1장
The Race to Tomorrow: How Visionary Companies Shape Industries
In the fast-paced business landscape of the 1990s, Gary Hamel and C.K. Prahalad's "Competing for the Future" arrived like a lightning bolt, challenging conventional wisdom about corporate strategy. First published in 1994, the book quickly became required reading for executives worldwide, with Fortune calling it "one of the most influential business books of all time." Its revolutionary premise-that companies should focus less on today's market share and more on tomorrow's opportunities-resonated deeply with leaders facing unprecedented global competition and technological change. The book's ideas have shaped the strategies of companies from Apple to Amazon, with Steve Jobs reportedly keeping a copy on his bookshelf. Beyond business circles, the concept of core competencies entered the cultural lexicon, influencing everything from personal career planning to government policy. What makes this work particularly fascinating is the authors' seventeen-year partnership that began with an intellectual showdown at the University of Michigan and evolved into one of the most productive collaborations in management thinking.
2장
Beyond Restructuring: The Limits of Playing Catch-Up
When competitiveness problems become undeniable, most companies instinctively reach for the restructuring playbook-carving away corporate fat, closing underperforming divisions, and reducing headcount. The United States and Britain have produced an entire generation of "denominator managers" who excel at downsizing, decluttering, and divesting. While sometimes necessary, this approach often amounts to selling market share profitably-essentially a "harvest strategy" that sacrifices the future for short-term gains.
The social costs of restructuring are devastating. Employee morale plummets as workers hear they're the firm's "most valuable assets" while being treated as the most expendable. Perhaps most concerning, restructuring seldom results in fundamental business improvement. At best, it buys time. Studies show that share price improvements from restructuring are typically temporary, with companies often lagging further behind index growth rates three years later than when restructuring began.
Wall Street recognizes this reality. Management teams skilled at denominator reduction may not excel at numerator growth. This explains why U.S. and British managers pay back more earnings to shareholders than their Japanese and German counterparts-investors prefer to redirect cash from companies that can't profitably create the future.
Recognizing restructuring's limitations, smart companies have moved to reengineering their processes-rooting out needless work and aligning every process toward customer satisfaction, reduced cycle time, and total quality. This twenty-first century Taylorism differs from the original by asking employees, rather than "experts," to redesign processes.
Though ostensibly focused on customer satisfaction, reengineering projects are typically approved for their cost-reduction potential. Companies take reengineering charges against earnings much as they did restructuring charges earlier. These massive write-offs aren't tributes to management foresight but penalties for not anticipating the future.
Unlike restructuring, reengineering offers the hope of getting better, not just smaller. However, it often focuses on catching up rather than getting ahead. Detroit's celebrated quality and cost improvements with Japanese competitors came after forty years-during which hundreds of thousands of jobs and 25 percentage points of U.S. market share were lost.
The fundamental problem is that many companies still focus on building yesterday's advantages-quality, time-to-market, and customer responsiveness. While these are survival prerequisites, working on 1980s advantages in the 1990s shows little management foresight. Too many managers dress up imitation as "adaptiveness," when they're merely responding to more imaginative competitors' preemptive strategies.
3장
From Organizational Transformation to Industry Transformation
It's not enough for companies to get smaller, better and faster-they must also become fundamentally different. Many companies have gotten better without becoming different. Xerox exemplifies this problem: despite benchmarking competitors and reengineering processes, it failed to recapture significant market share from Japanese rivals and couldn't capitalize on its pioneering innovations in computing.
A company surrenders today's businesses when it gets smaller faster than better, and surrenders tomorrow's businesses when it gets better without getting different. Market leadership today doesn't guarantee tomorrow's leadership. Companies must answer fundamental questions about their future customers, channels, competitors, advantages, margins, skills, and markets. Without substantially different answers to these "future" questions versus "today" questions, current market leaders will fall behind.
The real competitive problem isn't foreign competition but nontraditional competition-laggards versus challengers, incumbents versus innovators. Challengers discover new solutions because they're willing to look beyond the old, following paths of greatest opportunity rather than familiarity.
Many companies face organizational transformation challenges because they failed to reinvent their industries and regenerate core strategies years earlier. The organizational transformation agenda must be driven by a point of view about industry transformation: how the industry should evolve in ways advantageous to the company, what capabilities to build, and how to organize for opportunities crossing current business boundaries.
The primary challenge isn't organizational transformation but becoming the author of industry transformation. As Chrysler's Bob Eaton noted when taking over in 1993, the goal should be to "stop getting sick" rather than repeatedly leading comebacks. The real issue is whether transformation happens belatedly in crisis or with foresight in a calm atmosphere; whether the agenda is set by competitors or by one's own vision.
4장
Learning to Forget: Escaping the Gravitational Pull of the Past
Like dinosaurs threatened by cataclysmic climate changes, companies often struggle to adapt to radically altered environments. Fortunately, unlike dinosaurs dependent on slow evolutionary mutations, companies can deliberately alter their "genetic coding."
This corporate genetics consists of managers' mental biases, assumptions and presuppositions about industry structure, profit models, competition, customers, viable technologies, and organizational values. When environments change rapidly, these deeply embedded beliefs can become threats to survival.
Managers develop "genetic coding" through business education, consultants, management gurus, peer influence, business media, and career experiences. These managerial frames establish perspectives on strategy, competitive approaches, stakeholder priorities, policy tools, and organizational structures. These frames limit perception to particular slices of reality. Managers live inside these frames and often don't recognize what lies outside them.
Managerial frames within organizations become uniform through similar hiring criteria, education backgrounds, training programs, mentoring, and long executive tenure. This dominant frame becomes encoded in the organization's structure and processes-from business unit boundaries to capital budgeting, reward systems, planning processes, and information systems.
This creates two dangers: managers forget why they believe what they believe, and they come to think what they don't know isn't worth knowing. Yesterday's good ideas become tomorrow's mandates, with industry conventions going unquestioned. Like monkeys conditioned not to climb a pole for bananas (even after the cold shower punishment is removed), managers follow precedents without understanding their original context.
Companies with limited "genetic variety" become vulnerable to disruption. When executives share nearly identical backgrounds-same industry experience, same company tenure, same functional path-they develop dangerous blind spots. Entire industries can suffer from genetic sameness, as seen in U.S. airlines (1980s-90s), U.S. automakers (1970s), European chemicals (1980s), and banking (1970s).
To truly change genetic coding, companies must avoid overtightening administrative procedures, be cautious about using past lessons to train for the future, and hire people who aren't "just like us." Leaders must balance institutionalizing best practices with preventing managerial frames from becoming rigid. They should seek out and reward unorthodoxy, as one pharmaceutical chairman does by tracking down rejected projects that could change the business model.
Creating a "learning organization" is only half the solution-equally important is creating an "unlearning organization." Children learn faster than adults partly because they have less to unlearn. The more successful a company has been, the flatter its "forgetting curve"-its ability to unlearn habits that hinder future success.
What prevents most companies from creating the future isn't outdated equipment, products, or infrastructure, but an "installed base of thinking"-unquestioned conventions and myopic views. Creating the future doesn't require abandoning all of the past, but selectively identifying which parts serve as pivots to the future versus excess baggage.
5장
Developing Industry Foresight: Seeing the Future Before It Arrives
The goal of competition for industry foresight is simple: build the best possible assumption base about the future to develop the prescience needed to proactively shape industry evolution. This competition is essentially about establishing one's company as the intellectual leader influencing the direction and shape of industry transformation.
Industry foresight helps managers answer three critical questions: what new customer benefits to provide in the future, what new competencies will be needed, and how to reconfigure the customer interface. It's about establishing intellectual leadership over industry transformation. Companies like Motorola envision a world where phone numbers belong to people not places, while Apple's foresight led to the first mass-market computer and later the intuitive Macintosh interface.
Where does industry foresight come from when crystal balls are in short supply? The challenge is to create hindsight in advance-not impossible because what prevents companies from anticipating the future isn't that it's unknowable, but that it's different. As Allen Kay of Xerox PARC noted: "The future was predictable, but hardly anyone predicted it."
Foresight grows from childlike innocence about what could be, boundless executive curiosity, willingness to speculate beyond one's expertise, eclecticism, contrarianism, and genuine empathy with human needs. Companies must escape the myopia of currently "served markets" and orthodoxies of existing product concepts to see the future clearly.
What often prevents companies from imagining the future isn't its unknowability but viewing it through the narrow aperture of existing served markets. Technical imagination frequently outstrips new product imagination, which outstrips new business imagination, resulting in underleveraged resources.
Companies must enlarge their opportunity horizons by conceiving themselves as portfolios of core competencies rather than business units. Business units are defined by product-market focus, while core competencies represent broader customer benefits like Apple's "user friendliness," Sony's "pocketability," or Motorola's "untethered communications." Markets mature, but competencies evolve-Sony's miniaturization competence that began with transistor radios continues generating innovative products, while Honda leveraged its engine expertise beyond motorcycles into cars, lawn mowers, and marine engines.
Breaking industry orthodoxy requires challenging established price-performance trade-offs. Canon demonstrated this by setting an ambitious $1,000 price target for copiers in 1979, when Xerox's cheapest models cost thousands more. Rather than merely "cost reducing" existing designs (which might have yielded only 15-20% savings), Canon engineers completely reconceived the product, developing the revolutionary cartridge-based toner system that dramatically reduced costs and created the personal copier market.
Children's naivety-their willingness to ask "why" and imagine impossible things-is precisely what companies need to see the future. As we age, creativity declines and orthodoxy rises, with the most dramatic drop occurring when children start school and learn that "dumb questions" invite ridicule. Yet these seemingly naive questions often reveal future opportunities.
Creating the future requires substantial intellectual investment from senior management. Brief planning reviews are inadequate for building foresight. When one executive team realized they could debate overhead allocation for days but couldn't sustain an eight-hour discussion about industry trends, they recognized they had surrendered control of their destiny to competitors willing to invest time understanding future forces.
6장
Crafting Strategic Architecture: Building the Bridge to Tomorrow
Strategic architecture serves as the bridge between imagining the future and building it. Like an architect who dreams of structures not yet created while producing blueprints to make them real, companies need a high-level plan for the future.
Strategic architecture isn't a detailed plan but a high-level blueprint-more like an interstate highway map than city streets. It identifies major capabilities to be built without specifying exactly how they'll be constructed. It's specific enough to provide direction without detailing every step. Planning with excessive exactitude for 10-15 years is impossible and leads to inertia. Instead, companies need a broad agenda for functionality deployment and competence acquisition.
The strategic architecture identifies what must be done now to intercept the future-what competencies to build, what customer groups to understand, what channels to explore. It's the essential link between today and tomorrow, showing the organization how to prepare to capture future opportunities.
Strategic architectures don't last forever-eventually "tomorrow" becomes "today" and foresight becomes conventional wisdom. Companies must continually reinvest in creating prescient views of the future.
EDS exemplifies this approach. Despite recording its thirtieth consecutive year of record earnings in 1992, CEO Les Alberthal recognized that future success wasn't guaranteed. Disturbed that less than 40% of Fortune 500 companies from 1970 still existed in the same form by 1991, EDS launched a major renewal effort.
Warning signs were appearing: margins in outsourcing faced pressure from new competitors like IBM and Andersen Consulting; sophisticated customers demanded steep discounts; computing was shifting from mainframes to desktops and eventually homes. EDS's revenue per employee had flattened and slightly declined in real terms.
Rather than having a few executives craft a new vision, EDS engaged 150 managers from across the company in waves, eventually involving 2,000 people who invested 30,000 person-hours. This high-involvement process created a shared strategic architecture captured in three words: globalize (spanning boundaries), informationalize (converting data to actionable knowledge), and individualize (mass customization). This "ize on the future" framework guided new ventures with companies like Spectradyne, US West, and Apple Computer.
7장
Strategy as Stretch: Unleashing Organizational Energy
It's not cash that fuels the journey to the future, but the emotional and intellectual energy of every employee. Many resource-rich firms have surrendered leadership to poorer rivals, proving that starting resource positions poorly predict future industry leadership. Too often competitors are judged by resources rather than resourcefulness.
Looking at pairs like Volkswagen vs. Honda, Xerox vs. Canon, or IBM vs. Compaq, we see that incumbents with strong reputations, technological riches, and deep pockets often lost leadership to challengers with far fewer visible resources. These challengers succeeded through resourcefulness stemming from a deeply felt sense of purpose and a broadly shared dream.
Strategic intent is the animating dream that provides emotional and intellectual energy for the journey to the future. While strategic architecture is the brain, strategic intent is the heart. It creates a deliberate "misfit" between resources and aspirations-a substantial stretch for the organization.
Examples include Komatsu's "Maru-C" goal to encircle Caterpillar, Canon's dream to "Beat Xerox," and British Airways' aspiration to become "The World's Favourite Airline." Strategic intent conveys three essential elements: a sense of direction (a unique point of view about the future competitive position), a sense of discovery (exploring new competitive territory), and a sense of destiny (a goal employees perceive as inherently worthwhile).
Most employees can't articulate their company's direction beyond vague ideals or short-term goals. Without a compelling sense of purpose, employees feel little responsibility for competitiveness. Middle managers often lament: "We could be so much more successful if we had a clearer sense of direction." Most companies are overmanaged and underled, with more effort going into control than direction.
Every person has an explorer's heart, drawn to new discoveries and experiences. Yet many corporate mission statements are so generic they could belong to any competitor-as demonstrated when executives couldn't distinguish their own mission statement from their competitor's. A strategic intent should offer employees the enticing spectacle of a new destination or new routes to familiar destinations, like Bell Atlantic's quest to bring new information services to subscribers or Toyota's entry into the luxury car market.
Strategic intent must command respect and allegiance from every employee. The destination must be not only different but worthwhile, with emotional appeal beyond financial goals. Like Kennedy's moon mission or Japan's translating telephone project, great strategic intents create meaning for employees. Many companies understand employees have brains, but forget they have hearts too.
For strategic intent to become reality, every employee must understand exactly how their contribution is crucial to achieving it. Each level and function must understand the totality of the challenge, the interdependence of different roles, and their own responsibilities.
8장
Strategy as Leverage: Doing More with Less
Japanese manufacturing firms demonstrate extraordinary resource leverage-doing more with less across multiple dimensions. Their labor productivity advantages are well documented, but they also maintain lower overhead costs as a percentage of total expenses compared to American and Germanic competitors. Even more striking, there's often little correlation between R&D spending and output-GM spends four times more than Honda on R&D without achieving proportionate technological leadership, and Philips's research budget frequently exceeds Sony's without producing more successful products.
This pattern illustrates the essence of resource leverage-achieving more with less through an aspiration that transcends current resource constraints. North Vietnamese forces exemplified this principle by building bridges below the water line to evade American reconnaissance while moving troops and materials. Their tactical creativity was born from resource scarcity, as they hid in tunnels, sabotaged enemy facilities, co-opted civilians, and ambushed with greater determination than their resource-rich opponents.
Resource abundance can actually undermine strategic thinking. GM's massive factory automation investments demonstrated willingness to make bold moves but outpaced its ability to absorb new technology, retrain workers, and discard managerial orthodoxies. Without capacity for resource leverage, bigger bets bring bigger disasters, as abundance becomes a license for carelessness in decision-making.
Resource leverage can be achieved through five fundamental approaches: concentrating resources on key strategic goals, efficiently accumulating resources, complementing resources to create higher-order value, conserving resources wherever possible, and rapidly recovering resources by minimizing time between expenditure and payback.
Converging ensures efforts converge on a single strategic intent over time. Many companies lack this consistency, changing development trajectories and definitions more often than justified. Resource leverage requires that efforts of individuals, teams, functions, and businesses be additive across organizational units and through time.
Focusing protects against resource dilution. Too many firms try to fix everything simultaneously, making progress painfully slow. No group can effectively pursue more than two key operational improvement goals at once. Komatsu demonstrated this by focusing exclusively on quality first, winning the Deming prize in just three years, then sequentially focusing on value engineering, manufacturing rationalization, and other capabilities.
Mining involves extracting maximum learning from each experience. Some firms are more efficient at learning than others, explaining why Honda can develop new car models faster and cheaper than Ford or GM despite having launched fewer models overall. The key is seeing each experience, success or failure, as a learning opportunity.
Borrowing leverages resources from other firms through alliances, joint ventures, licensing, and subcontracting. This can include not just accessing skills but internalizing them by learning from partners-often more efficient than acquisitions, which require paying for both critical and less valuable skills.
9장
Core Competencies: Building Gateways to the Future
A key challenge in competing for the future is preemptively building competencies that provide gateways to tomorrow's opportunities while finding novel applications of current core competencies. Companies seeking to capture disproportionate profits from future markets must build competencies that will significantly contribute to future customer value.
Because developing world-class leadership in a core competence area may take five to ten years or more, companies need a clear point of view today about which core competencies to build for the future. Unfortunately, few companies understand how to leverage existing core competencies beyond current business unit boundaries to create new competitive space, and fewer still have a well-articulated agenda for building entirely new core competencies.
Core competencies are the gateways to future opportunities-a potentiality released when imaginative new ways of exploitation are envisioned. Companies like Sharp and Toshiba invested hundreds of millions in flat-screen display competencies not based on product-specific business cases, but driven by the broad opportunity arena accessible to a firm with near-monopoly in flat screens. By 1992, Sharp captured 38% of the $2.1 billion LCD market.
Competition for competence transcends product-versus-product battles to become corporation-versus-corporation warfare. While competitive strategy typically analyzes particular products or services, companies compete more fundamentally at the competence level. American Airlines competes with British Airways not just in first-class transatlantic service, but in developing competencies in fleet management and reservation systems.
A core competence represents a bundle of integrated skills and technologies rather than a single discrete capability. Motorola's fast cycle-time production rests on design disciplines, flexible manufacturing, and sophisticated order-entry systems. Federal Express's package routing competence integrates bar-code technology, wireless communications, and network management. A core competence rarely resides in a single individual or team but represents learning across skill sets and organizational units.
To be considered "core," a competence must meet three tests, the first being customer value. A core competence must make a disproportionate contribution to customer-perceived value by delivering fundamental customer benefits. The second test is competitor differentiation-a core competence must be competitively unique or superior, not just a "table stake" required for industry participation. The third test is extendability-core competencies must serve as gateways to new markets, requiring managers to think beyond current product configurations to imagine new applications.
A core competence is not an asset in the accounting sense-factories, channels, brands, or patents are things rather than skills. Unlike physical assets, competencies don't "wear out" but typically grow more valuable with use. Honda's engine competence, refined across motorcycles, cars, and generators, has multiplied its understanding of combustion engineering.
What constitutes a core competence evolves over time. Japanese automakers' quality advantage in the 1970s and 1980s was a genuine differentiator, but by the mid-1990s quality had become a baseline capability required of all car manufacturers. This dynamic appears across industries as former differentiators like quality, rapid time to market, and responsive customer service gradually become routine advantages.
10장
Getting to the Future First: The Race for Global Preemption
This chapter introduces how companies can turn intellectual leadership into market leadership ahead of rivals. Getting to the future first offers substantial rewards: establishing monopolies in new product categories (like Chrysler with minivans), setting standards and capturing royalties (like Matsushita with VCRs), establishing competitive rules (like Charles Schwab's "Street Smart" software and "OneSource" fund platform), building infrastructure not easily duplicated (like AT&T's cellular network acquisition), and amortizing investments in competence building more quickly than competitors.
Many companies assume being a quick follower is better than pioneering, based on two questionable assumptions: that pioneering is inherently risky, and that pioneers will inevitably stumble. While pioneering carries risks, companies should ensure these risks are less than the potential rewards. The most significant risk is financial-making large, irrevocable investments that fail to produce intended returns. However, getting to the future first isn't about outspending rivals or making bet-the-company investments. Creative resource leverage can minimize pioneering risks.
To get to the future first, a company must find the shortest path between today and tomorrow. Dreams don't materialize overnight, and years may elapse between conceiving a transformed industry and seeing a substantial market emerge. The goal is minimizing both time and investment required to turn foresight into genuine market opportunity.
Competition for the future occurs in three stages: First, competition for intellectual leadership-developing industry foresight and strategic architecture. Second, competition to shape migration paths between today's markets and tomorrow's opportunities. Third, competition for market power once new opportunities take off. The first stage is about out-thinking competitors; the second about out-flanking them.
Because ideal migration paths differ between companies, they compete to influence industry development trajectory. The goal is maximizing one's share of influence over industry development to capture future profits. A company's share of influence and future profits is determined by four factors: capacity to build and manage coalitions, success in building core competencies central to customer value, ability to rapidly accumulate market learning, and global "share of mind" and distribution capacity.
Many companies today have numerous alliances, but often these partnerships lack coherent logic-they're disconnected, each serving independent purposes rather than forming part of a strategic vision. The most effective coalitions have a clear "cumulative logic" where partnerships are deliberately assembled to create new competitive space.
Companies competing for the future increasingly recognize that "virtual integration" is replacing vertical integration. These relationships involve interdependence without ownership or legal control, where influence comes from political skills, critical competencies, inspiring future vision, and honoring commitments to partners.
11장
Securing the Future: Learning Fast and Preempting Globally
Competing for the future requires maximizing the ratio of learning over investment. When tracking emerging opportunities, companies must learn faster than competitors about where future demand truly lies through expeditionary marketing, while positioning themselves to maximize worldwide revenue share when markets take off through global preemption.
Creating new competitive space requires market learning that traditional research can't provide. While companies naturally want high success rates with new products, policies focused solely on improving "batting average" often delay market entry, sacrificing pioneer advantages. The number of "runs" scored depends on both hit rate and times at bat-a player batting .250 with hundreds of plate appearances outscores one batting 1.000 but rarely playing.
The practical challenge of expeditionary marketing is reducing both the time and cost of product iteration. Companies with shorter iteration cycles-12 months versus 36 months-can close in on potential markets much faster, as each iteration provides an opportunity to apply marketplace learning. Toshiba exemplifies this approach with its laptop computers, launching and withdrawing more models in five years than some competitors introduced in total. This blistering pace allowed Toshiba to explore every market segment and outrun early rivals like Grid and Zenith.
Corporate attitudes toward failure often impede expeditionary marketing. Traditional approaches rarely distinguish between "wrong target" failures and "falling short" failures. When new products underperform, companies typically search for culprits rather than lessons, and managers are often blamed for not knowing in advance what could only be learned through market experience.
While competence development and market exploration may take a decade or more, the final race to market leadership can become an all-out sprint when competitors simultaneously realize a market is "ripe." This scramble is a race to preempt competitors in key markets and capture the rewards of pioneering. Procter & Gamble's experience with Pampers in Europe demonstrates the importance of global preemption-by launching late in France and the UK, P&G surrendered market leadership to competitors like Colgate.
Competition for global preemption requires access to critical national markets and distribution channels. Markets may be "critical" for several reasons: they may offer access to sophisticated "reference" customers who validate products; they may provide scale economies through sheer size; they may offer high growth rates; or they may provide access to competitors' domestic "profit sanctuaries."
To preempt competitors globally, customers worldwide must be predisposed to try your products. Companies with strong global franchises like Coca-Cola, Apple, Sony, and Honda enjoy instant credibility when launching new products. Marketing experts estimate building significant consumer awareness across major global regions costs roughly a billion dollars in advertising, but companies with established "banner brands" can transfer customer goodwill from existing products to new offerings at minimal marginal cost.
Global preemption requires not just physical distribution capability but organizational ability to rapidly communicate product advantages worldwide, ensure adequate marketing resources in each country, and quickly address adoption problems. The results have been impressive: Gillette launched Sensor in 19 countries simultaneously; P&G rolled out Pampers Phases in 90 countries in under 12 months; and Pert shampoo reached 30 countries shortly after its U.S. introduction.
12장
Thinking Differently: A New Perspective on Strategy
To build industry leadership, companies must go beyond restructuring and reengineering-they must be capable of reinventing their industries and regenerating core strategies. Becoming different requires first thinking differently about three fundamental areas: competitiveness, strategy, and organizations.
The search for competitiveness requires looking beyond industry structure analysis, which excels at describing the what of competitiveness but fails to address the why. Industry analysis explains what makes firms profitable through barriers to entry and competitive advantages, but provides little insight into why some companies continually create new advantages while others merely follow.
Understanding the what of competitiveness (cost, quality, time-to-market) helps laggards catch up, but understanding the why is essential for leadership. Similarly, industries don't simply "evolve"-they're transformed by challengers who overturn accepted practices and reinvent product concepts. Process reengineering often treats symptoms rather than addressing the root causes of competitive illness.
Strategy faces a credibility crisis in many companies. Strategic planning departments are being disbanded, senior managers spend little time on strategy, and consulting firms have abandoned strategy for operational improvement. This isn't because companies have clear visions of their futures-it's because the predominant notion of strategy has failed them.
In many companies, strategy has devolved into an annual ritual of form-filling that rarely challenges fundamental assumptions. Strategic planning typically starts with "what is" rather than "what could be," focusing on incremental improvements while failing to address deeper questions about corporate identity or future positioning.
When strategy moves beyond incremental planning, it often takes the form of major acquisitions or investments that finance executives decode as "this project will lose money!" The terms "long-term," "ambitious," and "committed" have become code for distant returns, high risk, and big spending. This mindset creates a paradox: companies need forward-looking strategies but can't justify the perceived financial risk.
The need to think differently about strategy requires new ways of thinking about organizations. Current organizational change practices are as inadequate as current strategy practices for competing for the future. Many companies have been transforming through devolution, empowerment, focus, entrepreneurship, personal accountability, and customer-focus-the antithesis of the centralized, bureaucratic models of previous decades. Yet these antidotes can be as toxic as the poison they aim to counteract when organizational choices are posed as stark either/or contrasts.
In many companies, "corporate strategy" is merely an aggregation of independent business unit strategies, with corporate officers handling only investor relations, acquisitions, and resource allocation. This approach risks suboptimization-white space opportunities go unexploited, core competencies fragment, and R&D budgets splinter as divisions pursue independent agendas.
The authors conclude by offering a synthesis rather than a middle ground between organizational extremes. They present how competing organizational choices (corporate vs. business units, centralized vs. decentralized, bureaucratic vs. empowered, etc.) can be resolved through higher-level synthesis concepts like interlinkages, collective approaches, and core competence focus. The book's philosophy emphasizes building over downsizing, organic growth over deal-making, and making a difference-to customers through exceeding expectations, to employees by creating meaning, and to managers by generating new wealth and building lasting legacies.
