Of course, even if strategy’s value proposition is changing, we can still learn from books about optimizing profitability. R. Preston McAfee’s Competitive Solutions: The Strategist’s Toolkit (Princeton University Press, 2002), for example, belongs on every strategist’s bookshelf. McAfee is an economist with a gift for selecting and communicating the best new thinking by economists about business, translating from often abstruse mathematics to clear English and understandable examples. McAfee explains economists’ latest thinking about pricing, auctions, signaling, and incentives — key decisions that have make-or-break potential for a company. His book can help a consumer packaged-goods company decide how many dollars should be spent in promotions, how much a telecommunications company should bid in public auctions of the electromagnetic spectrum, or how a purchasing manager should structure auctions. If you are the person responsible for one of those functions, McAfee’s book helps you do a better job and makes you a hero. But for a senior manager or someone aspiring to be a senior manager, the issue is not so much understanding how to make these decisions; it’s knowing that there are powerful ways to make the right decision and making sure that those approaches are used. Know what’s covered in McAfee’s book so that you know when to take it from your bookshelf and give it to the person responsible for the decision.
And that returns us to the strategy value proposition. The 25-year decline in the time, attention, and resources devoted to strategy reflects the experience of most senior managers that “strategy” is only one of many drivers of profitability — and a far less important driver than functional excellence and effective execution. In that context, McAfee’s insights just raise the bar on what’s required in functional excellence. But for those of us who believe that the pendulum has swung too far and that businesses aren’t sufficiently focused on creating powerful strategies, the question of what will be the new value proposition is critical. Does acceleration of profitable growth require an effective strategy? We think so. The jury is still out on whether or not growth is the definitive value proposition for strategy, but it’s clear that it is at least part of it.
Unless your business is one of the fortunate few confident that it can generate excellent profitability and sustain rapid growth, then The Innovator’s Solution, How to Grow When Markets Don’t, and Double-Digit Growth are essential reading. Since each book excels in a different aspect of the growth story, the books are more powerful when read together than when read separately. Together the three books provide an effective path to growth, supported by examples and practical concepts that serious businesspeople can adapt to accelerate profitable growth. And for the strategists out there, these books are important steps toward an evolving new value proposition for strategy.
Chuck Lucier ([email protected]) is senior vice president emeritus of Booz Allen Hamilton. He is currently writing a book and consulting on strategy and knowledge issues with selected clients. For Mr. Lucier’s latest publications, see www.chucklucier.com.
Jan Dyer ([email protected]) spent 12 years at Booz Allen Hamilton, consulting to a variety of industries and serving as the firm’s first director of intellectual capital. She specializes in strategy and the strategic application of knowledge and learning.