What companies didnt have before the strategy revolution was a way of systematically putting

together all the elements that determined their corporate fate, in particular, the three Cs central
to any good strategy: the companys costs, especially costs relative to other companies; the
definition of the markets the company servedits customers, in other wordsand its position
vis vis competitors.

There are many sorts and conditions of consultants, and even the best can be fairly
hermaphroditic creatures, one minute exhibiting a professors passion for the great clarifying
concept, the next displaying sales skills worthy of a street hustler. Among my contentions is that
it was this very combination of natures that animated Henderson and his confreres to launch the
strategy revolution.

They all believed that ideas are not out there waiting to be discovered, but are toolslike forks,
knives, and microchipsthat people devise to cope with the world in which they find themselves.
They believed that ideas are produced not by individuals, but by groups of individualsthat
ideas are social. They believed that ideas do not develop according to some inner logic of their
own, but are entirely dependent, like germs, on their human carriers and environment. And they
believed that since ideas are provisional responses to particular and unreproducible
circumstances, their survival depends not on their immutability but on their adaptability.

STRATEGY AS A CASE TO BE
CRACKED
HISTORY OF IDEA IN THREE STAGES
THE THREE PS
Positioning: Where was your business situated on the experience curve, charting your costs
compared with competitors? Where did a particular business sit in the portfolio of businesses
your company owned, according to measures like its market share? Should it be built up or sold
off? (Early 1960s-1980s)

Processes: the procedures and routines by which companies get things done. (-1990s)
- Time-based competition: If you can research and manufacture new products more quickly than
your competitors, you get a competitive edge
- Business process redesign / business reengineering : Re-engineering of the core competencies
of a company to achieve mostly competitiveness in the business process. Considered just as
another corporate fad

People: The smallest unit of analysis in consulting should be people, instead of companies. People
holds the keys to innovation, and innovation leads to competitive advantages.

The conflict regarding the definition of strategy: Strategy as positioning and strategy as
organizational learning.
- Positioning school, led by Harvards Porter, focus on what industry you compete in, what niche
you find, how you produce your products, and at what price
- Organizational learning school: Retorts the positioning school that no strategy ever goes as
planned, and that whats important is for companies to set a direction and go toward it, adjusting
to any difficulties along the way

THE FIERCENING OF CAPITALISM

Elitism of BCG: only hired the smartest of the smartest
Ever since the evil idea that the ultimate purpose for company is to rack up gains for
shareholders rose, strategy has been fueling the fiercening of capitalism. Executives get fired
more and more frequently, companies get punished by the stock market once they failed to meet
financial targetetc
Another development in the strategic world is that innovative competitive edges are competed
away more and more quickly, and that the job of consulting firms are now to make old,
established companies as innovative as a start-up.

THE INTELLECTUALIZATION OF BUSINESS

But take the trouble to look for it through unsentimental eyes, and you can find evidence
everywhere over the past five decades that increasing numbers of people have come to
understand business not just by doing itas it was done in the past, as company lore said it was
to be donebut rather as framed and mediated by ideas.

BRUCE HENDERSON DEFINES THE

SUBJECT
THE MYSTERIES OF MARKET SEGMENTATION
Market Segmentation: Looking at the universe of markets you serve, all the customers to whom
you sell different products or services, how do you carve up the totality to figure out where you
make money and where not? By customer? Product? Geography? Some combination of the three?
(Anyone who asserts You just take the cost of the product and subtract it from the price has
never worked in a large organization.)

Druckers wordsthat managing implies responsibility for attempting to shape the economic
environment, for planning, initiating and carrying through changes in that economic
environment, for constantly pushing back the limitations of economic circumstances on the
enterprises freedom of action.

LOADING THE MATRIX

DEBT AND CASH AS IMPERATIVES
First, that in thinking about strategy, one should focus on cashhow much did a business
generate, how much consumerather than on earnings reported for accounting purposes.
Second, that for most companies, leverage was a good thing. Or as Henderson put it in a 1972
PERSPECTIVES essay, Use more debt than your competition or get out of the business.