Preface
Welcome to Strategic Management: From Theory to Practice. As a potential reader or adopter of this text, you may ask: Why another book on this subject? Certainly there is no shortage of alternatives, all authored by good scholars who are also knowledgeable in their field and passionate about their work. The answer is that this book is fundamentally different from those others. Moreover, the things that make this book different will also make it an especially valuable tool for teaching and learning. Indeed, students and instructors alike should find this approach novel and accessible.
What makes it so different? Stated plainly, it is a book on strategic management rather than a book about strategic management. The difference is subtle but important and reflects a basic question that every teacher of this material should ask — specifically, Why do students take this course and what must they take away from it in order to have a successful experience? It is my belief that students expect to leave this course as better strategic thinkers and managers. They want to be able to do the things, to make the decisions, and to deliver the results that will enable their success. In essence, they come to this course wanting to become successful or to become more successful. So this text is organized and oriented in such a way as to help.
Rather than try to convey all that theory has to say on a subject, the book seeks to translate what theory has to say into principles and practices that students need to know in order to accomplish what that they want to accomplish. As mentioned, it is a subtle difference but it is an important one. It reflects an approach that is grounded firmly in theory and research but that is ever so practical in application. It reflects 18 years of experience teaching strategic management, to executives, MBAs, and undergraduates. And it reflects a desire to communicate, in a straightforward and plain-spoken way, a model that has too often seemed overly esoteric and academic to students and executives alike. In essence, the approach is to render strategic management practical by making it accessible and to leverage its utility by leveraging its generalizability. Everything in the book, then, from its coverage to its organization, reflects this philosophy.
Chapter 1 is an introduction built on a simple foundation — namely, that it is all about performance. There is a song by Sean “Diddy” Combs entitled “It's all about the Benjamins.” Few books or articles capture the practical essence of our discipline as well as this simple phrase. In business we keep score by measuring performance, and performance is a function of strategy. Of course, strategy and strategic management can mean different things to different people and the study and practice of strategy can involve all manner of complexity and nuance. But tying it all together is the focus and the impact on performance.
Chapter 2 then addresses the question begged by Chapter 1: What is performance? While seemingly simple, the issue of performance has been elaborated and complicated by the myriad different measures that are employed to capture it and by the context in which it is evaluated. Thus, great attention is paid to the technical challenges and trade-offs in performance measurement. Here too, though, the point is to simplify and make accessible and to show performance from a variety of perspectives. Moreover, the discussion is connected to strategic management, to illustrate the responsibility and challenge of the role.
Chapter 3 begins the process of meeting that challenge, and strategic management is presented as a set of “tools” that can help. Covered in this chapter are the principal components of the model. However, the point is not to be comprehensive or exhaustive. Indeed, I intentionally gloss over some fine-grained distinctions and lump together some things that others would prefer to keep separate. I do this because the purpose is to simplify and make practical, to focus on questions of “why” rather than questions of “what”, and to provide an overarching framework for the practice of strategy.
Chapter 4 covers the first step in that application — analysis of the environment. While similar in many ways to other texts, this analysis is different in some fundamental ways as well. The first is the way the environment is defined. With a goal of practical accessibility, I define competition as those who interfere with the relationship a firm has to its customers. I define the competitive environment as the sum of those first-order connections that affect the relationship of a firm to its customers. Finally, I cast environmental analysis as the input to the rest of the strategic process. Through the analysis of past, present, and future, environmental analysis must produce the insights that will motivate every step thereafter.
Chapter 5 takes that input and answers the question: Now what? How does a strategist take the output from the environmental analysis and convert it into strategy? The chapter focuses on some common tools for this, such as SWOT, the value chain, and VRIN (value, rarity, inimitability, and non-substitutability) analyses. However, it goes one step further and introduces “competitive profile analysis.” This process was developed through years of consulting practice and application and is built on sound theoretical principles. This process, along with all the other material in this chapter, is meant to provide a mechanism for answering the “What now?” question.
Chapter 6 focuses directly on competitive advantage and flows naturally from the issues in chapters 4 and 5. However, rather than discuss competitive advantage as an organizational-level construct, I discuss as it exists at the transaction level. The point is to facilitate better connection between the “why” and the “how” of strategy. How does the practice of strategy with all of its various models and tools actually connect to performance? The answer is by enabling more and more profitable transactions. This approach also provides a practical measure of competitive advantage that is both tangible and immediate and that links directly to financial performance.
Chapter 7 introduces the concept of multi-business strategy. Viewing competitive advantage at the transaction level focuses attention on environmental conditions and organizational attributes. Those conditions and attributes are specific to individual business units. But what does strategy have to say about diversified firms with multiple business units? Answering that question requires a discussion of synergy and of the “better-off” principle. In essence, a diversified firm should be more valuable than the sum of its individual business units or its corporate strategy will have been unsuccessful. How a firm gains and manages that synergy so as to be better off is the subject of this chapter.
Chapter 8 deals with implementation and marks the final step in the framework. A good comprehension of implementation requires understanding two distinct topics: fit and change. It also requires understanding that the relationship between these things is paradoxical. Designing a firm so that it is tightly fit to the current strategy and the demands of the current environment can facilitate performance in the short term. However, it also limits flexibility and adaptability in the long term. Yet performing well over time requires that attention be paid to both. This chapter, then, is meant to explain both topics in a practical and accessible way, while also introducing the subsequent dilemma and offering insights on how to manage it.
Chapter 9 is supplied almost as an addendum to the larger framework. It is not meant to flow from the previous chapters as the earlier ones did, but rather to derive from the sum of the previous chapters and to show the generalizable nature of strategic management. It does this by comparing similarities in the strategic management framework to issues in entrepreneurship and international business. Some may object to presenting these disciplines as subsets of strategy. But the treatment is intentional and meant to illustrate that, by truly understanding the framework and principles of strategy, anyone can move and work efficiently across a range of contexts and settings.
Chapter 10, the final chapter, is offered both as a summary of the book and as a point of connection between the practice of strategy and leadership. Here, again, the point is not to be comprehensive but to introduce common functions of leadership and to relate them to the framework of strategic management. Governance, which is briefly discussed in this chapter, is presented as a condition surrounding leadership and as an answer to the question: How is leadership structured and delivered in modern organizations? While this approach may not do justice to the complexity and richness of governance, it does serve to make the topic accessible and easily connected to the larger framework of strategy.
The sum total of the book, then, is a straightforward walk through the practice of strategy. Like other books, this one draws from theory and research as it explains the tools, models, and logic of strategic management. However, the language, perspective, and approach are subtly and yet fundamentally different. The result is a text that should be interesting, accessible, and useful to students at every level — undergraduate, MBA, and executive. Moreover, it is an approach that should be refreshingly different and yet still very comfortable for researchers and teachers.
Features in the Text
To bring the concepts together, each of the chapters ends with a list of key terms introduced and some questions for review.