Cynthia A. Montgomery is the Timken Professor of Business Administration and immediate past chair of the Strategy Unit at Harvard Business School, where she’s been on the faculty for 20 years. One of her recent assignments has been working with owner managers in the School’s flagship Owner/President Management program, an experience that changed her view of strategy, and the distinctive role leaders play in the process. Her latest book, The Strategist: Be the Leader Your Business Needs, grew out of that experience and was published by HarperBusiness (May, 2012).
Montgomery’s work has appeared in nearly a dozen top-tier managerial and academic outlets, including Harvard Business Review, Financial Times, American Economic Review, Rand Journal of Economics, Strategic Management Journal, Management Science, and others. She is the co-author of Corporate Strategy: Resources and the Scope of the Firm (with David J. Collis), the editor of Resource-Based and Evolutionary Theories of the Firm, and the co-editor of Strategy: Seeking and Securing Competitive Advantage (with Michael E. Porter).
Montgomery has served on the boards of two Fortune 500 companies, a number of mutual funds managed by BlackRock, Inc., and several non-profits.
Here is an excerpt from my interview of her. To read the complete interview, please click here.
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Morris: Before discussing The Strategist, a few general questions. Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.
Montgomery: When I finished my early education, I did a big round of interviews for a wide variety of jobs ranging from marketing tires to writing communications pieces for a liquid metal fast breeder reactor business. They all had their merits but when all the hoopla was over, I asked myself: Do I want to spend the majority of my waking hours doing this, even for a few years? Ultimately, I decided “no” and went with my gut. I went to graduate school, got a PhD, and became a researcher and educator. It has suited me well. I’m glad I had the courage to walk away from attractive jobs that “weren’t me.”
Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?
Montgomery: I did my graduate work at Purdue University, where they had state-of-the-art courses in empirical methods that are vital to strategy research. It was a very challenging program—not a lot of fun, especially for someone who had been a philosophy major as an undergraduate—but the run room from that investment set up the rest of my career.
Morris: What do you know now about business world that you wish you knew when you went to work full-time for the first time?
Montgomery: I wish I’d known more – not about the ideas side of business — but about the human side: What’s involved in building a reputation, inspiring people, and working effectively in organizations. I learned that incrementally over many years.
Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.
Montgomery: One of my favorite books is The Remains of the Day by Kazuo Ishiguro. It’s about a butler and the choices he makes about who he is and what matters to him. It’s also about how the goodness of the people/organizations we work for inevitably impacts the meaning of our own contributions. I read it years ago, but it still haunts me.
Morris: Tell me about the owner-manager program you’ve been teaching in.
Montgomery: The participants come from all over the world and from almost every industry — aerospace, refuse collection, health and beauty, financial services, education, fashion, biotech—everything. So, there’s enormous variety in the program; at the same time, what everyone has in common is that they’re leading an organization wherein they have a significant ownership stake. It gave me a great opportunity to think about the distinctive contributions leaders can make to a business –one of those, the one I’ve thought about most is the opportunity to define what a business will be and why it will matter. It’s the most fundamental question facing a business, the one from which everything else begins.
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To read the complete interview, please click here.
Cynthia cordially invites you to visit this website
where you can download an excerpt from her book, The Strategist: Be the Leader your Business Needs.
How to create “a unique and valuable position” by deciding what to do…and not do
This volume is one of several in a new series of anthologies of articles that initially appeared in the Harvard Business Review, in this instance from 1960 until 2006. Remarkably, none seems dated; on the contrary, if anything, all seem more relevant now than ever before as their authors discuss what are (literally) essential dimensions of formulating and then executing an effective strategy.
My own opinion is that strategies are “hammers” that drive tactics (“nails) and the key is to get a strategy in proper alignment with the ultimate objectives as well as with an organization’s various activities. That said, what we have in this volume is a variety of thoughtful perspectives on strategy provide by those who are among the world’s most highly-regarded authorities on the subject.
More specifically, the reader learns how to understand what strategy is and isn’t as well as what it does and (doesn’t) do, and, how to manage/leverage the five competitive forces that shape strategy (Michael E. Porter); also, how to build a company’s vision (James C. Collins and Jerry I. Porras), how to reinvent a business model (Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann), how to formulate and then execute a “blue ocean strategy” (W. Chan Kim and Renée Mauborgne), how to take full advantage of the “secrets” of effective strategy execution (Gary L. Neilson, Karla L. Martin, and Elizabeth Powers), how to use the Balanced Scorecard as a strategic management system (Robert S. Kaplan and David P. Norton), how to transform corner-office strategy into frontline action (Orit Gadiesh and James L. Gilbert), how to turn great strategy into great performance (Michael C. Mankins and Richard Steele), and gain a much better understanding of how clear decision roles enhance organizational performance (Paul Rogers and Marcia Blenko).
Each article includes two invaluable reader-friendly devices, “Idea in Brief” and “Idea in Practice” sections, that facilitate, indeed expedite review of key points. Some articles also include what I characterize as “business nuggets” in which their authors focus on even more specific subjects such as “Finding New Positions: The Entrepreneurial Edge” (Porter, Page 10), “Big Hairy, Audacious Goals Aid Long-Term Vision” (Collins and Porras, 96), “A snapshot of blue ocean creation” (Kim and Mauborgne, 130-132), “Translation vision and strategy: four perspectives” and “Managing strategy: four processes” (Kaplan and Norton, 172 & 173), and “A Decision-Making Primer” (Rogers and Blenko, 236-237).
These ten articles do not – because they obviously cannot – explain everything that one needs to know and understand about the formulation and execution of an effective strategy. However, I do not know of another single source at this price (currently $14.23 from Amazon) that provides more and better information, insights, and advice that will help leaders to achieve success in the business dimensions explained so well by the authors of the articles in this volume.
Here is an excerpt from an article co-authored by Michael E. Porter and Mark R. Kramer for Harvard Business Review (January/February 2011). To read the complete article, please click here.
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The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.
Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures. The legitimacy of business has fallen to levels not seen in recent history. This diminished trust in business leads political leaders to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle.
A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success. How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How else could companies think that simply shifting activities to locations with ever lower wages was a sustainable “solution” to competitive challenges? Government and civil society have often exacerbated the problem by attempting to address social weaknesses at the expense of business. The presumed trade-offs between economic efficiency and social progress have been institutionalized in decades of policy choices.
Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core.
The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.
What Is “Shared Value”?
A growing number of companies known for their hard-nosed approach to business—such as GE, Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, and Wal-Mart—have already embarked on important efforts to create shared value by reconceiving the intersection between society and corporate performance. Yet our recognition of the transformative power of shared value is still in its genesis. Realizing it will require leaders and managers to develop new skills and knowledge—such as a far deeper appreciation of societal needs, a greater understanding of the true bases of company productivity, and the ability to collaborate across profit/nonprofit boundaries. And government must learn how to regulate in ways that enable shared value rather than work against it.
Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But a narrow conception of capitalism has prevented business from harnessing its full potential to meet society’s broader challenges. The opportunities have been there all along but have been overlooked. Businesses acting as businesses, not as charitable donors, are the most powerful force for addressing the pressing issues we face. The moment for a new conception of capitalism is now; society’s needs are large and growing, while customers, employees, and a new generation of young people are asking business to step up.
The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again.
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Michael E. Porter is the Bishop William Lawrence University Professor at Harvard University. He is a frequent contributor to Harvard Business Review and a six-time McKinsey Award winner.
Mark R. Kramer cofounded FSG, a global social impact consulting firm, with Professor Porter and is its managing director. He is also a senior fellow of the CSR initiative at Harvard’s Kennedy School of Government.
I highly recommend 10 Must-Read Articles from HBR. The articles were written by Clayton M. Christensen, Michael Overdorf, Thomas H. Davenport, Peter F. Drucker, Daniel Goleman, Robert S. Kaplan, David P. Norton, Rosabeth Moss Kanter, John P. Kotter, Theodore Levitt, Michael E. Porter, C. K. Prahalad, and Gary Hamel, $29.95 and published by Harvard Business Press (2009).
The cost of this volume is about half of what the cost would be if all ten articles were purchased separately. There is also the matter of convenience: Having all of them assembled in a single volume. Each of these really is a “classic.”
The various HBR Article Collections save you time by synthesizing and distilling the essence of selected Harvard Business Review articles that, together, help you meet a specific management challenge. One-page overviews draw out the main points. Annotated bibliographies point you to related resources. Includes original HBR articles.
If you read nothing else, read these 10 articles from HBR‘s most influential authors: 1) “Meeting the Challenge of Disruptive Change,” by Clayton M. Christensen and Michael Overdorf, explains why so few established companies innovate successfully. 2) “Competing on Analytics,” by Thomas H. Davenport, explains how to use data-collection technology and analysis to discern what your customers want, how much they’re willing to pay, and what keeps them loyal. 3) “Managing Oneself,” by Peter F. Drucker, encourages us to carve our own paths by asking questions such as, “What are my strengths?” and “Where do I belong?” 4) “What Makes a Leader?” Not IQ or technical skills, says Daniel Goleman, but emotional intelligence. 5) “Putting the Balanced Scorecard to Work,” by Robert S. Kaplan and David P. Norton, includes practical steps and examples from companies that use the balanced scorecard to measure performance and set strategy. 6) “Innovation: The Classic Traps,” by Rosabeth Moss Kanter, advocates applying lessons from past failures to your innovation efforts. She explores four problems and offers remedies for each. 7) “Leading Change: Why Transformation Efforts Fail,” by John P. Kotter, argues that transformation is a process, not an event. It takes years, not weeks, and you can’t skip any steps. 8) “Marketing Myopia,” by Theodore Levitt, introduces the quintessential strategy question, “What business are you really in?” 9) “What Is Strategy?” by Michael E. Porter, argues that rivals can easily copy your operational effectiveness, but they can’t copy your strategic positioning–what distinguishes you from all the rest. 10) “The Core Competence of the Corporation,” by C.K. Prahalad and Gary Hamel, argues that a diversified company is like a tree: the trunk and major limbs its core products, branches its business units, leaves and fruit its end products. Nourishing and stabilizing everything is the root system: its core competencies.