strategy+business Winter 2013 : Page 60

B E S T B U S I N E S S B O O K S 2 0 13 / S T R AT E G Y 60 openings, and threats to the old. The smartest outfits not only instill this ethic, but also cushion potential dislocations by finding new places for those employees whose units have experienced “healthy disengagement” from their former parent. Unless what McGrath calls continuous reconfigu-ration was installed with their genes, most organiza-tions don’t seem to take easily to innovation. Building on her earlier book with Ian C. Macmillan, Discovery-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity (Harvard Business School Press, 2009), McGrath lays out a process for building this ca-pacity into an organization. Many of its elements have been written about elsewhere: formal governance and funding models; experimentation; senior management involvement; a portfolio of new initiatives; an options-based investment approach; and an ability to accept and learn from intelligent fail-ures. Familiar perhaps, but no small leadership chal-lenge to put in place. Three or four qualities distinguish the mind-set of company leaders who face up to the reality of transient competitive advantage, and those qualities are useful even at companies that don’t approach the McGrathian ideal. One theme I hear a lot of lately from smart strate-gic thinkers is the absolute imperative to create a flow of information from the corporate periphery—from reps actually talking to customers and factory managers lis-tening to suppliers and wild freelance types attending offbeat conferences—to the central, strategy-making intelligence of the enterprise. The leaders of McGrath’s paragons do this as a matter of course, seeking inputs from a diverse set of re-sources and trying to widen the constituencies engaged in making strategy. They particularly seek “disconfirm-ing” information, tidings that suggest the enterprise’s current understanding of the outside world is flawed or incomplete—signals of trouble. (In contrast, say, to the Wicked Witch running a sweatshop in the movie ver-sion of The Wiz, with her managerial mantra, all too common in the real world: “Don’t nobody bring me no bad news.”) The leaders of McGrath’s outliers also prefer to be fast and roughly right versus slow and precisely right, taking up an option rather than engaging in an endless analysis of anticipated net present value. And contrib-uting to the culture they want to create, outlier lead-ers hire not so much for existing or demonstrated skills as for what Kris Gopalakrishnan, cofounder of Infosys, calls learnability—the capacity to acquire new skills. Like the ones that will be required in that new business just over the next hill. Five Strategic Injunctions At first blush, Playing to Win: How Strategy Really Works, by A.G. Lafley and Roger L. Martin, seems at odds with McGrath’s focus on the transience of com-petitive advantage. If you read only Lafley and Martin’s prescribed steps for making business strategy, you might think you’ve been presented with a semi-classic frame-work, albeit one tempered by years of practical experi-ence. Lafley was the highly successful CEO of Procter strategy+business strategy+business issue issue 73 73 best books 2013 strategy Rebranded simply as “Olay,” P&G’s skin-care product found a nifty niche at an $18.99 price—the “Oil of” version had sold for $8 or less. & Gamble from 2000 to 2009, helping the company double its sales and quadruple its profits (so successful, in fact, that he was recently called back to his old job when his successor floundered). Martin was his long-time strategy consultant at Monitor Company, before going on to become dean of the University of Toronto’s Rotman School of Management. Lafley and Martin invoke Michael Porter’s five forces model for gauging industry attractiveness, a mod-el long criticized for its allegedly static quality. (For-get “industry” anyway, argues McGrath, concentrate instead on “arena.”) They ritually tug their respective forelocks to the received wisdom that any competitive advantage you devise must be sustainable. It’s only when you dig down into the book’s many detailed examples, drawn from P&G’s experience, that its affinity with The End of Competitive Advantage be-comes clear. Almost every case is a tale of a brand gone flat or under attack that must be reinvented, including Oil of Olay (derided by critics as “Oil of Old Lady”), Bounty paper towels (by the late 1990s, the “business was struggling”), and, of course, the redoubtable Pam-

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