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 ROWE
CROSSAN
MAURER
ROUSE
S T R AT E G I C A N A LY S I S
NINTH EDITION

S T R AT E G I C
A N A LY S I S
AND A C T I O N

ACTIONAND
ISBN: 978-0-13-337029-4
EDITION
NINTH

www.pearsonhighered.com 9 780133 370294 MARY M. CROSSAN • MICHAEL J. ROUSE

W. GLENN ROWE • CARA C. MAURER
 5 Environment Analysis: The Strategy–Environment Linkage 88
Conducting Environment Analysis 88
Step 1: Focus the Environment Analysis 88
Performance Assessment as a Focusing Tool 90
The Strategic Proposal as a Focusing Tool 91
Jantzen Technologies: A Case Study 91
The Profit Model as a Focusing Tool 93
Defining the Right Time Horizon 95
Minimizing the Risks of Focus 96
Step 2: Test the Strategy–Environment Linkage 98
Demand 99
Supply 102
Competition 103
Government 105
First Check for Fit or Recycle 108
Step 3: Forecast Performance 109
Step 4: Rank against Other Proposals 110
Summary 110
Notes 111

6 Resource Analysis: The Strategy–Resource Linkage 112

The Nature of Resources 112
Other Characterizations of Resources 114
Resources and Competitive Advantage 116
The Dual Role of Resources 119
The Constraining Role of Resources 119
The Driving Role of Resources 120
Resource Analysis 120
Step 1: Identify Resource Requirements 123
Step 2: Test the Strategy–Resource Linkage 123
Recycling 126
Step 3: Develop Gap-Closing Analysis 126
Step 4: Move to the Next Step in the Diamond-E Analysis 128
Dynamic Resources 128
Resources and the Scope of the Firm 129
Summary 129
Notes 130

7 Management Preference Analysis: The Strategy–Management

Preference Linkage 132
Value Creation, Capture, and Distribution 132
Reconciling Stakeholder Interests 133
Corporate Governance 134
Corporate Social Responsibility 137

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 Management as a Key Stakeholder 138
Inconsistency between Proposed and Preferred Strategy 138
Inconsistency between Preferred Strategy and Other Realities 139
The Role of Management Preferences 140
The Roots of Strategic Preference 141
Personal Attributes 141
Character 142
Competencies 143
Job Context 146
Frozen Preference 147
Implications 149
Matching Preferences and Strategy 149
Step 1: Identify the Required Management Preferences 151
Step 2: Test the Strategy–Preferences Linkage 152
Step 3: Develop Gap-Closing Analysis 152
Framing the Gap-Closing Issues—Individual Managers 153
Gap-Closing Actions and Risks—Individual Managers 154
Framing the Gap-Closing Issues—Groups of Managers 155
Management Preferences and Competitive Analysis 157
Summary 158
Notes 159

8 Strategy and Organization 161

Organizational Capabilities 163
Behaviour 166
Culture 167
Step 1: Identify Required Organizational Capabilities 169
Step 2: Identify Capability Gaps 171
Step 3: Develop New Organizational Capabilities 172
Organization Structure 173
Functional Structure 173
Product Organization 175
Geographic Structure 176
Matrix 178
Cellular 178
Strategic Alliances 180
Choosing a Structure 181
Management Processes 182
Decision-Making Processes 182
Operating Processes 184
Performance Assessment and Reward Processes 185
Leadership Behaviour 186
Do You Have the Right Leaders? 187
Using All Three Leverage Points 188
Step 4: Assess Feasibility 188

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 Summary 190
Notes 191

9 Strategic Choice 193

Strategy as a Dynamic Process 194
Setting Direction 194
Focusing Effort 194
Defining the Organization 194
Providing Consistency 194
Strategy as Planning 196
Strategy as Learning 199
Cognitive Biases 200
Organizational Learning and Strategic Renewal 203
Reconciling the Tensions in Strategic Renewal 205
Leadership for Strategic Renewal 207
The Practical Matter of Strategic Choice at a Point of Time 209
Summary 211
Notes 211

10 Implementing Strategy: Change Agenda and Starting

Conditions 214
Types of Strategic Change 215
Strategic Decline 216
Leadership Style 217
Implementing Strategic Change 218
The Change Plan 219
Change Agenda 220
Analysis of Starting Conditions 220
Need for Change: The Crisis Curve 221
Crisis Change 223
Anticipatory Change 225
Reactive Change 227
Organizational Readiness for Change 229
Target Group Identification 229
Target Group Readiness 230
Personal Readiness for Change 232
The View From Below 234
Summary 235
Notes 235

11 Implementing Strategy: Guidelines and Action 238

Establishing Guidelines for Action 238
Priority Objectives 238
Behavioural versus Non-Behavioural Objectives 239

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 Action Priorities 240
Adopters and Resistors 241
Picking Starting Points for Action 244
Focus versus Scope 245
Leadership Style 246
Directive Leadership 246
The Participative Style 248
Pace 249
Implementing Pace Decisions 250
Generic Guidelines 250
Crisis Change 251
Anticipatory Change 252
Reactive Change 255
Creating an Action Plan 257
Monitoring Performance 258
Summary 259
Notes 259

Index 262

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 Preface

This book was written to complement case analysis in university and company strategic
management courses. It takes the point of view of the general manager and presents a con-
sistent, operational approach to analyzing and acting on strategic problems. Our intent
is to introduce you to the breadth of material in strategic management, yet enable you to
apply it in a decision-making process. In doing so, we venture beyond current strategic
management texts to help reconcile the diversity, breadth, and complexity of the field.
As we point out in Chapter 1, general managers run businesses and other types of
organizations, and, while their responsibility may be for a small business, a not-for-profit,
public sector, or large corporation, they face the common challenge of guiding their orga-
nizations to success in competitive environments. The aim of this book is to develop the
basic general management skills required to understand a business organization, sense the
opportunities and problems that it faces, deal effectively with strategic decisions, and to
set in place the people, structures, and operations to implement those decisions. We
refer to this as the general management perspective and, as we describe in Chapter 1, it
applies to any person in the organization, not just the general manager. Having a general
management perspective requires a disposition to lead, and therefore having a general
management perspective is consistent with concepts such as strategic leadership and
cross-enterprise leadership.
In preparing the text materials, we have concentrated on analytic concepts that con-
tribute to a practical understanding of specific strategic issues and to the translation of this
understanding into personal action. Further, we have linked these discrete concepts into
a comprehensive framework—the Diamond-E framework—to ensure that the whole of
the situation facing the business is appreciated and that priorities are set for both analysis
and action.
We have made two assumptions about our readers. First, we have assumed that
they are engaged in trying to solve strategic problems—as students of business doing
case analyses or field projects, or as managers on the job. Application and practice are
the prime vehicles for understanding the power and limitations of the concepts in this
text and, more importantly, for developing general management skills. Second, we have
assumed that our readers possess a basic understanding of the background disciplines and
functional areas of business, such as the financial analysis and marketing skills provided
in early courses in university business programs.

APPROACH
The point of view we take on strategic issues is that of a general manager. We assume
that you are willing to share this perspective—to see yourself as responsible for the over-
all direction and success of an organization or business unit. As a general manager, you
must think in comprehensive terms of the total problem you are dealing with, taking
into account the full breadth of its meaning and consequences for the business. Partial

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 analyses from a specialist or a functional perspective may be helpful, but they do not meet
the general manager’s need for the best overall approach to a situation. In addition to the
broad issues of direction, you must worry about the specific steps of execution—about
closing the gaps between strategic choice and practical, personal action. Again, the rec-
ommendations of a consultant or staff specialist may be useful, but their advice will usually
address only the directional aspects of the general manager’s concerns. In short, we ask
you to step into a particularly challenging position in which you must think of problems
in terms of a total business, set priorities, and plan for tangible, practical action.
Three threads weave their way through the fabric of the text: value, advantage, and
globalization. General managers are fundamentally charged with the responsibility of
guiding their organizations to create and capture value with an eye to how that value is
distributed among various stakeholders, including shareholders. Our perspective is that
organizations are mechanisms invented by society to generate value that individuals can-
not generate on their own. The value that organizations generate takes many forms (e.g.,
profit, jobs, self-actualization, goods, and services), and different organizations generate
different types of value. All organizations, however, must generate value—that is the
reason they exist.
Organizational growth or even survivability depends not merely on the generation of
value; businesses must also have comparative or competitive advantage. Why should cus-
tomers buy your valuable product or service rather than another firm’s? As a general man-
ager, you must ensure that your value-generating organization has competitive advantages.
Thirdly, today’s environments are global. Very few industries are not impacted in
some meaningful way by global forces. We deal with some specific issues related to global
diversification strategies, but a basic assumption that we hold, and that we encourage you
to consider as a general manager, is that globalization is no longer a separate, optional
consideration. Globalization is a fundamental element for strategic analysis and action.
Understanding that the role of the general manager has changed in recent years,
we have chosen to underscore this change with the term “Cross-Enterprise Leadership.”
We summarized these changes, and the distinctions between the general manager and
the Cross-Enterprise Leader in an Ivey Business Journal article. There, we concluded that
the forces of globalization, rapid change, and time-based competition had redefined the
role of the general manager and that organizations, as single entities controlling their own
fate, had been supplanted by networks and alliances of enterprises.

Whereas general management focused on integrating the various functions within an

organization, the business imperative today requires an approach—Cross-Enterprise
Leadership—that can create, capture and distribute value across a network of
companies, not just within a company. Second, these networks, which we call
enterprises, are complex and dynamic, and must be able to respond as a whole to
the emergent challenges that are continually presented. Third, no one leader can
“manage” the enterprise, and therefore leadership needs to be distributed. Finally,
these changes require an approach to leadership over-and-above that possessed by
traditional business leaders. At its core, Cross-Enterprise Leadership recognizes that
managers operate in a complex world in which the boundaries of organizations are
fluid and dynamic, cutting across functional designations, departments, business
units, companies, geography and cultures.1

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 That value is created cross-enterprise is demonstrated by Coca-Cola and Nestlé,
who are competitors in bottled water and several beverage categories around the world.
But in North America, Coca-Cola is the primary distributor for Nestlé’s Nestea product.
Toshiba reduces its shipping costs by having UPS undertake repairs of Toshiba prod-
ucts, and Singapore-based Flextronics undertakes design and manufacturing services for
companies in the automotive, industrial, medical, and technology sectors. Health care
networks have become a necessary means to deliver on health care needs. While we take
the organization as the primary focus, our perspective acknowledges that the boundaries
of the organization are often blurry, and models of strategy need the flexibility to take
this into account.
For the purpose of this book, we will retain the term “general manager”; however,
our view of the role of the general manager has changed, and these changes are reflected
in the materials presented. The choice and presentation of material in the book have
been guided by experience and practical utility. Our aim has been to provide useful tools
organized into one consistent and comprehensive framework. Our intent is to present the
diversity and complexity of the field but distill it so that it can be applied in a decision-
making process. Additional readings are suggested, where appropriate, at the end of chap-
ters for those who wish to explore specific subjects in greater depth.
Throughout the book, we have frequently used examples to make the connection
between the concepts, which have to be somewhat general for flexibility and breadth of
application, and specific strategic issues. As you read, you might find it useful to think
of examples from your own experience and test the applicability of the concepts against
them.

ORGANIZATION
The book is organized according to a general pattern: problem identification to analysis to
decision to execution. This is a natural, logical sequence and is effective for the cumula-
tive presentation of concepts. But we do not mean to imply that actual strategic problems
can be dealt with in such a neat, serial fashion. On the contrary, most strategic problems
require an iterative approach, in which the analysis moves back and forth between choice
and action. This point will become evident as you read through the book. Its immediate
application, however, is that you should not expect to find business situations, or case
problems describing them, that neatly conform to the flow of the text.
Throughout the book we use the terms business, organization, and firm interchange-
ably. Whether considering a not-for-profit or for-profit organization, a small entrepre-
neurial firm or a large multi-national, a public or private sector enterprise, the concepts
apply to all types of organizations. If there is a particular distinction to be made for a
specific type of organization, such as a not-for-profit, we will flag it. However, these
instances will be rare as the fundamentals of strategy apply to all types of organizations
in all geographic contexts.
There are 11 chapters in the book. Chapters 1 and 2 position the concept of strategy
as a crucial general management tool and then provide an operational understanding and
definition of it. Chapter 3 introduces the Diamond-E framework and the fundamental
logic of strategic analysis. Chapters 4 through 8 elaborate on the processes of analysis by

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 working through the individual components of the Diamond-E framework with a view to
building a comprehensive position on strategic needs and priorities. Chapter 9 discusses
the dynamic nature of strategy, providing a transition to Chapters 10 and 11, which
concentrate on developing personal action plans to move from the analytic results to the
implementation of strategic changes.

SUGGESTIONS FOR USE

At the outset, we suggest that you read Chapters 1 through 3 thoroughly. This will pro-
vide a perspective for your thinking and a basic framework for your analysis. Skim the rest
of the book so that you know where to turn as specific circumstances dictate.
As you deal with problems, use the book selectively. Try to work back and forth
between the problem that you are addressing and the relevant parts of the book. Use the
concepts to check your analysis and, as necessary, to expand it. Common sense is very
important here. Do not try to force the concepts and procedures on a problem; instead
use them to enrich the analysis.
Study the book after you have spent some time working on strategic problems. At
that point, you will more readily appreciate the general analytical approach and see the
applicability of particular concepts. From then on, the building of skills in strategic analy-
sis and action is a matter of practice and more practice. Remember, you are dealing with
the most complex problems in business. Good luck!

NEW TO THIS EDITION

The first edition of this book was published in 1986. In revising it for this ninth edition,
we have updated both the examples and recent theory that support the practical and user-
friendly aspects of the eighth edition.
Many of the changes in theory and practice in recent years have been toward frag-
mentation of concepts and pitting one approach against another. We have found this to
be counter-productive. For example, emphasizing a dynamic approach to strategy does not
negate the importance of understanding strategic positioning at a point in time. Thus,
in this edition, we have tried to make connections between concepts that have become
increasingly fragmented or polarized.
Throughout the many editions, our consistent aim has been to increase the relevance
of the materials for solving general management problems in the field or in the form of
written cases.

ACKNOWLEDGMENTS
Our primary acknowledgment goes to Nick Fry and Peter Killing, who launched
the first edition in 1986 and who continued as authors through the years into their
retirement. They provided a vision and platform that has stood the test of time in
its ability to anticipate and adapt to changes in both research and practice. Indeed,
virtually all advances in the field of strategy have been easily accommodated within

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 the approach they imagined. We are grateful for their leadership in resisting some
early moves in academia and practice away from a general management perspective to
treating strategy as a technical competence. The shortcomings of that approach are
apparent—strategy and leadership are tightly intertwined. We are grateful that as Nick
and Peter have retired from the book, Cara Maurer and Glenn Rowe have joined the
author team.
We have been fortunate to work for many years in institutions that value good
teaching and professional relevance. These cultural attributes have been developed and
reinforced by many people. In all editions, we have benefited from the new ideas and
continuing support of our colleagues in the university and in the private sector. We
would particularly like to acknowledge our immediate colleagues at the Ivey Business
School and at IMD who, over the years, have included professors Jay Anand, Tima
Bansal, Paul Beamish, Oana Branzei, Laurence Capron, the late Harold Crookell, Jim
Dowd, Tony Frost, Michael Geringer, Louis Hébert, Gerald Higgins, Amy Hillman,
Bryan Hong, Ariff Kachra, Mike Levenhagen, Peter Lorange, Pat MacDonald, Alan
Morrison, Eric Morse, Charlene Nicholls-Nixon, Tom Poynter, Paul Strebel, Don Thain,
Stewart Thornhill, Jean-Philippe Vergne, Rod White, Mark Zbaracki, Laurina Zhang,
and Charlene Zietsma.
We are also extremely grateful to the following reviewers for their comments and
suggestions: Wael Ramadan, Sheridan College; Natalie Slawinski, Memorial University
of Newfoundland; Jianyun Tang, Memorial University of Newfoundland; Bob Thompson,
Seneca College.
We are indebted to our publisher, Pearson Canada, and, in particular, Kathleen
McGill, Madhu Ranadive, and Alanna Ferguson for their help in producing and promoting
this book. At Ivey, we are obliged to Nicole Haney for her tremendous organizational and
administrative support.
Mary M. Crossan,
Michael J. Rouse,
Cara C. Maurer,
W. Glenn Rowe
London, Ontario

SUPPLEMENTS
Test Item File (ISBN 978-0-13-430808-1)
This test bank in Microsoft Word format includes over 300 questions. There are
approximately 55 questions per chapter, including multiple choice and true/false. The
Test Item File is available for download from a password-protected section of Pearson
Canada’s online catalogue. Navigate to your book’s catalogue page to view a list of
those supplements that are available. See your local sales representative for details
and access.

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 Learning Solutions Managers
Pearson’s Learning Solutions Managers work with faculty and campus course designers to
ensure that Pearson technology products, assessment tools, and online course materials
are tailored to meet your specific needs. This highly qualified team is dedicated to helping
schools take full advantage of a wide range of educational resources, by assisting in the
integration of a variety of instructional materials and media formats. Your local Pearson
Canada sales representative can provide you with more details on this service program.

Notes
1. Crossan, M., Olivera, F. “Cross-Enterprise Leadership: A New Approach for the 21st
Century,” Ivey Business Journal, May June, 2006.

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 Chapter 1
A General Management Perspective

A general manager is someone who has responsibility for all functional facets of the busi-
ness. General managers run businesses and organizations of all kinds, such as for-profit
businesses and public sector and not-for-profit organizations.1 A fundamental challenge
facing general managers today stems from the fact that the external environment in which
their organization operates—which includes current customers, potential customers, com-
petitors, technological innovation, government, suppliers, global forces, and so on—is
changing so rapidly that the firm, with its finite resources and limited organizational capa-
bilities, is hard pressed to keep up. Keep up it must, however, because in a rapidly chang-
ing environment, sticking with yesterday’s strategy, no matter how successful it may have
been, is often a recipe for tomorrow’s disaster.
Although the general manager holds a particular position in the organization, any
individual in a functional position can also have a general management perspective, and
we argue that having one will assist employees throughout the organization. A general
management perspective means having the capacity to understand and to appreciate issues
facing individuals who are placed in the specific role of a general manager. Often, strategic
decisions require difficult trade-offs. To the degree that employees understand why deci-
sions have been made and what needs to be done, personal performance and organizational
performance will be enhanced. A general management perspective also helps you to iden-
tify relevant data, information, and knowledge that are important to strategic analysis and
action. Strategic decisions need to draw on the collective intelligence of the workforce.
We view having a general management perspective as consistent with having a stra-
tegic leadership perspective or cross-enterprise leadership perspective. Strategy requires
both the disposition to lead and the capacity to manage across the enterprise. Yet the
general manager does not act in isolation. Throughout the text we refer to the general
manager, with the intention of including all persons seeking to develop a general manage-
ment perspective.

THE JOB OF THE GENERAL MANAGER

The job of the general manager is to create, capture, and appropriately distribute value for
the enterprise. As a general manager you need to recognize emerging opportunities and chal-
lenges, prepare a response, and ensure the success of whatever plan of action you decide upon.

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 By way of example, consider the rapidly changing competitive situation in the con-
sumer smartphone industry over the last few years. This is an industry that has grown
rapidly and undergone rapid innovation. BlackBerry, a company that had a dominant
position in the enterprise smartphone market, entered the consumer smartphone market
to increase its revenues and market share. As an early entrant in the industry it initially
had good success capturing higher market share each year. But this came at the cost of
reduced margins, which the co-CEO at the time, Jim Balsillie, described as a deliberate
strategy of a “land grab.” He knew they would sacrifice margins for several years, but felt
that they needed to sacrifice financial performance to claim space in the segment as a
basis for future growth.2
While BlackBerry’s smartphone devices offered a superior email experience, the
release of Apple’s iPhone in 2007 started chipping away at BlackBerry’s market share. By
the second quarter of 2011, Apple had achieved the top position in the smartphone space,
while BlackBerry was in fourth place, with a market share that had declined over the
previous year. What was even more worrisome was the fact that BlackBerry was behind
the curve in its response to Apple’s release of the iPad, and when BlackBerry did release
a competitive product, the market response was tepid and disparaging due to high defect
rates and insufficient functionality. What had gone wrong? How could a company that
had held a leading position in the enterprise smartphone market come up so short in
the consumer segment? Many analysts pinned the failure to BlackBerry’s capabilities and
resources that, while finely honed to understand and lead the enterprise market, did not
seem to understand the needs of the consumer market; BlackBerry was therefore slow to
react to changes in the market, let alone lead it.
After establishing a long-term direction and creating the strategy, the general manager’s
work is not done. In fact, the most difficult part is just beginning. While BlackBerry’s co-CEOs
established long-term direction and created the strategy early on, not enough was done to
develop the capability to allow the organization to provide leadership in both the enter-
prise and consumer market. Capabilities that were deemed superior in BlackBerry’s highly
protected enterprise market were inadequate in the far-more-competitive consumer market.
Further, BlackBerry lacked many capabilities required for success in consumer products.
This example illustrates three of the fundamental components of the general
manager’s job: setting direction, creating strategy, and implementing change. One further
crucial aspect of the job, shown in Figure 1.1, is assessing performance—both current and
longer term. Without a good feel for how well the organization is performing at any point
in time, a general manager could get the other three components of the job very wrong.
Emphasizing lofty but distant goals when the company may not survive the coming year
could lead to disaster; acting as if there is a crisis when a slower pace of change would be
more appropriate can be just as damaging.
A competent general manager will perform all four of these tasks. The tasks will not
be addressed sequentially or in isolation from each other, but as a continuously changing
mix of activities. The double-headed arrows in Figure 1.1 are intended to convey this
interconnectedness.

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 Setting Direction
vision
mission
values

Assessing Creating Strategy

General
Performance determining the way
Manager
today and tomorrow forward

Implementing
Change
making it happen

Figure 1.1 The Job of the General Manager

The primary focus of this book is on the processes and tools you will need for creat-
ing strategy and managing strategic change. Before you embark on the strategy-making
process you need to make sure that you know your starting position, which means that you
need a solid assessment of current performance. You also need a high-level view of what
you are trying to achieve, which will be captured in your vision, mission, and values. In
the remainder of this chapter we address these topics.

ASSESSING PERFORMANCE
We begin with a discussion of performance assessment because the general manager who
is not skilled at this task will have great difficulty with other aspects of the job. Many
corporate tragedies are rooted in the fact that senior managers had a false idea of how
well their organization was performing. Take, for example, McDonald’s, which in 2003
announced its first-ever quarterly loss since becoming a public company in 1965. As a
franchisor, McDonald’s collects royalties that amount to four percent of sales. However,
it is also a real estate company that owns the land and buildings of many of its franchised
locations, with rental income amounting to about 10 percent of sales. McDonald’s focused
on rental income from real estate, which prompted expansive growth. At the same time,
McDonald’s lost sight of deteriorating measures of performance such as same-store sales,
which had been stagnant for a decade, and customer service, where it had ranked last in
the fast-food industry since 1994. To turn things around, management had to reverse its
strategy by dramatically reducing the number of store openings worldwide and, instead,
focus its attention on attracting more customers to existing stores. The results were

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 Table 1.1 Typical Measures of Operating Performance
Profitability Financial Position Market Performance
• Profit margins • Leverage ratios (debt/equity, • Absolute level and
(gross and operating) interest coverage) growth rate in sales
• Key expense ratios • Liquidity ratios (units, revenue) • Market share
• Return on equity, • Activity ratios (e.g., asset and • New products as %
assets inventory turnover) of sales
• Economic value added

impressive. In 2010, McDonald’s had achieved growth in same-store sales for eight con-
secutive years. From 2003 to 2010, revenues increased by 40 percent and net income more
than tripled. By 2015 performance was lagging expectations and once again management
reviewed avenues for improvement including a restructuring intended to make them more
nimble and responsive to competition.
There are many approaches to take to size up performance, and each industry
and company will have its own metrics based on key performance drivers. For a useful
approach to creating multiple performance measures, see Robert Kaplan and David
Norton’s “Balanced Scorecard.”3 Our assessment of organizational performance is based
on two sets of measures: operating performance and organizational health. Operating perfor-
mance includes the “hard” or more quantitative measures of financial and market perfor-
mance. Some typical measures of operating performance are included in Table 1.1. In any
given situation some of these measures may be more important than others. Whatever
your circumstances, beware of relying on only a single measure of operating performance,
or on solely internal measures.
Measures of organizational health are generally “softer” and more qualitative than those
of operating performance, and include such things as management and worker enthusiasm,
the ability to work across boundaries, the ability of the organization to learn, employee
satisfaction, customer satisfaction, and supplier relationships.4 These and other factors are
described in Table 1.2. Again, you might put more emphasis on some of these factors than
others as you are assessing the health of your organization, but here, too, we recommend
that you focus on more than a single measure, and assess how these factors change over time.
The danger that many senior management teams face is that they think they know
where the business stands in terms of organizational health, when often they do not.
This could be due to several reasons: negative feedback to upper-level managers may be
implicitly or explicitly discouraged; middle managers may choose to filter out information
before it reaches the upper echelons; or senior managers may simply not listen well. One
response used by many firms has been to conduct anonymous employee surveys on a large
scale to try to get a realistic assessment of these measures. Another method is to obtain
360-degree feedback from staff on members of the senior management team. We are aware
of one CEO who did this and who discovered that he was not a very good listener.

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 Table 1.2 Typical Measures of Organizational Health
Enthusiasm Boundaries Problem Solving Learning Sustainability
How Do individuals Are problem Does the Can the pace
enthusiastic identify areas identified organization at which
are managers with narrow and dealt with learn from its people are
and employees sub-groups or hidden and experiences? working be
about their or with the ignored? From others’ sustained?
work? organization experiences?
as a whole?

It is also important to recognize that the drivers of performance for any company or
industry are often interrelated in important ways, with both key leading and lagging indi-
cators. For example, a fast-food chain developed a causal model that proposed the drivers
of strategic success. They found that selection and staffing choices impacted employee sat-
isfaction, which in turn affected the value that employees were able to add to the business.
Employee value-added service affected customer satisfaction, which affected customer
buying behaviour, profitability, and overall shareholder value.5

Using the Performance Matrix

We use the performance matrix to classify operating performance and organizational health
as roughly positive or negative and ask three questions: (1) where was your business three
years ago, (2) where is it today, and (3) in which direction is it currently moving? Our main
emphasis is on the current position of the business, but a discussion of this naturally leads
to consideration of where the business has been and which way it is moving. In Figure 1.2
we have illustrated the hypothetical case of a business that has moved from Quadrant 2
(Q2) through Q4 and is currently in Q3, hoping to move upward to Q1.

Quadrant 2 Quadrant 1

+ complacent desired
Organizational Health

organization state
three years
ago tomorrow?

today
troubled
– crisis
organization

Quadrant 4 Quadrant 3
– +
Operating Performance
Figure 1.2 The Performance Matrix (with illustrative example)

Assessing Performance 5

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 Clearly, the desired state is Quadrant 1, in which operating performance and orga-
nizational health are both positive. If your analysis suggests that your business is in this
quadrant, and you expect it to stay there, your strategy review will probably be a question
of fine tuning, and perhaps taking a farther-than-usual look into the future. But do not
take the strategy assessment process lightly. You need to ensure that you have placed your-
self in this quadrant as a result of thorough analysis, not complacency or wishful thinking.
The picture in Quadrant 2, on the other hand, may be of an inward-looking and
self-satisfied organization where people enjoy their work but collectively are performing
inadequately in terms of market and financial standards. There may be recognition by a
few that there is a need to change, but getting a meaningful strategic review underway
may be difficult, as currently happy employees will not want to face the prospect of mak-
ing uncomfortable changes to improve operating performance.
In Quadrant 3 the business is achieving its operating objectives at the expense of
organizational health. This may arise because management has applied pressure to obtain
short-term profits, often via downsizing, without upgrading the skills of their people.
Management also may have given little thought to the processes by which work should be
done. It is a classic case of doing the same work with fewer people, and everyone burns out.
Quadrant 4 represents a clear-cut problem situation in which immediate and com-
prehensive action is necessary. It may well be a crisis; if so, strategic analysis had better be
fast. Shortcuts may have to be taken, but our hope is that if your firm is in crisis a quick
look through this book will at least help you decide where to start, and which parts of the
strategy creation process will quickly yield the most value to you and your business team.
In later chapters we will discuss other perspectives on performance. In Chapter 5,
for example, we will ask you to predict the likely performance of your business if it con-
tinues with its existing strategy; this is your “base case” scenario. In the last two chapters
of the book, which deal with the management of change, we will discuss the crisis curve
concept, which involves tracing the past, current, and projected future performance of a
business to determine the urgency for change.
We now turn to another task of the general manager that needs to be considered before
we turn to strategic analysis: that of establishing the overall direction for the business.

SETTING DIRECTION: VISION, MISSION, VALUES

Organizations need a strong sense of direction—a vision—to bring coherence to the many
strategic and operating decisions that managers at all levels are constantly called upon
to make. There are three basic reasons for starting strategic analysis with work on vision-
ing. The first is to resolve confusion over the purpose of the business: why it exists. For
example, visioning is often most visibly used in family-owned companies, when disagree-
ments arise among the family shareholders over such issues as dividend income or family
employment. Other examples are found in newly privatized enterprises that now have to
decide on fundamental objectives and whom they are to serve. All organizations need a
clear sense of what and who they are.

6 Chapter 1 A General Management Perspective

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 The second reason for developing or changing a company’s vision is to revitalize it.
In 2007 Apple dropped “Computer” from its name, signalling a shift to make Macs a hub
in a networked world of digital devices. Fortune magazine described CEO Steve Jobs as
having

… exercised his increasing power with the facility of a jujitsu master. Consider: He
elbowed aside the likes of Sony to change the dynamics of consumer electronics with
the iPod. He persuaded the music industry, the television networks, and Hollywood to
let him show them how to distribute their wares in the Digital Age with the iTunes
Music Store. He employed the arch austerity of his hugely successful Apple Stores to
give the big-box boys a lesson in high-margin, high-touch retailing. And this year, at
the height of his creative and promotional powers, Jobs orchestrated Apple’s over-the-
top entry into the cellular telephone business with the iPhone, a lozenge of glass and
aluminum encasing a do-everything digital device.6

Finally, you might decide to prepare a mission statement when your business is oper-
ating reasonably well, and you think that creating one may help to reinforce your existing
informal “sense of vision.” You could also see it as a public relations exercise that helps
better present the business to shareholders, customers, or regulators.
The challenge in developing a vision is to simultaneously raise people’s sights,
give them direction, and stay realistic. While it usually helps to formalize agreements
about vision, mission, and values in an explicit mission statement, the existence of a
formal statement may actually mean very little; the critical factor is whether the vision
has permeated the organization. Achieving a powerful sense of mission depends very
heavily on the day-to-day decisions and actions of an organization’s leaders. People
look to actions, not words, for guidance. If a purpose like “to be the best and most
successful company in the airline business” is to have real motivating power and direc-
tional meaning, then the actions of senior management in everything from investment
decisions for aircraft to the budgets for cleaning cabins had better be consistent with
that vision.
There are many frameworks and references on the subject of vision, mission, and
values. A list of references is provided at the end of this chapter. One pair of research-
ers, James Collins and Jerry Porras, studied highly successful companies and found that
what they had in common was an enduring set of core values and purpose, unique to
each company, that remain fixed even though their business strategies evolved over
time.7
The Collins and Porras framework is a good example since it is based on solid
research, yet provides a practical approach for applying the concepts. Collins and Porras
state that “at the broadest level, vision consists of two major components—a Guiding
Philosophy that, in the context of expected future environments, leads to a Tangible
Image.”8
In the Collins and Porras framework, the guiding philosophy includes the core pur-
pose and core values of the organization. The core purpose and core values need to be

S e t t i n g D i r e c t i o n : V i s i o n , M i s s i o n , Va l u e s 7

M01_CROS0294_09_SE_C01.indd 7 28/09/15 4:16 PM

 translated into a tangible image in the form of a mission and a vivid description of that
mission. Whereas environmental analysis plays a pivotal role in the case of strategy, in
the case of vision it plays more of a moderating role in translating purpose into mission.
Aspiration plays a stronger role with vision such that there is a fine line between the
possible and impossible. Although Collins and Porras advocate that strategic analysis
should be done after the vision and mission-setting process, this is rarely the case. The
practical matter is that vision and strategy operate in tandem as we discuss later in this
chapter.

Guiding Philosophy
The guiding philosophy has two elements, the core purpose and the core values. The core
values are the starting point for the guiding philosophy.
Values Values represent the basic beliefs that govern individual and group behaviour
in an organization. These may be brief and highly abstract, or much more detailed and
specific. Coca-cola talks about spreading optimism and happiness, providing a refreshing
experience, making a difference, and adding value. They aspire to achieve this by their
seven rules:Leadership, Collaboration, Integrity, Accountability, Passion, Diversity and
Quality. While many organizations may share these types of values, the expression and
application can be quite different. For example, when it comes to the value of collabora-
tion Coca-Cola focuses on being able to “leverage collective genius” and they want their
leadership to have “the courage to shape a better future”.9
Of course, the real test is whether a company lives its values. For example, Starbucks
has a set of values that include providing a great work environment and embracing
diversity. Starbucks backs up its values by treating its associates better than the industry
standard. This can be seen in the employee stock plan, benefits, a first-class working envi-
ronment, heavy investment in training, and other practices.
It is not surprising that Starbucks demonstrates these values since they are strongly
held by its CEO, Howard Schultz. Schultz was deeply affected by the experiences of his
father, whom he has described as a broken-down blue collar worker who was not valued
or respected by his employers, and became very bitter as a result. Schultz was commit-
ted to ensuring that Starbucks would be a different kind of company that would not
leave anyone behind.10 Having witnessed the financial stress on his family when his
father was unemployed with a broken ankle and no medical benefits, Schultz is commit-
ted to treat all employees with respect and dignity. As a result, thousands of part-time
Starbucks workers have full medical benefits. The proof of the values is that Schultz is
not willing to compromise. Although his profit margins are lower than other fast-food
or restaurant businesses, Schultz says that it is the price you have to pay for doing busi-
ness his way.
By achieving these goals, Starbucks has proved that it is different from many
other companies. Creating a values list that looks good is not so difficult; living up

8 Chapter 1 A General Management Perspective

M01_CROS0294_09_SE_C01.indd 8 28/09/15 4:16 PM

Another random document with
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river. There was a bumper crop, and the price of transport is heavy.
Finally he succeeded in securing the boat in which he and his family
had come up earlier in the season. The bargain was made for sixty-
two dollars for the trip, with a bonus of two extra at the end, if we
were satisfied. There were to be four rowers, but they didn’t keep to
the agreement. They wanted to have military escort in addition,
which we declined on account of the limited deck space in which
they and the owners have to live.
The accommodation of a river-boat is small: ours consisted of
three tiny compartments, of which we took two, finding that our beds
occupied exactly half the space, with a well between them, and our
chairs and table the remainder. The cooking was done in a sort of
well in the small deck in front of us, and it was a great satisfaction to
watch the way in which it was done by Yao and his meticulous
cleanliness. There was no lack of water, so each vegetable was
washed in clean water about five or six times. I believe the correct
number of times to wash rice before cooking is ten. It was really
astonishing to see the dishes Yao prepared on the handful of
charcoal which was used to cook not only our meals but also those
of the crew.
The scenery was very wild and beautiful, and on the whole our
crew rowed well. There was an engaging little girl of three years old,
who amused us not a little with her clever manipulation of the
chopsticks, never dropping a grain of rice: she wore two silver
bangles and two rings. Each night we moored by the bank in what
was considered a safe place, for the robbers were much dreaded by
the crew. Our live stock—chickens and ducks—were tethered out to
graze. At one place they took on a couple of unarmed police,
unknown to us, but as they would have been no use whatever had
we been attacked, I ordered them to be put ashore at the next town.
The robbers had burned many villages, we were told, driving off the
cattle, killing some of the inhabitants, and looting all that was of
value to them. All the way we passed shrines dotted along the river-
bank—one hideous fat Buddha was painted on the rock—and
incense was burnt continually by the owners of the boat. The quality
of their zeal varied relatively to the danger incurred, so we had no
need to make inquiry. At the worst part of all we had to support the
courage of the crew by a pork feast, portions of which were flung into
the air and caught by wicked-looking crows, which hovered
screaming overhead. These crows are looked upon as evil spirits of
the river needing to be propitiated.
The first important town we reached in Hunan was Yuan Chowfu,
and we found there some missionaries of the China Inland Mission
who had many interesting experiences to tell of revolutionary days.
Hunan has always been a particularly anti-foreign province, and
work has progressed slowly: it is not at all surprising that the people
should be slow to understand the object of foreigners coming to
settle among them, and every one mistrusts what they do not
understand. It needs something to break down prejudice, and in this
case the something was of a tragic nature. The missionary came
home one day to find his wife lying in the veranda with a fractured
skull and brain exposed to view: she had been attacked by a
madman, who left her for dead. It was long before she was nursed
back to a certain measure of health, with speech and memory gone.
This happened two years ago, and now she is slowly regaining
strength and her lost powers, and welcomed us with exquisite
hospitality; despite having an attack of fever, she insisted on our
staying to tea and the evening meal. Mr. and Mrs. Becker have the
supreme satisfaction of finding that from the time of the accident
their work has taken on a wholly different complexion; the people
have rallied round them and look to them for support in troublous
times. With but slight medical training Mr. Becker organized Red
Cross classes, and took charge of the wounded in the mission
premises. At one time the city was threatened by revolutionaries, the
officials lost control, and for three days he took full command and
saved the situation. He received medals and a complimentary board
from the Government, acknowledging the great services he had
rendered to Yuan Chow.
No less than nine times Mr. Becker has been caught by robbers,
but has never had a single thing stolen by them, which certainly
constitutes a record. When a pistol was put to his head, he
presented a visiting card, saying, “Take this to your Chief”: it is a fine
example of “a soft answer turneth away wrath.” On recognizing who
he is, they have always released him without any injury. He told us
that recently the robber bands have been broken up, and thought we
need have no anxiety about them. We were regaled with the first
strawberries of the season from their garden, which contained a
promising supply of vegetables, and there were goats and kids in
pens. We went away loaded with good things, and deeply impressed
by the sight of these heroic workers and their colleagues.
The principal industry of the place is white wax: special ash trees
grow here on which the insects live, but every year the insects
necessary to produce the wax have to be brought from the
neighbouring province of Szechwan. “When they reach the right
stage of development they are put in paper boxes, in bamboo trays,
and carried by the swiftest runners. These men only travel by night,
as it is essential that the process of development should not proceed
too rapidly. The boxes have to be opened every day and ventilated,
and the men secure the best rooms in the inns, so that other
travellers have to suffer if they are on the road at the same time”
(Face of China, p. 183). There were also large numbers of paulownia
trees, with their lilac flowers in full bloom: they produce a vegetable
oil used for cooking and for furniture. All this district is noted for its
trees, and much wood is brought down by a tributary river from the
Panghai district, where it is cut down by the Black Miao tribe.
The next town where we halted was particularly attractive,
surrounded by red sandstone walls and grey stone battlements. We
made a complete tour on the top of the city wall, but the houses are
so high that you cannot see into any of the courtyards. At one point
there was a fine, picturesque group of trees overhanging the wall,
otherwise the houses were built very close together, like a rabbit
warren. On the battlements were a number of most comical little
guns, some carefully protected from the weather by shrines built
over them. They looked as if they might have come out of the ark,
but were only about seventy years old, some being dated.
In the market we bought wild raspberries, which had quite a good
flavour when cooked, but they were rather tart, as they were not fully
ripe. We found wild strawberries by the wayside, but were told that
some varieties are poisonous, and those we ate were quite
tasteless.
Our next halting-place was Hong Kiang, where we arrived at 8.30
a.m., and spent a pleasant day with two missionary families, one
being a doctor’s. He was rather depressed, because the town is
under the control of a military governor of irascible temper. The
doctor’s cook had recently been suffering from insanity and was
being treated in the hospital, when he was suddenly seized and
condemned to death. The doctor, on hearing of it, went instantly to
the Governor to explain matters, but he pleaded in vain, and found
the man had been shot while he was with the Governor. Executions
are continually taking place, and so badly done that frequently the
offenders linger wounded for hours after they have been shot. Often
the doctor is begged to go and help, but what can he do? On
occasion he has been allowed to go and bring them back to life! In
one case he had taken stretchers on which to bring the sufferers
back to the hospital, but they were one too few, so that he told one
man he would come back for him. The man dare not wait for his
return, and managed, despite being in a terrible condition, to drag
himself to the hospital on foot.
Mr. Hollenwenger took us up a high hill behind the city to see the
view, and it was certainly worth while, although the heat was great.
The river winds round a long strip of land, and a narrow stream
across it could easily be made navigable so as to save the junks
having to make a detour of several miles. Another big tributary joins
the river almost opposite the stream, by which quantities of wood are
brought down from the hills. The valley is full of ricefields, and we
saw men transplanting the rice with incredible rapidity from the small
field in which it is originally raised to the larger fields where it attains
maturity.
When we got back to lunch we found Dr. Witt had to go at once to
an ambulance class, which the Governor had requested him to
undertake in view of the troops being sent to fight in the struggle now
going on between North and South. In various parts of the country
we found missionaries being used by the authorities in this way. At
the time that China joined the Allies during the war they told the
German missionaries to leave the country, but exceptions were
made in the case of many like these, whose work was felt to justify
their remaining.
The next town of importance that we reached was Shen Chowfu,
where there is quite a large group of American missionaries with
hospitals, schools, etc., whom we had been asked to visit. Their
buildings stood up conspicuously at both ends of the long river-front
of the city. We were told that the hospital had been built with
indemnity money paid by the Chinese Government on account of the
murder of C.I.M. missionaries many years ago, but which the C.I.M.
declined to accept. It is a well-known fact that such money never
comes from the guilty parties, but is extorted from the people, and
consequently is always a source of ill-will. We were told by some
charming American ladies there, how bitter the feeling had been
against them, and that for years they were guarded by soldiery and
never left their houses unaccompanied by a guard. They had
spacious gardens, and the missionaries’ families lived there without
ever going into the streets. It seemed a strange kind of existence,
and brought home to us acutely the question of mission policy. There
seem to me to be two classes of American missionary ideals—
roughly speaking—one of which is responsible for some of the finest
work possible in China and which every one must heartily admire;
such work may be seen at St. John’s University, Shanghai, and in
the American Board at Peking. But there is another increasingly
large class whose faith seems to be pinned on a strange trinity—
money, organization, and Americanization. The first necessity for
them is large and showy buildings, generally apart from the busy city
life, or at least on the outskirts of the city—this may be all right in the
case of boarding-schools, but for hospitals it renders them practically
useless. I have seen groups of residential premises miles away from
the work. The welfare of the missionaries is the foremost
consideration. The means of transport are slow, so that hours must
be spent every day by the workers getting to and from their work,
and they live a life wholly apart from the Chinese. The work is highly
organized, and they have much larger staffs than our missions
provide, as they seem to have unlimited means and men.
Undoubtedly we err grievously in the opposite direction: our
missionaries have all far more work than they can perform. Added to
that, our missionaries have about one-third of the holiday that the
Americans do and less money to make the holiday a real one. Our
societies are all hard hit by the question of finance, but it would be
better to cut down our work rather than spoil its quality by insufficient
staffing and underpay.
The third point is Americanization. A large section of missionaries
so value their own culture that they believe they can do no better
than try and denationalize the Chinese, or Indians, or whatever other
nations they may be working amongst, and transform them into
Americans. In the case of China this seems to me a most disastrous
policy, and founded on serious error. The Chinese and British
characteristic of reserve which we consider a quality they consider a
defect, and believe that familiarity breeds not contempt but
friendship. The breaking down of the reserve in the Chinese
character is only too frequently a breaking down also of moral
barriers—a disintegration of character, and opposed to the genius of
the race. The Chinese student returning from the United States is
often completely spoiled by having cast off the charming old-time
manners of his own country in favour of the hail-fellow-well-met
manners of young America. He cannot be accepted into a European
or Chinese household on his return without taking what seems to
them unwarrantable liberties, while he himself is sublimely
unconscious of the effect produced. In the same way in mission
schools the students are encouraged to familiarity with their teachers
—as for instance in the case of mixed bathing in summer resorts.
The teacher and the taught are all put on the same level, and the
respect which we have been taught to consider due to age and
learning, ceases to exist. “Manners maketh man,” and the difference
in manners is one of the greatest bars to united work, which
Christians of all denominations are trying so hard to build up in China
at the present day.
To return to our brief stay at Shen Chow. It seemed an interesting
place with fine large shops, and we should like to have made closer
acquaintance with them. However, our boatman, who always wanted
to loiter where there was nothing to be seen, showed a sudden
determination that we should leave the town before sundown and
reach a certain safe spot to spend the night. As we were always
urging him to hurry, we felt obliged to give in, and reluctantly went on
board. The Standard Oil Co. is very energetic there, and has a large
advertisement, happily in Chinese characters, which are not
aggressively ugly (like our Western advertisements) all along the
river-front, the last thing we saw as we floated down stream.
Next day we shot the big rapid, and much incense and paper was
burnt to ensure our safety. Rain fell heavily in the evening, as it had
so often done during our journey. Before stopping for the night we
came to a custom-house, where our boat was thoroughly searched
for opium. It meant that at last we were come to a place where
opium was strictly forbidden, namely into the territory under General
Feng’s jurisdiction. The Customs officers, however, were most
courteous, though thorough, and I believe would have taken our
word with regard to our personal belongings, but I preferred that they
should see we were quite willing to be examined.
At midday on the morrow we reached Changteh, and walked
through wet slippery streets a long way till we came to the C.I.M.
house. Mr. and Mrs. Bannan received us most cordially and invited
us to be their guests, as Mr. Locke (who had invited us when we
were at Shanghai) had been transferred to a school five miles down
the river and was sure we should prefer to be in the city. This was
much more convenient, and we found a week only far too short to
see all the interesting things. We spent a couple of nights at the
school with Mr. and Mrs. Locke, and took part in a Christian
Endeavour meeting. This movement has proved very successful in
some parts of China, especially for training the women and girls to
take active part in evangelization. We went down the river in a
minute motor launch, which was very handy, especially as we had to
leave at an early hour to call on General Feng. I leave to another
chapter an account of him and the city, which so obviously bore his
impress when we were there. The level of Changteh is below the
river-level sometimes to the extent of fifteen feet; then the city gates
have to be sandbagged to keep the water out.
 From Changteh we went by passenger boat to Changsha, and had
two little cabins which we converted into one for the voyage. The
whole of the roof was covered with third-class passengers and their
belongings; at night they spread their bedding, and in the daytime
squatted about or wandered round the very narrow gangway outside
the cabins, a proceeding which left us in a darkened condition. Yao
managed to prepare us savoury meals in some minute nook, having
brought the necessary stores and a tiny stove on which to cook
them. The day after leaving Changteh we crossed the wonderful lake
of Tong Ting, a lake more than two thousand square miles in extent
during the summer, and non-existent in winter. This strange and
unique phenomenon is due to an overflow of the Yangtze, and in the
summer there is a regular steamship service across the lake,
connecting Changsha with Hankow, two hundred and twenty-two
miles distant, by the river Siang and a tributary of the Yangtze.
Eventually they will be connected by a railway, which is to run from
Hankow to Canton, and of which the southern part is already in
existence—and also a short section from Changsha to Chuchow;
this is only thirty-eight miles and is mainly valuable on account of its
connexion with a branch line to the Ping Siang collieries.
Changsha is an important city, the capital of Hunan. It is large and
clean, the centre of considerable trade, and one of the newest treaty
ports, opened in 1904. The variety of its exports is interesting: rice,
tea, paper, tobacco, lacquer, cotton-cloth, hemp, paulownia oil,
earthenware, timber, coal, iron and antimony. I was anxious to buy
some of the beautiful grass cloth for which it is noted, and was taken
by a friend to some of the big shops, but found them busily packing
up all their goods, in case their shops should be looted by the
approaching Southern troops. Such doings are by no means
uncommon, and all Americans and Europeans seemed to take it as
a matter of course. Arrangements were being made to receive
terrified refugees into mission premises, and the Red Cross was
extremely busy preparing for the wounded. The rumours as to the
Governor fleeing varied from hour to hour, and it soon became plain
that the city would be undefended. Our kind American hosts, Mr. and
Mrs. Lingle, were having little Red Cross flags made to put up as
signals on places of refuge, and he came in to tell us how the tailor
who was making them had just appealed to him for help: a retreating
soldier thought to make hay while the sun shone, and was taking
possession of the sewing-machine, demanding that it should be
carried away for him by the tailor’s assistant. Mr. Lingle also
prevented another sewing-machine being stolen: evidently they were
in great request.
No more striking proof could be seen of the progress of
Christianity in China than the difference of attitude shown towards
missions in time of danger and difficulty. When I first visited China a
mission station was the most dangerous place to live in; now it is the
place of safety par excellence, to which all the Chinese flock when
they are in danger. An interesting illustration of this took place last
year. In a certain district in Shensi a notorious band of robbers came
to a Baptist Missionary and a Roman Catholic priest, and promised
to save the town where they were working if they would procure for
them six rifles. They succeeded in getting the rifles, and took them to
the brigands. When they attempted to use them, the brigands found
they had been tampered with, and decided to loot the town in
consequence. They respected, however, their promise to the men
who had brought them, evidently believing in their good faith, and
said they would spare all the Christians. The problem was how to
recognize them, for at once there were a large number who claimed
to be Christians. The robbers decided by looking at them who was
genuine and who was not. In cases of uncertainty they appealed to
the missionaries, who assure us that they had proved quite accurate
in their judgment. Christianity ought to mould the expression of a
face.
There are many missions of various nationalities at Changsha,
and all seemed extremely prosperous, most of them in large and
handsome buildings. The girls’ school, of which our hostess was the
head, stood in spacious grounds outside the city wall, and near it is
the imposing pile of the Yale mission buildings. The mission started
in 1905 when Dr. Gaze began the medical work, a hospital was
opened in 1908, and the first students graduated in 1912: it is
essentially a medical school, and differs from others as regards the
staff in having short course men sent out from Yale University as
volunteers. They are not necessarily missionaries. There are fine
laboratories for research work, a large new building for science
students, splendid up-to-date equipment in all branches of medical
and surgical work, schools for male and female nurses, beautiful
houses for the large staff of professors, library, a really beautiful
chapel, lecture rooms, dormitories, playing grounds, tennis courts; in
fact everything that can be desired on the most lavish scale, the
greatest conceivable contrast to every other mission I have seen in
China. There is a special ward for Europeans. The new Rockefeller
hospital in Peking is to outshine it in beauty, I believe, but will find it
difficult to equal it in all-round equipment, and of course will lack the
acreage, which makes many things possible in Changsha which are
impossible in Peking. “The Hunan Provincial Government has met all
the local expenses of the College of Medicine and the Hospital for
the last six years.” The Rockefeller Foundation has provided funds
for salaries of additional medical staff, and Yale Foreign Missionary
Society academic teachers and a few of the medical staff. The fees
of the patients cover about half the running expenses of the hospital.
“The campus of Yale in China in the north suburb is on rising ground
between the railroad and the river, where its buildings are
conspicuous to travellers arriving by either train or steamer” (see
Yale College in China). The only drawback seems to be lack of
patients.
One of the finest pieces of mission work I saw was Dr. Keller’s
Bible School, which is supported by a Society in Los Angeles: it is for
the training of Chinese evangelists for all missionary societies, and
they divide the time of training between study and practical work.
They looked a fine body of men, and have been greatly appreciated
by the missionaries for whom they have worked. Application for their
help is made to the school, and they do not go unasked into any
district occupied by a society. When asked to conduct a mission, a
band of men is sent, and their modus operandi is as follows: they
make a map of the district, taking an area of about three square
miles—and after a day spent in prayer the men visit systematically
every house in that area and try to get on friendly terms with old and
young, giving them some portion of Scripture and inviting them to an
evening meeting. As soon as the people have become interested,
evening classes are started respectively for men, women, boys and
girls. The children are taught to sing, as they very quickly learn
hymns and like to practise the new art both early and late. The
special feature of their work is that they go as Friends to the people,
and as their own race; and it is to Chinese only that many Chinese
will listen. The character of many a village has been changed, the
missionaries say, by these national messengers, where they
themselves have been utterly unable to get a hearing. This is an
important feature of present-day missionary enterprise, and is the
link between the Past Phase of foreign evangelization and the Future
Phase of home Chinese mission work. Changsha is full of foreign
workers of many nationalities, but mainly American.
Dr. Keller’s work has been greatly strengthened in the eyes of the
Chinese by the noble example of his mother, whose spirit has
impressed them far more than any words could have done. When
her son was home for his last furlough, he felt that he could not leave
her alone, an old lady of eighty, recently widowed, and he decided to
give up his mission work for the time being. She would not agree to
this, but decided to go out with him and make her home in China for
the remainder of her life. Who can gauge the sacrifice of giving up
home and friends at such a time of life and going to an unknown land
where men spoke an unknown tongue? She had to undergo very
great hardships at first, and now after four years the solitude presses
heavily on her. At first she was able to read a great deal and lived in
her books; but she told us that now her sight is failing the time
seems very long.
We visited a Danish mission of some size, Norwegian Y.M.C.A.
workers, and a Russian lady in charge of a little blind school. She
had had no word from home for the last two years, but was pluckily
sticking to her task. The London Missionary Society has withdrawn
from work in Hunan, but the Wesleyan Mission has a high reputation
under the charge of Dr. Warren. He is one of the men who takes a
special interest in the political side of Chinese life, and gave me
much valuable information about the different parties. Just now the
changes going on are so rapid that anything one put down would be
out of date before it could be printed. The secret forces at work
keeping up hostility between North and South were everywhere
attributed to Japanese militarism: but it is only too obvious that the
present Government is not strong or patriotic enough to deal with the
situation. It is hard enough to carry on good government in so small
and stable a country as our own, so need we wonder at the inability
to transform the whole political and social system of the vastest
country in the world.
Meanwhile the civil war is a very curious one, and happily does not
cause the bloodshed one would expect, considering the forces
engaged. We had some talk with our British Consul about the
dangers of the road, as we wanted to go south to visit the sacred
mountain of Hengshan and thence to cross fine mountain passes
into the neighbouring province of Kwangshi. Mr. Giles told us that it
would be hopeless to attempt it, as an English steamer had been
fired on the day before in the very direction we must take. The
Northern and Southern troops were in active fighting, and every day
they were coming nearer to Changsha. The Governor would
probably desert the city when the Southern army had driven back the
Northern, and no one could say what would happen! After so
discouraging a report it may seem strange that Mr. Giles said there
was to be a reception at the Consulate next day, in honour of the
King’s birthday, to which he invited us.
War seemed infinitely remote from the charming gathering, where
all the foreign community met in the sunny garden on the river-bank.
English hospitality is very delightful so far away from home, and the
cordial spirit of the host and hostess lent a special attractiveness to
the occasion. I was particularly pleased to meet a Chinese friend
there, Miss Tseng, who invited us to visit her school next day. In
Chapter VIII I have tried to give an account of this famous scion of a
famous race.
With all the educational and religious and philanthropic institutions
to be visited, it was most difficult to find time to see the monuments
of the past, but we determined not to miss the beautiful golden-
roofed temple, dedicated to Chia Yi, a great statesman of the second
century B.C. It is now transformed into a school, and we saw the
boys drilling; but they seemed an insignificant handful in those noble
courtyards, and there were no signs of proper or even necessary
equipment.
Our time at Changsha was all too short, and it ended very
pleasantly with an evening spent at the Consulate. By this time many
of the Chinese were in full flight, because of the coming Southerners,
and the city was supposed to be set on fire by incendiaries at 8 p.m.
Our steamer had retired into the middle of the river, because of the
rush of passengers clamouring to be taken on board, and the captain
was unable therefore to fulfil his engagement to dine at the
Consulate. We were promised a fine sight of the blazing city—only
happily the show did not come off—from the Consulate garden
across the river. We stayed there in the delicious summer air till it
was time to go on board, and found it difficult not to step on the
slumbering people who covered the deck when we reached the
steamer. At midnight we slipped down stream, following in the wake
of the departing Governor. The Southern troops came in a few days
later, but without the looting and fighting which has so often
happened in similar circumstances.
 Chapter VII
Present-Day Ironsides—General Feng Yu Hsiang

“There shall never be one lost good! What was shall live
as before;
The evil is null, is nought, is silence implying sound;
What was good shall be good, with, for evil, so much good
more;
On the earth the broken arcs; in the heaven the perfect
round.

All we have willed or hoped or dreamed of good shall

exist;
Not its semblance, but itself; no beauty, nor good, nor
power
Whose voice has gone forth, but each survives for the
melodist
When eternity affirms the conception of an hour.
The high that proved too high, the heroic for earth too
hard,
The passion that left the ground to lose itself in the sky,
Are music sent up to God by the lover and the bard;
Enough that He heard it once: we shall hear it by and
by.”

—Browning.

Chapter VII
Present-Day Ironsides—General Feng Yu Hsiang
 China is a land full of
surprises, and at the
present day there is an
amazing variety of
individual efforts for the
regeneration of the country
by her patriotic sons and
daughters. In some ways
the chaotic political state of
China makes these
individual efforts possible
where perhaps a more
settled government would
not admit of them. For
instance, each province is
governed by a military or
civil governor, or both; and
within a province may be
found large territories
practically controlled by
some autocratic military
official, the presence of
whose army is the potent
INN LAMP. warrant for his wishes
being executed. In the
province of Hunan, roughly
speaking in the centre of China proper, is such an area, of which
Changteh is the army headquarters.
Having travelled for many weeks through districts infested with
robbers, where law and order are mainly conspicuous by their
absence, where the land is one great poppy garden for the opium
trade, it came as a shock of surprise and delight to enter a district
where we found the exact reverse of these things.
In 1918 there was fighting between the forces of the North and of
the South throughout this district, and as the Northern forces were
defeated and the City of Changteh captured by the Southerners,
General Feng was sent from the neighbouring province of Szechuan
to re-take the city. He had not only defeated the Southern Army
there, but had treated them in an entirely new way. Feng disbanded
the Southern troops after disarming them, and presented each
officer with ten dollars and each private with five dollars, so that they
might be able to return to their homes without resorting to pillage, the
source of so much sorrow in China. The General led his troops to
Changteh and found that the Southern forces had withdrawn, so that
he entered the city unopposed, though by no means with the
goodwill of the inhabitants. They were only too familiar with the
tyranny of ordinary Chinese troops; for it is not by foreigners only
that they are evilly spoken of, but by all Chinese.
In the two years which had elapsed since then this attitude was
completely changed, for the army was paid regularly and not obliged
to prey upon the habitants for sustenance, the strictest discipline was
observed, and no soldier was allowed to loaf about the streets. The
city itself underwent a wonderful purification: gambling dens, opium-
smoking halls, houses of ill repute were swept away, and theatres
transformed into schools; now a woman even can walk the streets
day or night without fear. A notice of three days to quit was given to
the above-mentioned houses, and the order was no dead letter.
Severe fines were inflicted on traffickers in opium. The streets of the
town became wonderfully clean in another sense of the word; the
General is so particular about this that if any of the army mules or
horses pass through it they are followed by scavengers in order that
no traces of their passage may remain; for as there is no wheeled
traffic and the streets are extremely narrow there are no side-walks.
There are notices in the centre of the streets with regard to the rule
of the road, but this is too recent an innovation to be quite
understood as yet. Everywhere one is confronted with signs of the
General’s determination to raise the moral of the people. When he
closed the opium dens he opened refuges for the cure of the smoker,
instead of putting him in prison, as is done in certain parts of the
North. The patient was photographed on entering and on leaving (à
la Barnardo). General Feng punishes with death the soldier proved
to have been trafficking in the sale of opium, while the civilian is
punished by being flogged and paraded bare-backed afterwards
through the streets, preceded by a notice board stating his offence.
The city gaol is the only one in the country which has a chapel and
the missionary bodies in the town have charge—a month at a time
by turns. As you pass along the streets your eye is attracted by
posters of a novel kind. They are pictures descriptive of evil habits to
be shunned: a cock is vainly sounding the réveillé to which the
sluggard pays no heed; the vain woman on her little bound feet
watches from afar the industrious woman doing her task in cheerful
comfort with normal feet, and so on. In odious contrast to these
pictures are the British and American cigarette posters to be found
all over the country, and I was told that one of the leading
Englishmen in the trade said regretfully that he thought they had
done the country no good turn in introducing cigarettes to China.
They are considered a curse by thoughtful Chinese, and at the
request of the officers, the General has prohibited the use of them in
the army, though there is no embargo on other tobacco-smoking.

A Man of Mark.

Page 158
 Another noticeable feature of the city is the open-air evening
school, the sign of which is a blackboard on a wall, sheltered by a
little roof which may be seen in many an open space. When the
day’s work is over benches are produced from a neighbouring house
and school begins. The General has established over forty night
schools dotted along the five miles of the city on the river-bank,
besides the industrial schools open during the daytime. We visited
one large training school for girls and women, which he has
established and supports in order to promote industry, and to which
workers from the country districts are welcomed. They have six
months’ training and one meal a day gratis, and they are taught
weaving, stocking-making (on machines), dressmaking and tailoring,
etc., and the goods turned out find a ready market. The instructors
are all very well paid, and the work done is thoroughly good, despite
the disparaging remarks of an elderly overseer who evidently had
the conventional contempt for the Chinese woman’s intelligence.
General Feng is a firm believer in women’s education, and has
established a school for the wives of his officers, to which they come
not altogether willingly, I fear. The unwonted routine and discipline
are naturally a trial, especially to women no longer in their première
jeunesse; and despite the fact that he succeeded in persuading a
highly-trained and charming woman to come from the north to take
charge of it, there have been many difficulties to surmount. She
lunched with us one day and told us an instance of this which makes
one realize the situation: a certain lady resented the fact of her
teacher being the wife of a veterinary surgeon (lower in rank than her
husband), and disregarded her continual efforts to curb her feminine
loquacity and make her attend to her studies. Finally there was a
complete rupture between the ladies, and the unwilling pupil
indignantly left the school. The teacher pondered over this and could
not bear the thought of having quarrelled with a fellow Christian. She
determined to try and make it up, so she called upon the lady, who
refused to see her. Nothing daunted, she tried a second time, and
again the lady was “not at home,” but sent her husband to speak to
her. The teacher explained to him all she felt—he was so moved by
her appeal that he fetched his wife, a complete reconciliation took
place, and she returned to school.
 The General has a short religious service in his own house every
Sunday morning for these ladies, at which he, his wife and some
officers are present, and at which he invited me to speak.
Having described in outline the changes effected in Changteh by
General Feng, it is time to try and describe the man himself and his
past life. He is tall and powerful, with a resolute, masterful air as
befits a man who is ruler of men; but his ready smile and the
humorous twinkle in his eye reassures the most timid. He was born
in 1881 in the northern province of Nganhwei, of humble parentage,
and had no educational advantages. He has amply made up for this,
however, having a keen sense of the value of knowledge and giving
to others what was not given to him. The study of English is being
eagerly pursued by himself and his officers, and he will soon pick it
up if he comes to England, as he wishes to do.
General Feng entered the army as a common soldier, and in 1900
was present (on duty), but only as an onlooker, at the Boxer
massacre of missionaries at Paotingfu. This was his first contact with
Christian people, and it made a deep impression on him. This was
strengthened by further contact with a medical missionary, who
cured him of a poisoned sore and charged nothing, but told him of
the love of God, Who had sent him to heal the sick. There is no
doubt that medical missions have been one of the best possible
instruments for winning the Chinese to Christianity, and one cannot
but regret that it is now becoming necessary to abandon the practice
of non-payment, except for the most necessitous cases, on account
of the terrible rise in prices and the lack of funds for the upkeep of
our hospitals. However, it appears to be inevitable.
The turning-point in General Feng’s life took place when he was
stationed at Peking in 1911, having already risen to the rank of
Major. He was feared and disliked by officers and men on account of
his fierce temper, which caused him to strike them when he was
angry, while his wife also had to submit to being beaten when she
displeased her lord and master in the most trivial details. There was
as complete a change in his life as in Saul’s when he obeyed the
heavenly vision. This was the result of attendance at a meeting by
Dr. Mott, and he was assigned to Bishop Morris’s care for further
teaching. The strongest influence brought to bear on him at that
time, however, seems to have been that of Pastor Liu, of the
Wesleyan Mission, who became one of his best friends. It is not easy
at the age of thirty-one to conquer an ungoverned temper and
tongue, but the fact remains that he is now adored by his troops, and
that he has never abused or ill-treated his wife (a General’s
daughter) since becoming a Christian. How difficult this is may be
judged by the fact that one of the finest characters among the
Christian Chinese clergy, Pastor Hsi, says that he found it so
impossible to conquer the lifelong habit of abusive language to his
wife that he had to make it a special matter of prayer before he could
succeed, though he was such a saint. The question of bad language
throughout the army is remarkable; an American missionary, after
spending a year constantly in and out amongst the men, said he had
heard none, for the General has a wonderful way of getting his
wishes observed, and has been instrumental in winning the bulk of
both officers and men to Christianity. He has compiled a treatise on
military service, redolent of Christian morality, which every one of his
men can repeat by heart. This treatise has been taken as the basis
of General Wu Pei Fu’s handbook (a friend of General Feng), who
quotes Cromwell’s army of Ironsides as a model for the soldier’s
imitation, though he does not profess to be a Christian! It may be
thought that the Christianizing of the army is of doubtful reality, but
this is certainly not the case; for in the first place the amount of Bible
teaching they are undergoing is far beyond what would ordinarily be
the case here at home before admitting candidates to Church
membership, and the only difficulty about this teaching is to find the
teachers necessary for such numerous candidates: they are keen to
learn about Christianity. Before baptism they have to submit to a
searching examination of their character and behaviour, and must
have an officer’s certificate to that effect. In addition each man must
sign a statement promising to spend time daily in prayer and study of
the Bible, to seek the guidance of the Holy Spirit and to obey the
teaching of the New Testament.
Nevertheless, they have been baptized by hundreds, so that
already more than a third of the army (and I think the proportion must
be much greater now, as over one hundred were postponed as being