The Practice of Making Strategy

Volume 17, Number 3 Article by Babu Subramanian September, 2005

The Practice of Making Strategy : By Fran Ackerman and Colin Eden with Ian Brown, Response Books, New Delhi, pp 265, Price: Rs. 340. :

It seems odd to find a book on business strategy starting with a meaningful but well worn quotation from a leftist icon (Lenin): `Theory without practice is pointless, practice without theory is mindless.' Written by Ackerman, Eden (professors at the University of Strathclyde) and Brown (Director at Fitzpatricks Group), The Practice of Making Strategy aims at offering a practical aid to strategy, drawing from a range of theories. The book also contains an MBA student project case study by Ian Brown. Brown, as an MBA student at Strathclyde, employed the methodology propounded by Eden and Ackerman in their earlier book, Strategy Making: The Journey of Strategic Management, at Fitzpatricks to develop a business strategy for the firm. The package of process tools and techniques has been developed and tested over 200 strategy interventions.

The authors claim that their approach is different from others' in that it focuses on the realities of management in the organisation. It discusses the use of cognitive mapping which involves interviewing members of the strategy-making group. The Oval Mapping technique (OMT) is recommended to bring to the surface and structure strategic issues in groups. The authors suggest considering eight team roles (although they list only seven!) while forming strategy-making teams. The MBTI (Myers Briggs Type Indicator) tool and Belbin team role questionnaire have been recommended as the framework for forming teams.

The emphasis of the book is on `enabling issues to emerge with the intention of building a strategic future based on realities rather than some abstraction of the future'. It advocates using a bottom-up approach to detect the emergent strategy, and introducing incremental change. The authors also contend that incremental change is more practical than wide ranging and fundamental change. However, in reality, the demand for radical change is quite high in companies. Incrementalism has been considered innovation's worst enemy1 and other theories have been used to illustrate strategic shift — such as the revamping of the New York City Police Department by Bill Branton by employing tipping point leadership2.

Clayton Christensen and Michael Raynor offer a more complex approach to the management of the strategy development process than that presented in the book under review. In their book, The Innovator's Solution3, Christensen and Raynor point out that when the strategy is clear, as in the case of sustaining innovation and certain low end disruptions, it can be deliberately conceived and implemented. With new market innovations, it is impossible to get the details of strategy right. In these circumstances, managers need to implement a process through which a viable strategy can emerge. They also discuss the resource allocation process which is crucial in directing the right strategy.

Given their accent on using mapping techniques to detect emergent strategy, the authors of The Practice… aver that in the construction and testing of a robust business model, core distinctive competences have to be discovered through a designed process. The goal system that emerges is reviewed and revised in the light of core distinctive competences and the business model. The authors quote Prahalad and Hamel4 who warn of the potential danger of unwittingly surrendering core competences when internal investment is cut in favour of cost outsourcing. While the idea of sticking to the core is important, what is core can turn peripheral and vice versa. An activity that is considered peripheral could be a great opportunity5. IBM's decision to outsource peripheral activities, such as the microprocessor for its PC business to Intel and its operating system to Microsoft, enabled these two companies to capture most of the profit in the PC industry. Christensen and Raynor use circumstance-based theory to describe the mechanism by which activities become core or peripheral.

The Practice. . . illustrates the composition of a statement of strategic intent effectively by reverse engineering MsKinsey's mission statement (`To help our clients make distinctive, lasting and substantial improvements in their performance, and to build a great firm that is able to attract, develop, excite, and retain exceptional people'). They point out how the power of the statement is illustrated by it being a self-sustaining loop.

The authors effectively use a paper by Steven Kerr, `On the Folly of Rewarding A, While Hoping for B', originally published in the Academy of Management Journal, to suggest that effective control or an effective reward system is crucial to the delivery of strategy. Bringing out the anomalies in management reward practices, Kerr observes, for instance, that companies hope for `long-term growth and environmental responsibility' but reward quarterly earnings. The authors recommend John Kotter's eight steps towards strategic change for ensuring strategy delivery.

Though the writing is rather tedious and the practice suggested appears long and arduous, the tools recommended by the book, such as the Cognitive Mapping technique and the Oval Mapping technique will be quite useful in detecting emergent strategy in an organisation. The authors bring a whole range of theories to unify the process of making strategy. Yet, some relevant works on strategy6 do not find a place in it. Considered in conjunction with other works on the subject, The Practice of Making Strategy would yield more effective practical solutions.

References and Notes

1. Nicholas Negroponte as quoted in Peters, Tom, 1997, The Circle of Innovation, Knopf.
2. Chan Kim, W, and Renée Mauborgne, 2005, Blue Ocean Strategy, Harvard Business School Press.
3. Christensen, Clayton, and Michael Raynor, 2003, The Innovator's Solution, Harvard Business Press.
4. Hamel, G, and C K Prahalad, 1994, Competing for the Future, HBS Press, MA.
5. Christensen, Clayton, and Michael Raynor, The Innovator's Solution.

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