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 / Summer 2007 / Issue 47(originally published by Booz & Company)


Books in Brief

Ideas that take hold, how strategy can lead to failure, rebounding from career failure, and AIG under Hank Greenberg.

Made to Stick: Why Some Ideas Survive and Others Die
By Chip Heath and Dan Heath
Random House, 2007
304 pages

Illustration by Lars Leetaru
Take 15 seconds and write down on a piece of paper as many things that are white as you can think of. Now reset your timer, get another piece of paper, and list as many white things in your refrigerator as you can think of. It turns out that most people can think of as many white things in their refrigerator as they can think of white things found everywhere. This little test, which demonstrates the power of placing problems (and ideas) in concrete contexts, is one of several illustrations in Made to Stick: Why Some Ideas Survive and Others Die. Written by Chip Heath, professor of organizational behavior at Stanford Business School, and his brother, Dan Heath, a consultant at Duke Corporate Education, this is a well-structured, useful little book on what makes ideas memorable.

The authors contend that for an idea to stick, it first has to get the audience’s attention by being unexpected; for the audience to understand it, the idea must be made concrete; and for the audience to agree with or believe it, it must be credible. People will care about the idea if it is emotionally resonant, and they are more likely to act on it if it is presented in the form of a story — a mini-simulation of how the idea works.

This framework, prefaced by the injunction to make things simple, spells out what the authors call their SUCCESs checklist (simple, unexpected, concrete, credible, emotional, story), and it forms the chapter headings for the book. As one would hope from the book’s title, the authors’ framework and illustrations stick in the reader’s mind, and the SUCCESs “formula” is a helpful mnemonic for those considering the potential impact of any important message.

The Strategy Paradox: Why Committing to Success Leads Corporations to Failure (And What to Do about It)
By Michael E. Raynor
Doubleday, 2007
320 pages

What’s the opposite of success? According to Michael E. Raynor, distinguished fellow with Deloitte Consulting LLP, it is not failure, but mediocrity. In The Strategy Paradox: Why Committing to Success Leads Corporations to Failure (And What to Do about It), he makes a persuasive case that both success and failure result from firms’ making powerful commitments to particular courses of action whose efficacy is uncertain. If they do not make these commitments, the result is likely to be mediocrity. This is the essence of the strategy paradox: To capture value, a firm’s strategies must resist easy imitation by others; products assembled from off-the-shelf components, for example, can be widely copied. Those based on proprietary technologies developed over time, however, are difficult to emulate, because of the commitment and persistence required. But this very commitment to actions that may ultimately turn out wrong places the strategy at risk of failure.

Traditional thinking about corporate strategy has emphasized the powerful continuity between strategy making, or formulation, at the top of the organization and operations, or implementation, at the bottom of the organization. Although this relationship, and indeed the ability of the corporate office to formulate powerful strategies, has been questioned, critics have rarely been able to suggest with any clarity what the role of the corporate office should be and how it should fit with the activities of the firm’s operations. Raynor’s research and conceptual framework fill this gap. He suggests that the role of the corporate office in a multidivisional firm is to deal with strategic uncertainty — strategic risks and opportunities — through the use of what he calls “real options,” whereas the role of the operating divisions is to focus on extracting value from the options that are exercised. This combination of activities can create strategic flexibility through the use of scenarios designed to anticipate the future, the formulation of optimal strategies to address various possible futures, the determination of the options needed, and the management of a portfolio of such options. Whereas traditional strategy posits prescient senior executives picking winners before the start of a “horse race,” the process Raynor advocates is akin to placing bets on a horse race well after the start: Executives identify winning scenarios but withhold commitment until the pool of likely winners shrinks, maximizing the chances of a successful bet.

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