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The Lords of Strategy

Written by: Walter Kiechel
Published: March 3, 2010


The world of business has been deeply transformed by a select group of individuals who revolutionized the way companies strategize. This metamorphosis, as chronicled in "The Lords of Strategy," unveils the fascinating journey of strategy's evolution in the corporate landscape. It's a tale that showcases the inception, growth, and influence of strategic thinking, all of which have today become indispensable cornerstones in the realm of business management.

Before the 1960s, the term "strategy" was predominantly military parlance. However, as the business world grew more competitive, the need for a clearer blueprint of corporate direction became paramount. Enter the 'strategy revolution,' spearheaded by four main protagonists – Bruce Henderson, founder of the Boston Consulting Group (BCG); Bill Bain, Bain & Company's creator; Michael Porter, the esteemed Harvard professor; and Fred Gluck, McKinsey & Company's former managing director. These "lords" were instrumental in turning strategy from an abstract concept to a concrete methodology, fundamentally altering the DNA of business thinking.

Bruce Henderson, with his innovative experience curve, emphasized the cruciality of scale and experience in driving down costs. The Boston Consulting Group, under his leadership, pioneered the growth-share matrix, which categorized a company's businesses as "cash cows," "stars," "question marks," or "dogs." This provided a simple yet profound tool for corporations to allocate resources effectively and prioritize their business units.

Bill Bain took a different approach. He believed in the idea of 'results, not reports.' Instead of merely advising companies, Bain & Company became deeply involved in the implementation process. They often took equity stakes in the firms they worked with, ensuring their skin was in the game. This revolutionary approach led to tangible outcomes and solidified the firm's reputation as a transformative force.

Michael Porter introduced the world to the 'Five Forces' model, a powerful framework to assess industry attractiveness. By analyzing the bargaining power of buyers and suppliers, the threat of substitutes, the potential for new entrants, and the degree of competitive rivalry, companies could discern the profit potential of an industry and adjust their strategies accordingly. Porter's emphasis on competitive advantage and industry structure has had a lasting impact on how businesses perceive their environments.

Lastly, Fred Gluck, who hailed from McKinsey, championed the internal dynamics of strategy formulation. He believed in fostering a culture where everyone in the organization was involved in the strategic process. This participative approach decentralized decision-making and democratized strategy, breaking the mold of it being the exclusive domain of top management.

Throughout the book, the interconnectedness of these lords and their institutions is evident. Their shared experiences, rivalry, and collaborations set the stage for the strategy industry's rise. From the boardrooms of Fortune 500 companies to the lecture halls of premier business schools, their influence is unmistakable.

However, the narrative also delves into the critiques and limitations of strategic thinking. Not all strategies guarantee success, and not all successful companies strictly adhere to strategic models. Moreover, the dynamic and unpredictable nature of the business world means strategies must continually evolve, challenging the very frameworks the lords put forth.

But beyond the tools, methodologies, and models, "The Lords of Strategy" is a testament to the power of ideas. It showcases how groundbreaking thinking, when combined with execution, can reshape industries and redefine norms. The four lords, with their distinct philosophies and approaches, collectively sowed the seeds of a revolution. Their legacy is evident in today's business lexicon, where 'strategy' is not just a word but a way of life.

Final Thoughts

Walter Kiechel's "The Lords of Strategy" isn't just a historical account; it's an odyssey of transformation. The rise of strategy as a discipline has forever changed the corporate world's face, and understanding its roots provides invaluable insights for modern business leaders. It emphasizes the importance of visionaries who dare to challenge the status quo and, in doing so, lay the foundations for a new world order. As business landscapes continue to evolve, the tales and teachings from these strategy stalwarts remain an enduring source of inspiration and guidance.

10 Big Ideas

1. The Birth of Business Strategy

The transformation from a predominantly military term to a business imperative highlights the adaptability and evolution of the term 'strategy'. This shift underscores the increasing complexity and competition of the corporate world, necessitating a clear vision and direction for businesses to thrive and differentiate themselves.

2. The Power of Innovative Tools

The introduction of tools like the growth-share matrix by BCG revolutionized the way companies approached resource allocation and business prioritization. Such frameworks provided a clearer understanding of business units and their potential, making decision-making more data-driven and strategic.

3. Commitment to Results

Bill Bain's philosophy of 'results, not reports' marked a paradigm shift in consulting. By diving deep into implementation and even taking equity stakes, Bain & Company embodied a hands-on approach, ensuring that strategies weren't just theoretical but were brought to life with tangible outcomes.

4. Understanding Industry Attractiveness

Michael Porter's 'Five Forces' model equipped companies with a lens to evaluate industry profitability. By dissecting factors like buyer power, supplier clout, and the threat of new entrants, businesses could strategize better, understanding their position and potential within an industry landscape.

5. Democratizing Strategy

Fred Gluck's belief in involving everyone in the strategic process democratized the realm of strategy. By decentralizing decision-making, it ensured that strategy wasn't a top-down directive but a collaborative effort, making businesses more agile and inclusive.

6. Interconnectedness of the Lords

The relationships, collaborations, and even rivalries among the strategy lords enriched the industry. Their collective experiences, shared wisdom, and mutual challenges fostered an environment of innovation, pushing the boundaries of traditional business thinking.

7. The Evolving Nature of Strategy

Despite the foundational models and tools introduced by the lords, the narrative underscores that strategy isn't static. The dynamic business environment demands continual adaptation and evolution, challenging companies to remain agile and responsive.

8. The Critiques and Limitations

While strategic thinking has its merits, it's not a one-size-fits-all solution. The book highlights that not all successful companies strictly follow strategic models, reminding us that there's no singular path to success and that adaptability is key.

9. Beyond Tools and Models

The true essence of the book lies in the power of groundbreaking ideas. It's a testament to how innovative thinking, paired with execution, can reshape industries. The legacy of the strategy lords is not just in the tools they introduced but in the mindset shift they instigated.

10. Visionaries Shape the Future

The profound impact of the strategy lords on the corporate world showcases the power of visionaries who challenge the status quo. Their courage to think differently and pioneer new paths serves as a reminder of the potential each one of us holds to redefine norms and lay the groundwork for future generations.

5 Exercises

1. Strategy in Your Life

Objective: Understand the role of strategy in your personal life and career by crafting a personal strategic vision.

  • Begin with a blank sheet of paper and write down where you envision yourself in 5 years.
  • Identify the key obstacles and opportunities that might come your way.
  • Using the 'Five Forces' model, evaluate your personal "industry" or career field.
  • Develop a plan on how you will address each of the forces to position yourself favorably.
  • Commit to reviewing and adjusting this strategy every 6 months to stay aligned with your goals.
2. Tools for Decision Making

Objective: Familiarize yourself with strategy tools to make more informed decisions in your life.

  • Research a basic understanding of the growth-share matrix and how it categorizes business units.
  • Apply this matrix to the different aspects or "units" of your life - such as career, personal growth, relationships, etc.
  • Identify which areas need more investment and which ones are providing the best returns on your time and effort.
  • Plan actionable steps for the upcoming month based on your findings.
  • Reflect on your actions and outcomes at the end of the month to understand the effectiveness of your strategic decisions.
3. Democratic Decision Making

Objective: Experience the power of collaborative decision-making in your personal life.

  • Choose a significant decision you need to make in the upcoming weeks.
  • Instead of deciding alone, involve friends or family, seeking their perspectives and opinions.
  • Collect and analyze all the feedback, identifying common themes and outliers.
  • Make your decision based on this collective insight, ensuring you consider all angles.
  • Reflect on how the decision-making process felt and whether the outcome was different than if you'd decided alone.
4. Adaptive Strategy Journal

Objective: Develop the habit of continually revisiting and adapting your strategies in response to changing circumstances.

  • Set aside time each week to journal about the strategic decisions you made and their outcomes.
  • Note any external changes or challenges you faced and how they impacted your plans.
  • Every month, review your journal entries to identify patterns and learnings.
  • Adjust your strategies based on these insights for the following month.
  • Over time, evaluate how this practice has improved your adaptability and decision-making skills.
5. Visionary Daydreaming

Objective: Cultivate the ability to think beyond the present and envision groundbreaking ideas or solutions.

  • Allocate 10 minutes daily for uninterrupted daydreaming, allowing your mind to wander without any specific agenda.
  • Every week, jot down any innovative ideas or thoughts that emerged during these sessions.
  • Choose one idea each month and explore it in-depth, researching or brainstorming its potential implications and applications.
  • Discuss your chosen idea with a friend or colleague, gaining external perspectives.
  • Reflect on how this practice has enhanced your creative thinking and ability to envision the future.

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