind