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xvi PREFACE TO THE SECOND EDITION

short term, but consistently. This is being challenged as never

before.2

Second, the notion of “sustainable” competitive advantage,

while still conceptually interesting, is being seriously challenged
in the practice field. Traditionally, the achievement of “sustain­
able” advantage has been the Holy Grail in strategy. Increasingly,
however, firms are finding themselves pursuing not “sustain­
able” competitive advantage, but punctuated situations of
“unsustainable temporary” advantage. Once achieved, these
position the firm favorably only until the competition has caught
up or markets have moved on – at which point the search for new
advantage continues.3 If anything, this new mantra has height­
ened the awareness that firms’ strategy increasingly revolves
around gaining relevant insight, rapid experimentation, and evo­
lutionary learning.4 Kelly’s5 prescient assertion of firms engaging
in ever more frequent cycles of “find, nurture, destroy” resonates
closely to what we are, indeed, experiencing in the practice field.

This second edition of Strategy in Practice pursues the same

purpose as its earlier edition: it seeks to provide the practitioner of
strategy with a compendium that balances current thinking in
the field of strategic management and pragmatic guidance for
putting that thinking into practice.

This new edition, however, substantially extends the section on

strategic sense making and analysis. Following on an introduc­
tory chapter on strategic analysis, two new chapters have been
added; these elaborate on high-level and supporting-level strate­
gic analyses. The distinction between the two levels of analysis is
critical to strategic sense making and thinking; it is also a unique
2
Mainardi, C. and Kleiner, A. (2010) The Right to Win, Strategy + Business
(Booz&Co), Issue 61 (Winter 2010).
3
Stern, S. (2010) Get Your Strategy Right Now before the Dust Settles, Financial
Times (July 21, 2009).
4
McGrath, R.G. (2010) Business Models: A Discovery Driven Approach, Long
Range Planning, Vol. 43, pp. 247–261.
5
Kelly, K. (1997) The New Rules of the New Economy: Twelve Dependable
Principles for Thriving in a Turbulent World, Wired, September 1997.
WEBFPREF02 08/28/2015 4:26:40 Page xvii

PREFACE TO THE SECOND EDITION xvii

contribution of this book to the current thinking in strategic

analysis. The unique competing space concept and analysis
framework, a unique contribution introduced in the first edition,
is also dealt with much more thoroughly in one of the new
chapters (Chapter 5). Finally, this new edition of Strategy in
Practice introduces some practical exercises in Appendices A
and B for putting the thinking, concepts, and frameworks intro­
duced throughout the book into practice. These exercises have
been used effectively in Executive Strategy seminar workshops
around the world, and in consultancy work with both small start­
ups as well as multinational firms.

I am sincerely grateful to fellow scholars, management practi­

tioners, and MBA students around the world whose generous
feedback and suggestions on the first edition have contributed
directly to this new edition. I am particularly indebted to my
Henley DBA research associates, Henning Grossmann and Jacob
Bruun-Jensen, for engaging discourse on a number of the key
themes and concepts elaborated on in this edition; these have
contributed significantly to their advancement. Further, I am
grateful to Rosemary Nixon, Senior Commissioning Editor at
John Wiley & Sons, for her continuing support for this edition.

Lastly, but by no means least, I am once again indebted to my

wife, Heidi, for her careful scrutiny of the manuscript of this
second edition, and for her numerous invaluable suggestions for
clarification and structuring of its content.

The learning journey continues; with this second edition I look

forward to sharing new insights and learning with you.

George Tovstiga
Henley-on-Thames
August 2012
WEBFPREF02 08/28/2015 4:26:40 Page xviii
WEBPREF03 08/28/2015 4:29:43 Page xix

Preface to the
Third Edition

T
his third edition of Strategy in Practice is being
published in the aftermath of what has been an excep­
tionally prolonged economic crisis. By most accounts,
the difficult period marked by double- and triple-dip
relapses of the economy is over. Once again buoyant Wall Street
earnings appear to support that view.1

Nonetheless, the global business environment has changed, even

as business is returning to “normal.” But it is an unprecedented
“new normal” that businesses are facing in the wake of the crisis;
one characterized by continuing uncertainty, disappearing indus­
try boundaries, and new spheres of economic activity, against a
backdrop of ever shortening time horizons. Has the economic
crisis been at the root of the changed business context? No doubt,
the crisis has had an impact; as to its extent, we really don’t know.

Fact is, however, that several new global mega factors appear to be
changing how and where we compete in rather fundamental
ways. A recent report by the McKinsey Global Institute2 identi­
fies four of the mega drivers to be: (1) a shift of economic activity,

1
Braithwaite, T. and McLannahan, B. (2015) Buoyant Wall Street Earnings Lift
Cloud of Crisis, Financial Times (April 16, 2015).
2
Dobbs, R., Manyika, J. and Woetzel, J. (2015) The Four Global Forces Breaking
all the Trends, McKinsey Global Institute (April 2015) (accessed online at http://
www.mckinsey.com/insights/strategy/ on April 30, 2015).
WEBPREF03 08/28/2015 4:29:43 Page xx

xx PREFACE TO THE THIRD EDITION

globally, to emerging markets, and within these, to urban centers;

(2) accelerating technological change resulting in an unprece­
dented scope, scale, and economic impact of technology; (3) an
aging human population against a backdrop of falling fertility
rates; and (4) greater global flow and connections through trade,
movements of capital, people, and information extending to a
complex, intricate, and sprawling global economic web.

According to the McKinsey authors, these four factors are dis­

rupting long-established paradigms of competition across virtu­
ally all sectors of the global economy. This is causing familiar
patterns to break down, to break up, or to break altogether. The
impact of the macro-scale disruption is quickly trickling down to
the business level. The evolving “new normal” is asserting itself
in a number of ways relevant to management practice. Disruption
is playing havoc with the intuitions that in the past have under­
pinned much of our business decision making.

For one, the competitive game has changed – and is continuing to

change. New rules of competition are emerging. These demand
that we think differently about how we compete. Traditional,
static approaches to strategy are being challenged as never before,
particularly as they are proving to be far too inept in the face of the
changing nature of competition. “Practice-relevance” has
become the new business criterion.

If anything, these developments reaffirm the need for strategic

thinking at all stages of the strategy process. To that end, the core
theme and emphasis on strategic thinking established in the
earlier editions prove to be as compelling as ever. The notion
of strategic thinking, therefore, serves as the unifying theme and
“red thread” connecting the chapters of this new edition as it has
in the earlier editions. Strategic thinking is shown to pervade the
strategy process throughout its stages – regardless of whether at
the sense making stage, the strategic option formation and eval­
uation phase, or the stage in which the deployment of a preferred
strategic response occurs.
WEBPREF03 08/28/2015 4:29:43 Page xxi

PREFACE TO THE THIRD EDITION xxi

The third edition has been thoroughly revised, updated, and subs­
tantially extended. Conceptual notions introduced in the earlier
editions, such as the strategy building blocks, and the unique
competing space concept and framework, have been substantially
elaborated in several thematic areas. For example, the notion of the
unique competing space, particularly from the perspective of its
respective strategic boundaries, is shown to provide a cogent,
rational basis for the formation of strategic options. Similarly,
the strategy building blocks are used to develop insightful criteria
for evaluating the appropriateness of strategic options. Two
entirely new topics have been added: strategy execution and
strategic performance appraisal are explored in a new chapter.
With the inclusion of strategy execution this third edition now
thematically embraces the entire strategy process.

Finally, this new edition features an accompanying website hold­

ing additional resources for tutors (this can be located via www.
wiley.com/go/strategyinpractice3e). I look forward to more inter­
action with users via this new online functionality.

For this third edition, I remain indebted to a multitude of people,

in particular my Henley MBA students, for whom previous
editions of the book have constituted the syllabus of the core
Strategy module of the Henley MBA program. I am grateful for
their relentless challenging of the concepts and thinking; this has
contributed immensely to sharpening the thinking reflected in
the book. I am also indebted to my Russian students at the
Graduate School of Management (GSOM) of the University of
St. Petersburg, with whom I first used the material on strategy
execution and strategic performance appraisal (unbeknownst to
them!) in the core CEMS “Strategy in Practice” core course in
December 2014, for invaluable impulses that helped shape the
new Chapter 8 in the book.

Further, I am grateful to Holly Bennion, Sam Hartley and Jenny

Ng at John Wiley & Sons for their continuing support in preparing
this edition.
WEBPREF03 08/28/2015 4:29:43 Page xxii

xxii PREFACE TO THE THIRD EDITION

Finally, I remain indebted to my son, Matthew, and my wife, Heidi,

for their careful scrutiny of the manuscript of this third edition,
numerous invaluable suggestions for clarification and structuring
of its content – and above all, to Heidi for her endless understanding
and unwavering support throughout the endeavor.

This third edition thus marks a further milestone along a learning

journey that has yielded new thinking and new perspectives on
strategy in practice. I am keen to share these with you in this new
edition!

George Tovstiga
Henley-on-Thames
May 2015
WEBFLAST 08/28/2015 4:18:16 Page xxiii

About the Author

George Tovstiga is Professor of Strategy and Innovation Manage­

ment at Henley Business School at the University of Reading
where he is Director of the Henley Executive Strategy Programme
and Lead Tutor for Strategic Management in Henley’s MBA
programs. He teaches, researches, and consults in the areas of
strategy and innovation management. George has extensive
international experience as management educator, industry man­
agement practitioner (including Xerox Research in Canada, Bayer
AG in Germany, and ABB Ltd in Switzerland), author, and
consultant. Prior to joining Henley, George consulted for Arthur
D. Little (Switzerland) Ltd’s Strategic Growth and Innovation
Practice. He is a consultant to a number of multinationals in the
area of strategy and has published extensively in this area.
WEBFLAST 08/28/2015 4:18:16 Page xxiv
WEBC01 08/28/2015 3:10:20 Page 1

CHAPTER
1
Introduction to Strategy
in Practice

It is important to remember that no one has ever seen a strat­

egy or touched one; every strategy is an invention, a figment of
someone’s imagination . . .
—Henry Mintzberg

IN THIS INTRODUCTORY CHAPTER, WE:

 define and explore fundamental notions related to strategy
and the practice of strategy;
 review and frame key problems and issues contributing to
the ongoing dilemma managers face with strategy;
 reflect on the centrality of value creation, delivery, and
capture to strategy;
 introduce strategic thinking and the strategic thinking
process in the context of strategy in the practice field;
WEBC01 08/28/2015 3:10:20 Page 2

2 STRATEGY IN PRACTICE

 reflect critically on the differences between strategic

thinking and strategic planning; particularly from the
perspective of their relevance to strategy practice;
 introduce the strategy roadmap, and use it to briefly
introduce and outline the subsequent chapters of this
book;
 close with some caveats and useful pointers on strategy in
practice.

Strategy: A Persistent Dilemma

Strategy – is it really a figment of someone’s imagination? One
would hardly come to that conclusion judging by the popularity of
the word in the business media. Scarcely any business word is
invoked more frequently and with greater fervor. Business leaders
take great pride in referring to “their strategy.” A simple search
for the word “strategy” in the Financial Times online (FT.com)
for the 12-month period of 2014 results in 6,506 hits. The term is
being used; in fact, it is being used a lot.

Yet many business leaders have difficulty articulating their strat­

egy. Ask a business leader to explain their organization’s strategy
in simple terms and how it sets them apart from their competi­
tors. More often than not, this simple question elicits an evasive
response. Ignorance of the firm’s strategy extends down through
the ranks; recent research reports that only 55% of middle
managers surveyed can name even one of their firm’s top five
strategic priorities.1 Simply put, this means that when managers
are given the task of explaining strategy to their subordinates,
almost half fail to get it right. It doesn’t end there; not only are
strategic objectives poorly understood, they often appear discon­
nected from the firm’s overall business strategy. The sobering
reality is that most business leaders cannot articulate their
organization’s strategy in a simple, compelling way.