Putting leadership back into strategy

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A CEO must be the steward of a living strategy that defines what the firm is and what it will become.

Putting Leadership Back into Strategy
by Cynthia A. Montgomery

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copying or posting is an infringement of copyright. permissions@hbsp.harvard.edu or 617.783.7860
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Putting Leadership Back into Strategyby Cynthia A. Montgomery

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COPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

Strategy is not what it used to be—or what it could be. In the past 25 years it has been presented, and we have come to think of it, as an analytical problem to be solved, a left-brain exercise of sorts. This perception, combined with strategy’s high stakes, has led toan era of specialists—legions of MBAs and strategy consultants—armed with frameworks and techniques, eager to help managers analyze their industries or position their firms for strategic advantage. This way of thinking about strategy has generated substantial benefits. We now know far more than before about the role market forces play in industry profitability and the importance of differentiating afirm from its competitors. These gains have come in large part from the infusion of economics into the study of strategy. That merger added muchneeded theory and empirical evidence to strategy’s underpinnings, providing considerable rigor and substance. But the benefits have not come without costs. A host of unintended consequences have developed from

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harvard business review • january 2008copying or posting is an infringement of copyright. permissions@hbsp.harvard.edu or 617.783.7860
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what in its own right could be a very good thing. Most notably, strategy has been narrowed to a competitive game plan, divorcing it from a firm’s larger sense of purpose; the CEO’s unique role as arbiter and steward of strategy has been eclipsed; and the exaggerated emphasis onsustainable competitive advantage has drawn attention away from the fact that strategy must be a dynamic tool for guiding the development of a company over time. To redress these issues, we need to think about strategy in a new way—one that recognizes the inherently fluid nature of competition and the attendant need for continuous, not periodic, leadership.

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The Road to Here
Fifty years ago strategywas taught as part of the general management curriculum in business schools. In the academy as well as in practice, it was identified as the most important duty of the chief executive officer—the person with overarching responsibility for setting a

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A CEO must be the steward of a living strategy that defines what the firm is and what it will become.

Putting Leadership Back intoStrategy

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Cynthia A. Montgomery is the Timken Professor of Business Administration and head of the strategy unit at Harvard Business School in Boston.

company’s course and seeing the journey through. This vital role encompassed both formulation and implementation: thinking and doing combined. Although strategy had considerable breadth then, it didn’t have much rigor. The ubiquitous SWOTmodel taught managers to assess a company’s internal strengths and weaknesses and the opportunities and threats in its external environment, but the tools for doing so were pedestrian by any measure. Advances over the next few decades not only refined the tools but spawned a new industry around strategy. Corporate-planning departments emerged and introduced formal systems and standards for strategicanalysis. Consulting firms added their own frameworks, among them the Boston Consulting Group’s influential growth-share matrix and McKinsey’s 7-S framework. Academics weighed in, unleashing the power of economic analysis on problems of strategy and competition. It has been a heady period, and the strategy tool kit is far richer because of it. That said, something has been lost along the way....
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