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Published: November 30, 2006

 
 

Best Business Books: Strategy

The authors offer less help on the operational aspects of strategy. For example, rather than trying to accelerate idea generation, they argue, companies should embrace the natural flow of concepts from within the company. They recommend using the traffic lights to link top-down and bottom-up processes — increasing clarity in the former while imposing discipline on the latter. But they do not illustrate the more intentional, dynamic processes that lead to successful new innovation.

The Growth Gamble’s appendix is a bonus. Mr. Campbell and Mr. Park review 10 other books, hypothesizing the advice each author would give to one company, and contrasting that advice to their own. Not only did the appendix stimulate us to read some books we didn’t know about, but it also clarified the differences in content and emphasis among authors who seem to be saying many of the same things.

Strategic Operating Questions
Ten Rules for Strategic Innovators: From Idea to Execution is the best book we’ve seen on the “how-tos” of creating an innovative new business, and thus the single best strategic book of the year. The authors’ five case studies — Corning, the New York Times, Analog Devices, Hasbro, and an unnamed manufacturer of computer printers — reflect our own experience with clients. In short, this book rings true. Furthermore, the 40 percent success rate the authors observe is the same we’ve found in our work on strategic innovations.

To turn a powerful idea into a successful business, authors Vijay Govindarajan and Chris Trimble, both of Dartmouth’s Tuck School of Business, recommend: “forget, borrow, and learn.” Forget assumptions, mind-sets, and biases from the traditional core business, because a new business (as opposed to a business extension) must be fundamentally different from a company’s traditional core business. Borrow assets like existing customer relationships, distribution channels, supply networks, brands, credibility, manufacturing capacity, and technological expertise from the core business, because those assets confer a significant advantage over entrepreneurial startups. Learn to make ideas — some of which may not be new — work together in ways that are fresh to your industry. And learning quickly minimizes the time to profitability, lowers risk exposure, and maximizes the chance to overwhelm the competition.

The authors argue that the key measure of learning is the ability to predict future performance. They recommend “theory-focused planning,” a process based on the scientific method designed to test a series of predictions until they lead to sufficiently reliable forecasts. They also recommend holding leaders of potential strategic innovations accountable for learning, not for profitability and growth. After all, the value created by a strategic experiment is primarily a function of its likelihood and speed of success (i.e., its ability to learn), not its profitability and growth during the experiment. Those metrics are better applied to existing businesses.

The heart of 10 Rules is detailed guidance about the “organizational DNA” of the new strategic enterprise. “In the context of strategic innovation,” the authors write, “organizational DNA matters because CEOs cannot be on call to solve every problem that NewCo faces. They cannot make every decision; instead they must shape decisions by encoding assumptions, values, and decision biases into NewCo’s DNA at the time it is created.” This DNA includes the familiar elements of staff, structure, systems, and culture. Ten Rules excels in its ability to provide actionable organizational guidance for designing these elements, and for linking the assessment of the causes of problems to recommendations of solutions in the context of real cases.

A Better Value Proposition
Although 10 Rules offers the best discussion we’ve seen about the operational side of strategic innovation, it ignores the conceptual content of any new business endeavor. Jack G. Hardy’s The Core Value Proposition: Capture the Power of Your Business Building Ideas helps fill that gap.

 
 
 
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