And, like all ideas, they were exciting before they have been overused and turned into clichés.
“After all, by what other construct but strategy could an executive structure an understanding of the enterprise.” (Kiechel, 2010, p.281).
The strategy as the complete view of the firm:
“the purpose of strategy was to match a company’s capabilities to the opportunities in its environment.” (Kiechel, 2010, p.26).
“its emphases on treating your company as a portfolio of businesses that might be bought or sold, placing your bets where you had a competitive advantage, and using debt to finance the effort.” (Kiechel, 2010, p.205).
Ideas at the core of consulting:
Strategy has “the ability to take an extraordinary complex, integrated, multidimensional problem and get arms around it conceptually in a way that helps, that informs and empowers practicioners to actually do things.” (Kiechel, 2010, p.122).
Strategy is “powerful oversimplification.”
“I was an idea junkie.” (Kiechel, 2010, p.49).“Or, as one early BCG partner puts it, “We invented the retail marketing of business ideas.”” (Kiechel, 2010, p.21). “Put simply, Henderson cared more about his intellectual explorations and surrounding himself with exciting companions on the voyage than he did about putting the enterprise on a sustainable footing.” (Kiechel, 2010, p.49).
The human side
“strategists, including Porter, had thoroughly neglected the dimension of the human, the capabilities and desires of the individuals who turn strategy from concept into reality.” (Kiechel, 2010, p.137). “If the economists posited a sort of corporate version of their famous fiction, homo economicus, the consultants endowed it with certain qualities of an army – always in a fight (competition), led from the top, its sense of itself built around its strategy.” (Kiechel, 2010, p.140).
“businesses should expect their costs to decline systematically.” (Kiechel, 2010, p.32). “your cost position should reflect your share of the market.” (Kiechel, 2010, p.32). “A bigger market share typically means you have more experience (…) which should mean your costs are lower than theirs.” (Kiechel, 2010, p.32).
“What we were doing was pricing it for what it was going to be.” (Kiechel, 2010, p.40).
It “was a poor basis for strategy in mature industries – beer, cement – where accumulated experience doubled at glacial pace.” (Kiechel, 2010, p.45).The curve “could leave you open to being blindsided by changes in taste or technology.” (Kiechel, 2010, p.45).
“his recommendation “was balancing operating risk and financial risk.” If you had a low level of operating risk, as timber companies did, “beef up the financial risk by the use of debt, to get the appropriate level of debt for the business.” (Kiechel, 2010, p.54).“The vertical dimension was to display expected growth of the market in which the business competed.” (Kiechel, 2010, p.62). “The horizontal dimension would indicate relative market share. (…) Share was plotted on a logarithmic scale.” (Kiechel, 2010, p.62).
Not advice. Profit.
“By virtue of its be-there-with-you-all-the-way approach, Bain & Company stole a march on its competitors in tackling implementation.” (Kiechel, 2010, p.86). ““We don’t sell advice by the hour; we sell profits at a discount.” (Kiechel, 2010, p.87). “At his (Bower’s) firm, the interst of clients would always come first, assignments would be refused if the consultants didn’t add value, and everyone would wear a hat on leaving the office.” (Kiechel, 2010, p.98).
“In the perfect world dreamed of in their philosophy, the laws of supply and demand should quickly compete away any supernormal profit-making advantage.” (Kiechel, 2010, p.123).
Not just cost. Look at differentiation & innovation
“McKinsey was always interested in helping our clients figure out ways they could raise prices. I’m not sure that BCG, with its focus on cost, had the same emphasis.” (Kiechel, 2010, p.191)
“There were essentially three strategies a company could choose, he (Porter) posited: low-cost leadership (beloved of fans of the experience curve), product differentiation (making your offering so distinctive that you could charge more for it), or market specialization (pick a niche and dominate it).” (Kiechel, 2010, p.132).
“S curves almost always come in at least pairs, he argued, with the successor technology experiencing its own slow start but beginning from higher on the performance axis. The evidence also suggested that a company that was a master of one technology and S curve almost never succeeded in jumping successfully to the next one.” (Kiechel, 2010, p.235).
“Defining entrepreneurship as “the pursuit of opportunity beyond the resources currently controlled.” (Kiechel, 2010, p.288).
“Part of the challenge is that value creation, whether in the form of innovation or growth, has never been proven as susceptible to systematization as has cost reduction.” (Kiechel, 2010, p.192).
No Best Practice ever last.
“Managing for survival, even among the best and most revered corporations, does not guarantee strong long-term performance for shareholders. In fact, just the opposite is true. In the long run, markets always win.” (Kiechel, 2010, p.167).
Effectiveness is not strategy
“a world of ever-faster change, you didn’t need a strategy and might even be held back by one when you should be reinventing yourself.” (Kiechel, 2010, p.250).“failed to distinguish between “operational effectiveness” and “strategy.”” (Kiechel, 2010, p.250). “operational effectiveness thus boiled down, for Porter, to pretty much performing the same activities as your competitors, but more efficiently than they do. In contrast – drumroll here – “Strategic positioning means performing different activities from rivals’ or performing similar activites in different ways.” (Kiechel, 2010, p.251).“competitors quickly copy one another’s techniques and technologies, pushing what he called the industry’s “productivity frontier” ever outward.” (Kiechel, 2010, p.251).