The Trouble with Strategy: Synopsis

The Trouble with Strategy - coverThis book describes how teaching and practice of strategy lacks any of the features of a respectable profession:

clear and consistent terminology (we don’t even know what ‘performance’ is!)
a cumulative body of reliable knowledge (we have fads and slogans instead)
professional standards of practice (an MBA is no qualification to do strategy)

So it is no surprise that management do not use strategy methods – they either don’t work, or aren’t useful. Why? Strategy research has asked the wrong question for 50 years – what drives profitability? Finance has known for about the same time that a business and its strategy is worth the present value of discounted future cash-flows!

We have looked in the wrong place for answer’s! First, industry conditions, which explain little, then abstract features of companies, which are impossible to specify and meaningless to management.

We have used a tool that cannot work – statistical correlation studies. Performance depends on things that build up over time, often a long time – customers, people, assets, products – a process that destroys any seeming direct relationship between items we control at one end of the business and the performance coming out the other end. Strategy “answers” emerging from this process are superficial, unreliable and static – performance depends, say, on having a good position, a distinctive business model , or core competences. So strategy departments in business schools are not – as they should be – the pinnacle that integrates everything about how business works and performs. Sorting out this vast problem will not be easy – we need to:

seek answers to the right question – how to build performance over time (cash flow in corporate cases), strongly and sustainably
develop tools offering reliable, comprehensive answers (Strategy Dynamics is a candidate)
codify and define the few other strategy principles that work, and throw out the rest

Then establish professional standards, training and examinations that would be normal in any other respected profession, and inject the essentials of the discipline into MBA and executive training in business schools.