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Published: February 26, 2013
 / Spring 2013 / Issue 70

 
 

The Thought Leader Interview: Cynthia Montgomery

I can understand that you might be tempted to favor execution because you don’t really know if your strategy will succeed. If your strategy says you should take dramatic, disruptive risks, do you really dare to stand with it and keep supporting it? But frankly, a lot of businesses face more pedestrian choices, with much less risk—and they’re still not living deliberately, and are still flying by the seat of their pants.

More importantly, strategy is not a matter of immaculate conception, where you get a single answer and forever rule out other options. As a business, you operate in a complex system of other companies in which any advantage is fragile. Even Steve Jobs embellished and subtracted as time went on. You need to think about your strategy as an open, living thing. You start out by defining who you are as a company. But then you try it out, and discover that it’s not working so well, so you adjust it.

For example, we teach David Yoffie’s case on the Gucci Group. The company hit the skids in the 1980s, when counterfeit products and an undisciplined licensing strategy nearly destroyed the brand. Maurizio Gucci, grandson of the founder, stepped in and tried to reposition the company, but customers balked and were slow to come back. A new CEO, Domenico De Sole, was hired in 1993 to pick up the pieces. De Sole forged a new purpose built around providing fashion-forward clothing at good value, and rebuilt every activity in the company to align with it. Did Gucci survive? Yes. Did it thrive? Yes. But it was a different company than it had been in its former heyday, a company that mattered for a different reason.

Similarly, when Ingvar Kamprad started out, he was forced to leave Sweden. The existing Swedish retailers didn’t like his low prices and put pressure on local manufacturers to refuse to supply him. In fear that he’d lose the whole business, he went to Poland in search of new suppliers; their prices proved to make not just a difference in degree, but a difference in kind. In other words, this wasn’t just an incremental shift in one factor—it led Ikea into a completely different business model. Kamprad’s strategy developed because he was open to redefining the business.

S+B: So the point of a strategy isto keep improving your animating idea, and to keep building your own capacity to develop and execute it.
MONTGOMERY:
Yes, usually that’s true. Isn’t that preferable to the dichotomy we’ve been talking about, between conception and execution? Isn’t it better than being just the caretaker of a plan? Isn’t it a much better insight to pass on to the other managers in your company, who could be developing their strategic perspective along with you?

One must also acknowledge, though, that sometimes the animating idea itself has run its course and more radical action is necessary. The question remains the same: Why does the world need this company?

The Education of a Strategist
 

S+B: If you could spend time with a group of prospective chief executives, could you tell the strategists from the caretakers?
MONTGOMERY:
Yes. A leader who is a strategist has clarity not only about what’s being done, but why. He or she understands that the quality of execution begins there. No matter how successful an operator or executor you are, no matter how good your product innovation or manufacturing processes are, if your company doesn’t have a meaningful distinction, you won’t be effective; and if you can’t move it forward, your company will stagnate.

You learn those skills over time. Robert Katz, who wrote a classic article called “Skills of an Effective Administrator” [Harvard Business Review, September 1974], said that when you start your career, to succeed, you need a functional skill: For example, you need to be good at accounting, engineering, or HR. At the next level up, you need to be good with people. And at the very top, you need conceptual skills. Years later, someone asked him if he still agreed with that statement, and he said he was even more fervent about it now. But he thought that people either had those skills by the time they were teenagers, or they would never have them.

 
 
 
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