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 / Spring 2013 / Issue 70(originally published by Booz & Company)


The Thought Leader Interview: Cynthia Montgomery

Many business schools began to change their approach to strategy in the early 1980s after Michael Porter introduced the idea of competitive analysis. His course material on the subject was wildly popular because he brought economic rigor to the analysis of strategy. On its own, that was absolutely good. It transformed the era. My own work followed in that wake. Using large-sample statistical analysis, I examined the relationship between the overall profitability of a corporate enterprise and the average profitability of the industries in which it competed.

But over time, the economics began to distract people from the leadership aspect of strategy. Before long, strategy at many top business schools was taught by economists focused on theory and analytics. If you do this, how will your competitors respond? How do the structural characteristics of an industry shape competitive behavior? All important issues, to be sure, but gradually strategy became an exercise in getting the analysis right, providing the answer, and letting someone else implement it. That reinforced the idea that strategists were a group with specialized training.

Today, Harvard doesn’t even have a course called General Management. Nor do most other business schools. Many students have come to view entrepreneurial management courses as the capstone experience of the MBA curriculum, where you learn about defining businesses, moving them through growth, changing course, and doing it again. But entrepreneurship courses don’t teach people how to run a large company; they teach them how to create and finance a startup. If we care about improving the quality of large-enterprise strategy, we management academics have to avoid hoisting ourselves on our own petard.

S+B: Hasn’t the specialized, analytic approach to strategy lost some of its value in recent years?
Yes. It started to level off in the early 2000s. I saw that recently when, as part of my work on The Strategist, I talked with several speakers bureaus, thinking the subject of strategy would be hot. But instead, they said they would market me as a speaker on innovation or change management. Their interest in my book came not from the topic of strategy per se, but from its focus on what strategy means for business leaders.

The discussions helped me come to terms with how much strategy had lost its vitality—its edginess—and the tremendous opportunity we have to embrace it in a new way. I think other academics are beginning to see the same potential. For instance, at a strategy conference in celebration of the Harvard Business School centennial, our theme was “putting leadership back into strategy.”

S+B: When did you realize the limits of the analytic approach yourself?
A lot of it came through executive education, working with managers who had an opportunity to use strategy to make a powerful difference in their companies. In countless late-night conversations, I learned a lot about the challenges they faced and their aspirations, and I saw what happened to companies where no one stepped up. The existentialist philosopher Jean-Paul Sartre wrote about the “courage to choose,” and understood that choosing isn’t just an intellectual thing; it takes guts.

Strategy books don’t talk about that. They also rarely talk about how to get others involved, or how to serve as a champion of the process. Thomas Saporito, the coauthor of Inside CEO Succession: The Essential Guide to Leadership Transition [Wiley, 2012], has written about CEOs who fail because they know their strategy is correct, and they assume that’s enough to overcome any lack of buy-in. He reminds them that “executives don’t get paid to be right. They get paid to be effective.”

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