S+B: You’ve written that a leader who wholeheartedly embraces a strategic perspective is not the same as a conventional manager. Why not?
MONTGOMERY: Think about who does strategy in most large companies and where the strategist typically resides in an organization. It’s not the CEO; it’s a specialist function. Of course, everybody says that strategy is the CEO’s responsibility. But it’s just one of many things that the CEO is responsible for. So strategy becomes an area for experts. The company draws on specialists to help with external analysis, to do a deep dive on competitors, and to look at trends around the world.
All of that may indeed provide incredible added value. It’s certainly helpful in setting the stage. But underlying all this activity is a fundamental question that any company’s leader must ultimately answer: What will this firm be, and why will it matter? This is not a soft, philosophical question. It is a hard-nosed, economic one. As my former colleague Adam Brandenburger puts it, “Why would the world need this business? What would be different if it didn’t exist?”
And a leader can’t consider the question just once and be done with it. That question needs a compelling answer every day of a firm’s existence, an answer that’s relevant as the business evolves, and as markets and customers evolve. To enable that kind of continuous evolution, strategy should never be thought of as a problem that’s been solved and settled. There are occasional dramatic changes, but mostly it’s an evolutionary process, with the CEO at the center.
In some executive courses, I ask students to describe the strategy for their companies. Many of them start out thinking that the goal is to have a product, get it all down in writing, and they’re done. But the process doesn’t end there. We bring the strategies up for critique, and they have to defend them. It’s always surprising to see how the same individuals who are good on their feet and have brilliant things to say when talking about a case study like Nike or General Electric falter when they’re talking about their own companies. They revert to the same old generics that could apply to any company: “We will succeed because we’re the quality leaders, we’re best in class, we have the lowest costs,” and so on.
S+B: The same old “blah, blah, blah.”
MONTGOMERY: Exactly. For many leaders, there’s an immense gap between intellectually understanding the theory of strategy and being able to apply it in their own businesses. It’s only by directly engaging in strategy themselves that most leaders internalize the important questions and get a clear sense of what’s involved—the trade-offs, choices, commitments, and actions—in bringing a strategy to life. In working with these executives in class, my goal is to help them confront the gap between the high standards they’re developing for others’ strategies, and the often considerably less rich reality of their own.
S+B: How do you try to accomplish this in the programs you teach?
MONTGOMERY: I’ve taught some courses with 180 owner–managers coming to campus for three, three-week sessions, spaced a year apart. When they enter the program’s third session, they work on their own strategies. First they write up a strategic plan on their own, with input from their teams back home, then they share their work with one another. That’s when things get really serious.
We usually divide the group into cohorts of eight to 10 people. Each person presents his or her strategy to the cohort, and then each cohort selects one strategy to present to the full class. I ask them to select the one that makes the most use of the principles we’ve talked about together. We end up with about 20 strategies presented to the full class, 10 each in two long sessions. Each strategy is critiqued by another group, and then discussed openly by the whole class. The sessions go on for hours. The people in the room typically have very helpful things to say, so much so that we now give an award for the best critique, along with an award for the best strategy presentation.