Whether we’re conscious of it or not, every management decision is motivated by a desire to find universal answers to very specific questions. People who succeed in organizations tend to be pragmatic problem solvers. They have to be, because of the myriad challenges they face. How to grow the enterprise. How to get work done. How to find customers. How to be themselves in the workplace. And so on. Because there are no easy answers to these complex problems, they test the answers by starting a company, launching a project, or making a move. As they succeed and fail, the most attentive of them learn from the results. The history of business is thus the story of entrepreneurs, executives, leaders, and employees, lurching from one experimental answer to another. They gain expertise and acumen, and profits and revenues, and, along the way, add to the theory of management.
How do we win?
Build your knowledge, appear weak while growing strong, and when you’re ready, strike decisively.
“He will win who knows when to fight and when not to fight. He will win who knows how to handle both superior and inferior forces. He will win who, prepared himself, waits to take the enemy unprepared.”
Sun Tzu, The Art of War, 500 BC
Plan for your plans to fail.
The “fog of war” means that strategists must continually contend with chance and emotion.
Prussian General Carl von Clausewitz, On War, 1832
Become a monopoly.
American Telephone and Telegraph avoided competition for 75 years by guaranteeing the U.S. government universal telephone service in exchange for the sole right to a nationwide phone system.
Theodore Vail, first president of AT&T (and Alexander Graham Bell’s protégé) (1913–1982)
Build big strategic-planning operations.
Hire experts — the more, the better — put them in teams, and ask them to develop elaborate plans. It worked for major companies in the 1960s, didn’t it?
Hedge your exposure to the business cycle, combining diverse businesses and relying on your own expertise to hold them together.
Gulf + Western, Hanson, ITT, Jardine Matheson, Mitsubishi, Tata Group, and others
Stake out a competitive position.
Choose a strategy defensible against “five forces”: substitution, competition from established rivals, competition from new entrants, bargaining power of suppliers, and the bargaining power of customers.
Michael Porter, seminal theorist of the positioning school of strategy and author of Competitive Strategy, 1980
Compete on core competencies.
Develop a “bundle of skills and technologies” for an edge.
C.K. Prahalad and Gary Hamel, “The Core Competence of the Corporation,” Harvard Business Review, 1990
Focus your top leaders’ attention on operational prowess: Become a high-performance company.
William Abernathy and Robert Hayes, “Managing Our Way to Economic Decline,” Harvard Business Review, 1980
Larry Bossidy and Ram Charan, Execution, 2002
Let a thousand flowers bloom.
Try as many options as possible. Embrace those ventures that work, discard those that don’t, and adjust your strategy rapidly as circumstances change.
Henry Mintzberg, The Rise and Fall of Strategic Planning, 1994
Make yourself stronger by taking advantage of your competitors’ weaknesses.
George Stalk and Rob Lachenauer, Hardball, 2004
Keep asking, “Why does the world need this company?”
Leaders become better strategists by engaging in conversations about the purpose of the company.
Cynthia Montgomery, The Strategist: Be the Leader Your Business Needs, 2013
Close the gap between strategy and execution.
A truly winning company is coherent: It manages itself around a few differentiating capabilities — and integrates them with every aspect of strategy and execution, across everything they do.
Cesare Mainardi and Paul Leinwand, The Essential Advantage, 2011, and Strategy That Works, forthcoming, 2016
How do we
Watch out for megatrends.
All of business is affected by great sweeping forces: demographic and social change, shifts in global economic power, rapid urbanization, climate change and resource scarcity, and technological breakthroughs.
Alvin and Heidi Toffler, Future Shock, 1970
John Naisbitt, Megatrends, 1982
PwC, “How to Seize Opportunities When Megatrends Collide,” s+b, 2015
Anticipate black swans.
You can’t predict or avoid impossible calamities, but you can develop your company’s ability to cope.
Nassim Nicholas Taleb, Black Swan, 2007
Invent your own certainties.
“The best way to predict the future is to create it.”
Alan Kay, Xerox Palo Alto Research Center, 1971
Pay attention to the way you pay attention.
“How can I know what I think until I see what I say?”
Karl Weick, Sensemaking in Organizations, 1995
Imagine multiple scenarios.
Explore several possible futures to raise your awareness of the present and help you make better decisions by distinguishing predetermined events from critical uncertainties.
Royal Dutch Shell Group (home to Pierre Wack, Ted Newland, Arie de Geus, Peter Schwartz, and other business thinkers), 1971; “The Man Who Saw the Future,” s+b, 2003
What will help
us make smarter
Better industry data.
Harvard’s Bureau of Business Research was created in 1911 to gather and aggregate general sales and operating data — the first of many such sources.
SWOT (strengths, weaknesses, opportunities, and threats).
Systematically plot the pros and cons of any decision before committing.
Better decision making.
Decision making must be sufficiently broad to take into account all the necessary information, but realistic enough to make progress.
Herbert Simon, Administrative Behavior, 1947
Analyze how your moves affect everyone else’s options, and vice versa.
Avinash K. Dixit and Barry Nalebuff, Thinking Strategically, 1990; “The Game Maven of New Haven,” s+b, 2007
“Nothing in life is quite as important as you think it is while you’re thinking about it.”
Daniel Kahneman, Thinking, Fast and Slow, 2011
What do we
Change works best in small groups.
In small groups, people learn collective self-awareness.
National Training Laboratories
Edith and Charles Seashore, 1930–46
Only the paranoid survive.
Disrupt your own success, or someone else will.
Andy Grove, Only the Paranoid Survive, 1996
Changing a company is like running a campaign.
Articulate the urgency, set goals, organize a team to lead change, win hearts and minds, and roll out the new regime.
John Kotter, Leading Change, 1996
Strategic responsiveness is the ability to sense new risks and new opportunities in the business environment and to quickly craft a response to those pressures.
best way to do
Build good master–apprentice relationships.
Arguably the first text on management was a tome on how to avoid waste and unnecessary severity in disciplining subordinates.
James Montgomery, The Carding and Spinning Master’s Assistant, 1832
Recognize that what gets measured gets managed.
Breaking down operations into tasks, performing time-and-motion analysis of each task by trained experts, and forcing conformity to the one best way of doing the work was a source of immense productivity gains at first, but soon led to authoritarian micromanagement.
Frederick Taylor, The Principles of Scientific Management, 1911
Manage by walking around.
Hewlett-Packard founder and legendary leader David Packard argues that managers must be active and engaged.
David Packard, The HP Way, 1995
Aim for excellence.
Skillful management makes the most of people’s talent, incorporates a bias for action, promotes simplicity, and fosters a passion for work.
Tom Peters and Robert Waterman, In Search of Excellence, 1982
Harness tacit knowledge by making it explicit.
It’s critical to convert tacit knowledge (held in peoples’ minds and conversations) into codified knowledge (captured in routines, documentation, and software), without losing vitality.
“Improve constantly and forever” with quality, lean, and kaizen.
Team-based methods for seeing the system, using statistics to identify significant issues, eliminating waste, and continuously improving production, ingrained into day-to-day habits and attitudes.
Execute, execute, execute.
“Execution is making things happen. There are so many things in the world that are postured in terms of theory or strategy that don’t translate into action.”
Larry Bossidy in s+b, 2002
How can I
You won’t. Get used to it.
“The pressures of [the] job drive the manager to be superficial in his actions — to overload himself with work, encourage interruption, respond quickly to every stimulus, seek the tangible and avoid the abstract, make decisions in small increments, and do everything abruptly.”
Henry Mintzberg, “The Manager’s Job: Folklore and Fact,” Harvard Business Review, 1975
Capture everything you’re thinking about, and then do it now, delegate it, or put it on a list. Be sure to manage the lists so you get the right things done right.
David Allen, Getting Things Done, 2001
Every day, remove one undone item from your to-do list — deciding never to tackle it.
Begin with the end in mind.
Be proactive; prioritize the important over the urgent.
Stephen Covey, The 7 Habits of Highly Effective People, 1989
Know fewer people.
Before about 1870, no one in the middle classes complained about being busy; then, everyone did, after trains and telegrams brought more people together.
Adam Gopnik, “Bumping Into Mr. Ravioli,” New Yorker, 2002
should we use
to track how
Match debits against credits, and assets against liabilities.
Florentine and Genoan merchants, codified by Luca Pacioli, a Franciscan friar and collaborator of Leonardo da Vinci, 14th and 15th centuries
Activity-based costing and the balanced scorecard.
Integrate accounting with operations, assigning metrics to every activity, illuminating hidden costs and opportunities for improvement.
Track asset depreciation, inventory valuation, and other business results, meeting standards of certification and accuracy.
Institute of Chartered Accountants of Scotland, Queen Victoria, 1854
Return on investment and related metrics.
Estimate expected revenues and profits against the invested capital, and track the difference with actuals.
Donaldson Brown, CFO of DuPont and General Motors, Some Reminiscences of an Industrialist, 1920
Keep track of inventories, sales, and, always, taxes.
Ancient societies (Babylon, Assyria, Sumeria, Egypt), 7000–1000 BC
Ingrained awareness instead of numbers.
Emulate the Toyota Production System, in which people gain direct awareness of the flow of work without data-driven controls.
H. Thomas Johnson and Anders Brom, Profit Beyond Measure, 2000
What’s our ideal
A family of companies.
Japan’s keiretsu and Korea’s chaebol systems pool enterprises to share resources, consolidate financial activity, and dominate their markets.
Keiretsu originated in the 1940s and include Fuyo, Sanwa, Sumitomo, Mitsubishi, Mitsui, and Dai-Ichi Kangyo. The chaebol form was established in the 1960s and includes Samsung, LG, Hyundai, SK, GS, Lotte, and Daewoo.
A federalist shamrock organization.
A small central core and multiple branches in which decision making is pushed to the most local feasible level.
Charles Handy, The Age of Unreason, 1989; “The Paradox of Charles Handy,” s+b, 2003
Fit for purpose.
A company, with a unique strategy, capabilities, and culture, can combine four formal building blocks (structures, decision rights, motivators, and information flows) and four informal ones (norms, commitments, mind-sets, and networks) in a tailored way that yields high performance.
A reengineered company.
The ability to heavily automate business processes brings forth a new way of organizing companies.
Michael Hammer and James Champy, Reengineering the Corporation, 1993
A portfolio of companies.
Modern portfolio theory suggests organizing a company as if each division were a separate profit center.
Harry Markowitz, 1952
How shall we
Move into adjacencies.
Bring your existing products and services to related sectors.
Chris Zook, Profit from the Core, 2001
Sail to blue oceans.
Look for open markets where there are no serious competitors.
W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy, 2005
Give it away.
If marginal costs are low, offer nonpaying customers a “freemium” model, in which they get basic services gratis but have to pay for premium services.
Jarid Lukin of Alacra; Chris Anderson, Free, 2009
Expand within your current markets by finding new offerings for the same customers.
Ken Favaro, David Meer, and Samrat Sharma, “Creating an Organic Growth Machine,” HBR, 2012
Use your capabilities.
Look for in-market and near-market growth where your strengths make a difference.
Gerald Adolph and Kim David Greenwood, “Grow from Your Strengths,” s+b, 2015
What do we
There’s a fortune at the bottom of the pyramid.
Huge business opportunities exist in elevating the world’s poorest people to a post-subsistence life. But “doing business with the world’s 4 billion poorest people will require radical innovations in technology and business models.”
C.K. Prahalad and Stuart Hart, “The Fortune at the Bottom of the Pyramid,” s+b, 2002
The world is semi-globalized.
For business strategy, regional differences matter as much as they ever did.
Pankaj Ghemawat, Redefining Global Strategy, 2007, and s+b Thought Leader interview, 2008
Time differences can be overcome.
Prompted by the creation of railroads, global time zones enabled the management of large, multistate industrial enterprises.
The world is flat.
The global economy is so interconnected that regional differences matter less and less.
Thomas Friedman, The World Is Flat, 2005
Emerging markets evolve in predictable ways.
For every phase of a market’s life cycle, an ideal mix of products and services exists.
Alonso Martinez and Ronald Haddock, “The Flatbread Factor,” s+b, 2007
How do we
Give them what they really want and need, whether or not it’s in your business category.
“People actually do not buy gasoline…. What they buy is the right to continue driving their cars.”
Theodore Levitt, “Marketing Myopia,” HBR, 1960
Use analytics to gain in-depth awareness of your customers.
Measure your way to market insight.
Thomas Davenport, Competing on Analytics (2007) and David Meer, “The ABCs of Analytics,” s+b, 2013
best way to
Steal and steal again, only better.
The American textile industry took off when an English apprentice named Samuel Slater memorized the design of Richard Arkwright’s textile-making machine, illegally emigrated to the U.S., and built his own copy in Rhode Island. Chinese shan zhai companies do the same today.
Samuel Slater, 1790
Sprint and scrum.
Free-floating teams come together for concentrated effort and postmortems.
Zope Corporation and other agile software developers; Al Kent, “Warfare, Software, and Industrial Design,” s+b, 2014
Build a skunk works.
Create a safe, funded place where innovators can work without restrictions. Such an environment led Lockheed Aircraft to produce the first jet fighter in 1943.
Align innovation to strategy.
Instead of spending more on R&D, spend in line with your business priorities.
Design sustainability into your business model and your production processes, not just into your products.
William McDonough and Michael Braungart, Cradle to Cradle, 2010
What should we
do for our
Respect and empower them.
Seek power with people — giving them autonomy to make decisions on the company’s behalf — rather than power over them.
Reward them with meaning, not just money.
Money is a hygiene factor. Not having enough of it causes distress, but job satisfaction matters just as much.
Frederick Herzberg, “One More Time: How Do You Motivate Employees?” HBR, 1968
Motivate them using the carrot or the stick.
It’s one or the other: People are motivated by fear or by their own ambition. Douglas McGregor called it Theory X or Theory Y.
Douglas McGregor, The Human Side of Enterprise, 1960
Pay attention to them.
Turn down the lights, and workers work harder. Turn up the lights, and workers work harder.
Provide them with five things people crave: status, certainty, autonomy, relatedness, and fairness.
Increase the perceptible levels of status, certainty, autonomy, relatedness, and fairness, and you’ll trigger productive neurological responses.
David Rock, “Managing with the Brain in Mind,” s+b, 2009
Charging others as we would have them charge us.
The golden rule in commerce: Set fair prices that cover the costs of production, but don’t take advantage of people in desperate need.
St. Thomas Aquinas, Summa Theologica, 1265–73
Making work a calling.
The world of work and enterprise should be an ennobling way to devote one’s energies. This aspect of Protestant theology may have laid the groundwork for capitalism.
Max Weber, The Protestant Ethic and the Spirit of Capitalism, 1904
Embracing sustainable enterprise.
Transformative changes are needed if businesses expect to contribute to social and environmental health.
Being a giver, not a taker.
Help others — even when there is nothing in it for you.
Adam Grant, “Turning the Tables on Success,” s+b, 2013
How can we
Ascend the hierarchy of needs — attain survival, safety, security, love and belonging, esteem, and ultimately accomplishment and transcendence — to make a contribution larger than oneself.
Abraham Maslow, “A Theory of Human Motivation,” 1943, and Eupsychian Management: A Journal, 1965
Become skilled at reflection and inquiry.
Learn to talk openly about your team’s espoused theories (what you say and think you mean) and your theories in use (what you really believe).
Chris Argyris and Donald Schon, The Reflective Practitioner, 1960
Cultivate the “learning disciplines” of understanding, complexity, aspiration, and reflective conversation.
Learning is a full-time job.
Peter Senge, The Fifth Discipline, 1990
Understand the dynamics that underlie conflict.
Confront conflict head-on.
Edith and Charles Seashore, 1930–46
Get another person’s perspective on your progress.
Listen — really listen — to someone else for a change.
Marshall Goldsmith, “Leadership Is a Contact Sport,” s+b, 2004
How can I
work here and
still be me?
Find ways to overcome obstacles to success.
Women should find their own path to the top, making the most of their leadership talent and playing the game in their own way.
Sheryl Sandberg, Lean In, 2013
Find a parenting-friendly company culture.
The belief persists that women can't be great executives because of the potential distractions of motherhood. Only full support for family commitments can overcome that bias.
Felice Schwartz, “Management Women and the New Facts of Life,” HBR, 1989
Confront rankism: the tendency to ignore, abuse, and exploit other people.
Racism and sexism are manifestations of a deeper problem: the ingrained human tendency to ignore, abuse, and exploit other people.
Step across the divide of privilege.
Most business professionals are still too unaware of the gaps that exist among people of different backgrounds and status levels.
Barbara Waugh and Stacy Cusulos, American Family, 2010
Declare your identity in a way that promotes change.
Coming out of the closet is good for business.
John Browne, The Glass Closet, 2007
Christine Bader, “The Business of Coming Out at Work,” s+b, 2014
To take risks governments won’t or can’t.
Corporate charters were issued by Renaissance royalty to allow entrepreneurs to undertake risky new ventures, like sailing to the New World.
Joint stock companies, 17th and 18th centuries
To reduce transaction costs.
Putting business activity inside a single enterprise avoids the friction involved in building and managing external relationships.
Ronald Coase, The Nature of the Firm, 1937
For the people who buy their goods and services.
“There is only one valid definition of business purpose: to create a customer.”
Peter Drucker, Management, 1973
For the shareholders.
“A corporate executive is an employee of the owners of the business. [His or her primary] responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society.”
Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits,” New York Times Magazine, 1970
What the hell
It’s the tangible but invisible empowerment of the enterprise.
“The highest type of ruler is one of whose existence the people are barely aware.”
The Tao Te Ching, 570 BC
It’s ethically driven influence.
“The endurance of organization depends upon the quality of leadership; and that quality derives from the breadth of the morality upon which it rests.”
Chester Barnard, The Functions of the Executive, 1938
Who is the
An adventurous leader.
Pay “at all times rigid attention to order and economy,” while embracing a high degree of risk.
A well-compensated executive.
The first CEO compensation study, done by McKinsey for General Motors, made GM’s CEOs the highest-paid in the U.S. (earning US$900,000/year in 1967).
McKinsey; Graef Crystal, In Search of Excess, 1991+
Someone carefully chosen for the role.
The better the CEO succession plan, the more likely the company’s overall success. Companies that plan well for CEO turnover gain significant financial performance.
Ken Favaro, Per-Ola Karlsson, and Gary Neilson, “The $112 Billion CEO Succession Problem”, s+b, 2015
Someone fit for the future.
CEOs today seek “good growth,” aligned with ethics and sustainability.
Part of a duo.
A great top team is a producer paired with a performer, such as Lynda and Stewart Resnick.
John Sviokla and Mitch Cohen, The Self-Made Billionaire Effect, 2015
How does the
The invisible hand of the market organizes the economy.
Specialization and the division of labor act in systemic fashion without interference.
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776
The industrial revolution turns in predictable, 80-year, long-wave cycles.
These cycles have three stages: installation (frenzied growth led by speculative investment), crisis, and a broad golden age of expansion.
Carlota Perez, s+b Thought Leader interview, 2005
Economic forces are set in motion by choices people make (and not always rationally).
Individuals consistently behave in ways that traditional economic theory, predicated on the optimization of individual self-interest, would not predict.
Daniel Kahneman and Amos Tversky and the field of behavior economics, 1990s
Innovation sparks creative destruction.
Capitalism limits the scope for government interference with individual choice, and thus adds reward and risk to the life of the commons.
Joseph Schumpeter, Capitalism, Socialism, and Democracy, 1942
“When the rate of return of capital exceeds the rate of economic growth, capitalism generates arbitrary and unsustainable inequalities.”
Research, especially the work of Joseph Ellis and of Thomas Piketty, shows a direct link between the spread of financial equity and economic health.
For the 20th anniversary of strategy+business, we, the editors and staff of this magazine thought we’d celebrate this grand story of management thinking by holding, in effect, a grand party. We’d invite all the luminaries of management thought, from antiquity to today, to join us in spirit. Or at least to have their ideas in the room. And you’re invited too.
This catalog will give you an initial taste of the result: a browsable, ever-increasing compilation of management ideas, recast and reframed as we think only s+b can do it. We published only a small portion of it in print, of course. This is the rest of the catalog, in its evolving complexity. It’s a kind of genealogy chart of management ideas, showing their sources, their influences, and a little bit about how they are put into practice.
We started this catalog with a simple but grandiose idea: We’d celebrate our magazine’s history by tracking the most influential business ideas throughout history. We invited some of the most insightful business historians and observers we know to a workshop. Participants came prepared with lists of what they considered the milestones of management history. We spent the day posting ideas on a conference room wall, grouping them, and trying to get to the heart of each with an incisive phrase or reference.
We ended up with about 400 entries, more or less organized by theme. Then we refined them to the version you see here. We found that each group of ideas could be fairly well summed up in a single question and there happened to be about 20 of them — 20 questions for 20 years of s+b, a heartening coincidence.
Of course, this catalog of management thinking isn’t the last word. There never will be a last word with practical philosophy; there is always more coming, because the problems are never fully solved. But that means there will always be another chapter, another issue. As we mark our 80th issue, we hope strategy+business will continue to be one of the primary places to find that next great management idea, and understand what it could mean for you and your organization.
Participants in the “20 Questions” workshop:
And from strategy+business:
- Art Kleiner is editor-in-chief of strategy+business.
Nancy Nichols is a former senior editor of the Harvard Business Review and founder of the Great Ideas Studio.