Playing To Win
The Best of Two Years of Strategy — #5
The Lost Art of Strategy (December 6, 2021) comes in at #5 (of 104) in popularity. I think, based on comments and readership volume, it received the attention for three reasons. First, the piece leveled some pretty tough criticism at the ‘strategy consulting firms’ and state of business school strategy teaching and research. Second, I think the criticism dealt with things that outsiders to those two worlds didn’t know, so it provided illuminating insights. That is, most people think that the ‘strategy consulting firms’ primarily do strategy consulting — hence the name — and were unaware that strategy had became a tiny line of business for each of them. And most people are unaware of the degree to which what is taught in business school course these days is largely unhelpful to graduates trying to create strategy. Third, it rang true, at least to some extent, for even those who thought my views were more extreme than they thought warranted.
I returned to allied themes in two other posts (Strategy vs. Planning and Why Planning Over Strategy?) that both ended up on the top 10 most-viewed list, meaning that the general subject was of relatively high interest to readers.
Please enjoy! Next week: #4.
I have become increasingly troubled by a phenomenon in strategy — enough that I have decided to try to do something about it. Strategy becoming the lost art and I have launched a restoration project. And as part of that project, I am making my 6th Year II Playing to Win/Practitioner Insights (PTW/PI) piece on The Lost Art of Strategy. You can find the previous PTW/PI here.
A Bit of History
When considered in the context of the evolution of the practice of strategy, I have had an interesting career. I was a full-time strategy consultant for 17 years, then I served as a business school Dean (and professor of strategy) for 15 years (during which time I continued to advise on strategy on the side), then I transitioned from academic to full time strategy advisor/writer over the past 8 years.
I have gotten to see the bulk of the evolution of the field of business strategy. It got started in earnest with Bruce Henderson’s founding of Boston Consulting Group (BCG) in 1963, 18 years before my graduation and entry into the field. So, I have participated in 40 of the 58 years of the history of business strategy. And I saw it from two important vantage points: the strategy consulting industry and the business academy.
The art of strategy and its practice were initially led by the strategy consulting firms, beginning with BCG, and then its offspring, Bain & Company in 1973. McKinsey & Company, a venerable consulting firm founded in 1920 as a cost-accounting firm, saw BCG and Bain dominate this new line of business, and developed its own strategy practice to join that lucrative party. Finally, my old firm, Monitor Company, joined the fray in 1983. The demand was huge, and the industry grew at breakneck speed through the 1970s, 1980s and 1990s.
It took a while for the business academy to hop on board. There still wasn’t a required first year strategy course at Harvard Business School as of my graduation in 1981, almost two decades after the founding of BCG. And there was only one strategy elective in the second year — Industry & Competitive Analysis. That course was created and taught by Michael Porter, who created huge momentum for strategy in the academy when he published Competitive Strategy in 1980, which became the best-selling business book of all time (until In Search of Excellence came along).
Since then, strategy has become a major subject of research and teaching at business schools. No undergraduate or MBA program of which I am aware doesn’t teach multiple strategy courses. My own school, Rotman School of Management, had 19 full-time tenure-stream strategy professors by the time I left. Rotman was one of 561 accredited business schools in North America as of 2021 meaning that there are thousands of strategy professors in North America alone.
By the 1990s, business schools formally trained eager students in strategy, and McKinsey, BCG and Bain became the biggest recruiters of business school talent. Both supplied the industrial firms who grew internal corporate strategy departments and added the Chief Strategy Officer position to the C-suite. But by the turn of the 21st century, things changed, and strategy headed toward becoming a lost art.
The Lost Art
Both the strategy consulting industry and the business academy contributed to the drift of strategy toward becoming a lost art.
Thanks to the success of strategy as an offering, McKinsey, BCG and Bain gained access to the C-suites of the world’s companies to an extent never seen before by outside advisors. Sure, the big accounting firms had access to the CFO, but not the CEO to the extent of the strategy firms. This access positioned them to do lots and lots of work other than strategy — like post-merger integration, overhead cost reduction, salesforce reorganization, and digital transformation.
These projects turned out to be gigantic in comparison to strategy assignments — literally orders of magnitude greater in revenues. Selling and performing these kinds of non-strategy projects helped these firms become huge. They are all private so getting reliable numbers is difficult but recent estimates put their annual revenues in the $4 billion (Bain) to $10 billion (McKinsey) range. At that size, there is absolutely no way to sustain the revenues by doing strategy work because the assignments just aren’t in big enough revenue chunks. As a consequence, strategy (by my definition) has become a small line of business for these firms. Strategy is still beloved because it is their heritage. But it is proportionately tiny for each of them.
As a result, these firms are no longer the major sources of new strategy insights or key developers of strategy talent that they once were. Make no mistake about it, these are great firms that do great advisory and transformation work with great people — just not in strategy to a major extent anymore.
Meanwhile, business schools have lost their way in teaching strategy. To be fair, they were never great at teaching how to develop a strategy for a company. They were always most keen on developing and teaching analytical tools related to strategy. To give an example, Mike Porter transformed the world of strategy when he published Competitive Strategy. And he became a guru who CEOs called to help them with competitive strategy, which spurred the creation of Monitor Company to meet that demand. CEOs loved the Five Forces model from the book and much of what we did at Monitor in the early days (other than teach the core tools of the book to clients) was to perform Five Forces analyses for clients.
But when clients started to ask for us to develop a strategy for them (How can we get one of those generic strategies that Mike describes in the book?), it became clear to us that little in the book showed how to go from having a strategy with which you weren’t satisfied to having a strategy that you were excited about. It told you what a good one looked like — just not how to get there. That precipitated nearly a decade of my work (as the then head of ideas development at Monitor) to create the model and process for creating strategy, which I later wrote about with AG Lafley in Playing to Win.
But rather than develop and teach practical approaches to strategy, the strategy academy has delved increasingly into analytical tools related to strategy. And those tools have become ever more esoteric and theoretical — perfect for strategy academics to speak to one another about in academic journal articles.
For me, the most tragic and annoying of esoteric and theoretic strategy concepts is the Resource-Based View of the Firm (RBV) which I have talked about earlier in the PTW/PI series. Created as the anti-Porter because of the academy’s hatred for his guru status, RBV has now become the loyalty test in the strategy academy. In the vast majority of consequential business schools, the only way to get a full-time tenure stream job in a strategy department is to swear fealty to RBV.
Despite its dominance within the academy, RBV has little impact outside in the practice of strategy, despite now having being around for over 35 years. In all my years working on strategy with companies in the real world, I have only seen it used once — which is a stunning indictment. Thus, students are being taught as strategy doctrine — as the only proper way to think about strategy — a theoretical construct that isn’t used in the world into which they will graduate.
In sum, strategy is becoming the lost art because the ‘strategy consulting firms’ are producing consultants with wide-ranging skills (mainly in planning and project management), but no longer producing strategists. And with few exceptions, the strategy academy does not teach useful ways to transform your strategy from one you don’t like to one that you do.
A Restoration Project
I have spent 40 years building up ways of doing strategy practically and effectively, including how to build creativity/design into strategy formulation, and how to break seeming trade-offs with integrative thinking. I did it by working with real companies on real strategic problems. And I have written books to get these messages out, such as Playing to Win(with AG Lafley), The Opposable Mind, The Design of Business, Creating Great Choices (with Jennifer Riel) and the forthcoming A New Way to Think.
But more recently, I have attempted to get practical approaches into the hands of a wider audience that is longing for more actionable advice on strategy. One initiative is the PTW/PI series of which this post is a part. It is closing in on 100K words (one and a half books-worth) on how to go from a strategy you don’t like to one you do.
The second initiative is a live online course on strategy that I will be debuting in February 2022 with the educational platform, Disco. Founder Candice Faktor has created a platform that enables creators (such as me with the Playing to Win, Integrative Thinking and Design of Business material) to bypass the traditional learning structures (i.e., colleges and universities) to teach learners directly via a live online platform. This will allow me to reach a broader audience, as I am doing through the Medium platform with this series.
The course will have four modules — What is Strategy; Creating the Future; A Designerly Strategy Process; and ‘Greatest Hits’ (as judged by the participants) from the PTW/PI series. If you want to become a participant, all you need to do is apply at this link.
My goal with the course is to work toward restoring the lost art of strategy. The world benefits when organizations, both business and non-profit, use strategy to convert resources optimally into better outcomes, and I want to help with that.
If you want to become a strategist, you have to develop yourself. Nobody is going to do it for you. If you take a business undergraduate program or an MBA, you are going to be taught tools for analyzing aspects of strategy, not how to do strategy. Even if you go to a ‘strategy consulting firm’ after graduation, you are unlikely to do much strategy work. You will earn plenty, do excellent work, and learn a lot about planning and managing projects. But you are unlikely to become a strategist.
So, the bad news is that you need to take personal responsibility for learning strategy. However, the good news is that if you do, you will be on the positive side of a major demand-supply imbalance! Strategy is becoming a lost art, but there is more need for great strategy than ever. So, the opportunity is there for the taking!