clair015

Most corporations consist of multiple divisions. These divisions, which set their own strategy (what we generally refer to as “business strategy”), more often than not have very little to do with one another. Take Philips Electronics with its lighting, medical equipment, and consumer electronics; ThyssenKrupp with steel, elevators, and engineering services; or smaller companies such as Trinity Mirror with newspapers, printing, and digital services. They may not be like the conglomerates of the 1960s – you can see how their portfolio of somewhat related business came about – but, in reality, the various divisions and business units do operate completely independently from one another. Yet, corporate top management invariably tries hard to formulate an overarching strategy. It endeavors to stimulate cooperation across divisions (by repeatedly shouting really loudly that this should happen), sets up corporate shared services (which invariably are seen as a mere cost and nuisance by its...

For those of you out there who like to gleefully smirk about “strategy”; let me explain it immediately here at the start (and hopefully once and for all): Strategy is a necessary condition for success. But it is not a sufficient condition – we (strategy professors) are not that stupid. I’ll explain in a sec exactly what we mean by that – a necessary but not sufficient condition – but let me first explain the gleeful smirk. I again saw it last November, when the Monitor Group went bankrupt . The Monitor Group was a strategy consulting firm founded by Harvard Business School’s Michael Porter; seen by many as the founding father of the field of business strategy. When it went bankrupt I was gleefully approached by various people in various corridors making gleeful remarks that this strategy consultant’s strategy could not even save itself, and the famous strategy guru Michael Porter couldn’t even put together a company that made enough money to pay the rent. With the underlying ergo: se...