And, like all
ideas, they were exciting before they have been overused and turned into clichés.
“After all, by
what other construct but strategy could an executive structure an understanding
of the enterprise.” (Kiechel, 2010, p.281).
The strategy as the complete view of the firm:
“the purpose of strategy was to match a
company’s capabilities to the opportunities in its environment.” (Kiechel,
2010, p.26).
“its emphases on
treating your company as a portfolio of businesses that might be bought or
sold, placing your bets where you had a competitive advantage, and using debt
to finance the effort.” (Kiechel, 2010, p.205).
Ideas at the core of consulting:
Strategy has “the
ability to take an extraordinary complex, integrated, multidimensional problem
and get arms around it conceptually in a way that helps, that informs and
empowers practicioners to actually do things.” (Kiechel, 2010, p.122).
Strategy is “powerful
oversimplification.”
“I was an idea junkie.”
(Kiechel, 2010, p.49).“Or, as one early BCG partner puts it, “We invented the
retail marketing of business ideas.”” (Kiechel, 2010, p.21). “Put simply,
Henderson cared more about his intellectual explorations and surrounding
himself with exciting companions on the voyage than he did about putting the
enterprise on a sustainable footing.” (Kiechel, 2010, p.49).
The human side
“strategists, including Porter, had thoroughly
neglected the dimension of the human, the capabilities and desires of the
individuals who turn strategy from concept into reality.” (Kiechel, 2010,
p.137). “If the economists posited a sort of corporate version of their famous
fiction, homo economicus, the consultants endowed it with certain qualities of
an army – always in a fight (competition), led from the top, its sense of
itself built around its strategy.” (Kiechel, 2010, p.140).
Experience curve:
“businesses
should expect their costs to decline systematically.” (Kiechel, 2010, p.32).
“your cost position should reflect your share of the market.” (Kiechel, 2010,
p.32). “A bigger market share typically means you have more experience (…)
which should mean your costs are lower than theirs.” (Kiechel, 2010, p.32).
“What we were
doing was pricing it for what it was going to be.” (Kiechel, 2010, p.40).
It “was a poor basis for strategy in mature
industries – beer, cement – where accumulated experience doubled at glacial
pace.” (Kiechel, 2010, p.45).The curve “could leave you open to being
blindsided by changes in taste or technology.” (Kiechel, 2010, p.45).
Matrix
“his
recommendation “was balancing operating risk and financial risk.” If you had a
low level of operating risk, as timber companies did, “beef up the financial
risk by the use of debt, to get the appropriate level of debt for the
business.” (Kiechel, 2010, p.54).“The vertical dimension was to display
expected growth of the market in which the business competed.” (Kiechel, 2010,
p.62). “The horizontal dimension would indicate relative market share. (…)
Share was plotted on a logarithmic scale.” (Kiechel, 2010, p.62).
Not advice. Profit.
“By virtue of its
be-there-with-you-all-the-way approach, Bain & Company stole a march on its
competitors in tackling implementation.” (Kiechel, 2010, p.86). ““We don’t sell
advice by the hour; we sell profits at a discount.” (Kiechel, 2010, p.87). “At
his (Bower’s) firm, the interst of clients would always come first, assignments
would be refused if the consultants didn’t add value, and everyone would wear a
hat on leaving the office.” (Kiechel, 2010, p.98).
“In the perfect
world dreamed of in their philosophy, the laws of supply and demand should
quickly compete away any supernormal profit-making advantage.” (Kiechel, 2010,
p.123).
Not just cost. Look at differentiation & innovation
“McKinsey was
always interested in helping our clients figure out ways they could raise
prices. I’m not sure that BCG, with its focus on cost, had the same emphasis.”
(Kiechel, 2010, p.191)
“There were
essentially three strategies a company could choose, he (Porter) posited:
low-cost leadership (beloved of fans of the experience curve), product
differentiation (making your offering so distinctive that you could charge more
for it), or market specialization (pick a niche and dominate it).” (Kiechel,
2010, p.132).
“S curves almost
always come in at least pairs, he argued, with the successor technology
experiencing its own slow start but beginning from higher on the performance
axis. The evidence also suggested that a company that was a master of one
technology and S curve almost never succeeded in jumping successfully to the next
one.” (Kiechel, 2010, p.235).
“Defining entrepreneurship
as “the pursuit of opportunity beyond the resources currently controlled.”
(Kiechel, 2010, p.288).
“Part of the
challenge is that value creation, whether in the form of innovation or growth,
has never been proven as susceptible to systematization as has cost reduction.”
(Kiechel, 2010, p.192).
No Best Practice ever last.
“Managing for
survival, even among the best and most revered corporations, does not guarantee
strong long-term performance for shareholders. In fact, just the opposite is
true. In the long run, markets always win.” (Kiechel, 2010, p.167).
Effectiveness is not strategy
“a world of
ever-faster change, you didn’t need a strategy and might even be held back by
one when you should be reinventing yourself.” (Kiechel, 2010, p.250).“failed to
distinguish between “operational effectiveness” and “strategy.”” (Kiechel,
2010, p.250). “operational effectiveness thus boiled down, for Porter, to
pretty much performing the same activities as your competitors, but more
efficiently than they do. In contrast – drumroll here – “Strategic positioning
means performing different activities from rivals’ or performing similar
activites in different ways.” (Kiechel, 2010, p.251).“competitors quickly copy
one another’s techniques and technologies, pushing what he called the industry’s
“productivity frontier” ever outward.” (Kiechel, 2010, p.251).
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