For any business, for-profit or not-for-profit, organisation or indeed government, having an executable strategy is all-important. Perhaps once it was enough to form that strategy once every five years, but as John Wells points out in this book, to do so in today’s world is to risk decline and demise. His belief echoes that of Jack Welch, former chairman of General Electric, who he quotes
“I’m convinced that if the rate of change inside the institution is less than the rate of change outside, the end is in sight. The only question is the timing of the end.”
Wells indentifies three types of inertia that can kill a company: strategic, structural and human, and the book is divided into three parts: Smart Strategy, Smart Structure and Smart Minds. What makes his analysis persuasive is that as well as being Professor of Management Practice at Harvard Business School, he has also worked in senior management positions running both small and large firms, and has also worked in consultancy.
As such, he understands the academic side of strategy, but can speak to those who have to practice it. He also has at his fingertips dozens of case studies, both ones he personally has encountered during his years in business or as a consultant, as well as a choice of the hundreds of case studies of the Harvard Business School. Lastly, although the book is quite a whirlwind tour of strategy, he never loses focus on practical advice.
Reading books like these you can sometimes wonder what the authors would have to write about it if there weren’t companies like Kodak, IBM, Apple and Ikea to demonstrate good and bad strategy, but though Wells spends time on Wal-mart versus Kmart and Circuit City versus Best Buy, he also has new examples – Ben & Jerry’s Ice Cream, for instance, and JCDecaux.
The latter is used an example of looking at the same thing as everyone else and thinking of something different. Founder Jean-Claude Decaux was faced with French authorities who banned outside advertising on major roads outside cities. Since this was the core of his business, his livelihood was at stake. Then while passing through Paris he noticed someone had illegally fly-posted a bus-shelter.
He saw the opportunity, took pictures of it and circulated it round thousands of municipalities in France, promising to build and maintain bus shelters in return for exclusive advertising rights, and even built a sample bus shelter, loading it on the back of a lorry and drove it round France. As Wells says, “... he saw something that was illegal and wondered how to legalize it.”
“Despite many imitators, JCDecaux is still the world’s largest outdoor furniture advertiser and is constantly innovating to stay ahead, with everything from automatic toilets in San Francisco toy phone boxes in London and bicycles in Paris.”
Then there is Smart Structure, and the example of Li & Fung is instructive. Li & Fung is the ultimate asset-lite business. It is the world’s leading player in the fashion garment sector, larger that Gap or Inditex, owner of Zara. It supplied about $22 billion of fashion goods in 2010, yet owns neither shops nor factories. The detail is instructive (you have to read the book to get that), but so is the lesson from Victor Fung, the Chairman, who warns Wells of the dangers of confusing ownership with control.
“He observed that many firms own assets but have precious little control over them, whereas his goal was to own no assets but be able to exert strong control.”
As Wells says, “It is control that firms should seek rather than ownership.”
Lastly there is the human side of the enterprise, and here Wells is excellent, both talking of the need for inspiring people, hiring the right ones and, most importantly, not hiring the wrong ones.
“A boss of mine at PepsiCo once said to me “...beware of bums on seats, they cost a fortune...
You won’t get many academics saying things like that.
Wells doesn’t have a final ten points to take away, but some I took are from the history of the competition between Circuit City and Best Buy (and summarised at the end of that section. They are: Beware blind faith – revisit strategy regularly; Be paranoid – take every new idea as a potential threat; Self cannibalize – add new business models to your portfolio and cannibalise rather than letting the competition do it at will, and Create a burning platform. This last is all important. As Wells says,
“It’s hard to change unless the leadership team agrees that it is necessary. Creating a burning platform before a real crisis hits is important because waiting for the crisis is often fatal.”
Tough words, but it’s a good book for these times.
Tom Otley For any business, for-profit or not-for-profit, organisation or indeed government, having an executable strategy is all-important. Perhaps once it was enough to form that strategy once every five years, but as John Wells points out in this book, to do so in today’s world is to risk decline and demise. His belief echoes that of Jack Welch, former chairman of General Electric, who he quotes
“I’m convinced that if the rate of change inside the institution is less than the rate of change outside, the end is in sight. The only question is the timing of the end.”
Wells indentifies three types of inertia that can kill a company: strategic, structural and human, and the book is divided into three parts: Smart Strategy, Smart Structure and Smart Minds. What makes his analysis persuasive is that as well as being Professor of Management Practice at Harvard Business School, he has also worked in senior management positions running both small and large firms, and has also worked in consultancy.
As such, he understands the academic side of strategy, but can speak to those who have to practice it. He also has at his fingertips dozens of case studies, both ones he personally has encountered during his years in business or as a consultant, as well as a choice of the hundreds of case studies of the Harvard Business School. Lastly, although the book is quite a whirlwind tour of strategy, he never loses focus on practical advice.
Reading books like these you can sometimes wonder what the authors would have to write about it if there weren’t companies like Kodak, IBM, Apple and Ikea to demonstrate good and bad strategy, but though Wells spends time on Wal-mart versus Kmart and Circuit City versus Best Buy, he also has new examples – Ben & Jerry’s Ice Cream, for instance, and JCDecaux.
The latter is used an example of looking at the same thing as everyone else and thinking of something different. Founder Jean-Claude Decaux was faced with French authorities who banned outside advertising on major roads outside cities. Since this was the core of his business, his livelihood was at stake. Then while passing through Paris he noticed someone had illegally fly-posted a bus-shelter.
He saw the opportunity, took pictures of it and circulated it round thousands of municipalities in France, promising to build and maintain bus shelters in return for exclusive advertising rights, and even built a sample bus shelter, loading it on the back of a lorry and drove it round France. As Wells says, “... he saw something that was illegal and wondered how to legalize it.”
“Despite many imitators, JCDecaux is still the world’s largest outdoor furniture advertiser and is constantly innovating to stay ahead, with everything from automatic toilets in San Francisco toy phone boxes in London and bicycles in Paris.”
Then there is Smart Structure, and the example of Li & Fung is instructive. Li & Fung is the ultimate asset-lite business. It is the world’s leading player in the fashion garment sector, larger that Gap or Inditex, owner of Zara. It supplied about $22 billion of fashion goods in 2010, yet owns neither shops nor factories. The detail is instructive (you have to read the book to get that), but so is the lesson from Victor Fung, the Chairman, who warns Wells of the dangers of confusing ownership with control.
“He observed that many firms own assets but have precious little control over them, whereas his goal was to own no assets but be able to exert strong control.”
As Wells says, “It is control that firms should seek rather than ownership.”
Lastly there is the human side of the enterprise, and here Wells is excellent, both talking of the need for inspiring people, hiring the right ones and, most importantly, not hiring the wrong ones.
“A boss of mine at PepsiCo once said to me “...beware of bums on seats, they cost a fortune...
You won’t get many academics saying things like that.
Wells doesn’t have a final ten points to take away, but some I took are from the history of the competition between Circuit City and Best Buy (and summarised at the end of that section. They are: Beware blind faith – revisit strategy regularly; Be paranoid – take every new idea as a potential threat; Self cannibalize – add new business models to your portfolio and cannibalise rather than letting the competition do it at will, and Create a burning platform. This last is all important. As Wells says,
“It’s hard to change unless the leadership team agrees that it is necessary. Creating a burning platform before a real crisis hits is important because waiting for the crisis is often fatal.”
Tough words, but it’s a good book for these times.
Tom Otley 
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