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Behind the corporate-strategy facade

May 22, 2013
The Harvard Business Review has a reputation for carrying articles detailing the cutting edge of management practices. Or at least that is the impression HBR likes to cultivate. So, it is interesting to find that fewer than 4% of the 65,000 living alumni of Harvard’s own illustrious business school subscribe to HBR.

This statistic comes from Walter Kiechel, a one-time editorial director of Harvard Business Press who recently wrote a book (The Lords of Strategy) about companies in the strategy-consulting business. Kiechel provides plenty of ammunition for those of us who have grown skeptical about the value of a formal corporate strategy. In my own case, I began noticing that strategies introduced in HBR articles, often with a lot of fanfare, would invariably be discredited within a few years of publication.

The prime example is the concept of business-process reengineering. The term became a euphemism for downsizing. Companies that zealously “reengineered” their processes often found they were left with staffs so lean that the absence of one or two workers jeopardized the output of the whole operation.

Another invention in this category was a graph promoted by the Boston Consulting Group. BCG advised conglomerates to plot their businesses in one of four quadrants of a graph whose axes represented market growth rate versus relative market share. The idea was to graphically depict which businesses were stars, cash cows, dogs, or question marks. This sort of portrayal was supposed to help managers decide which of their businesses were worth additional investment and which should be divested. In reality, the graph may have been more helpful to a firm’s competition than to its managers. Competitors who could figure out how your graph was arranged had a roadmap for the amount of market-share loss that would relegate a business to the dog quadrant and, thus, force a sale or exit.

The impression one might get reading Kiechel’s accounts is that managers are right to treat ideas published in HBR with a certain amount of distrust. Moreover, what you see published there may or may not have value for business managers, but it certainly seems valuable for the writers. He says one HBR author confided that, “You can get a year’s worth of business, maybe two, on the strength of one (HBR) article.”

And the idea that a company can gain a long-term advantage by planning “strategic” changes promoted by consultants may be an illusion. The proof is anecdotal but compelling. Kiechel interviewed Tom Peters and Robert Waterman just before their blockbuster business tome, In Search of Excellence, came out in 1982. He asked them how the “excellent” companies they profiled had managed to become “excellent.”

According to Kiechel, Peters and Waterman “didn’t much want to answer.” It eventually emerged that in most cases, the “excellent” practices that Peters and Waterman highlighted in their book had not been learned at all. They had been instigated by the company founders. Ensuing generations of management simply had the good sense not to bollix up the works by changing things.

That’s something to keep in mind the next time management consultants knock on your door with the latest brand of magic management elixir.

— Leland Teschler, Editor

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