There are two people, and only two, whose ideas must be taught to every MBA in the world: Michael Porter and Henry Mintzberg. This was true more than 25 years ago, when I did my MBA at USC. These are two academics who have had real impact for a long time. Part of their success, beyond having big relevant ideas, is due to their clear and concise writing skills (There is certainly a lesson in there for many of us business school academics).
Both have been very influential in the study of strategy, an area of considerable interest to many Forbes readers. You can contrast their two views as Porter’s taking a more deliberate strategy approach while Mintzberg’s emphasize emergent strategy. Both are still taught, in fact, I taught Porter’s 3 Generic Strategies and his 5 Forces Model not two weeks ago in an undergraduate strategy course at McGill. Which is most useful today?
The world of deliberate strategy is one that I remember well from my days as a corporate manager at IBM and then as an executive teacher at Oxford and LBS. It was a world of strategy planning weekends at posh hotels in the English countryside, where we sat in rooms discussing the 5 Forces in our particular industry and what would we change in the model if we had a fairy’s magic wand. The output was 3 ring binders in North America and 2 ring binders in Europe. This worked well in its day, back in the 80s and part of the 90s, wonderful times now looking back on it, when the past was quite helpful in predicting the future. However, the nature of the world today no longer lends itself, by in large, to this type of strategy.
Emergent strategy is the view that strategy emerges over time as intentions collide with and accommodate a changing reality. Emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. Emergent strategy implies that an organization is learning what works in practice. Given today’s world, I think emergent strategy is on the upswing. Here’s why.
But first, in the interest of transparency, I have worked closely with Henry co-directing and co-teaching on Leadership Programs at McGill, where we are both on the faculty, for more than a decade. In fact, many times, I have presented key parts of Porter’s ideas on strategy for a couple of hours and then Henry presents his ideas as a contrast to Michael’s. We started doing this tag team effort about 11 years ago and it has become increasingly easy for Henry to shoot me down in the last few years. And the executives in the class agree with Henry.
It seems the relatively stable world of (at least part of) my corporate career has gone the way of the dodo. At times, it seems the world‘s gone nuts. Let me count the ways: Japan, the PIGS, 9/11, Hurricane Katrina, SARS, the financial collapse of 2008 and 2009, the BP oil spill, and many more examples. As one writer put in it this weekend’sSunday New York Times, “For a moment, all the swans seemed black.” However, as my friend Dick Evans, ex-CEO of Alcan, pointed out that my memory was being a bit selective, as it was not only recently that stability seems to have gone out the window. He reminded me of the time he was stationed “in Africa experiencing 3 coups – and then back in the USA in the midst of the junk bond raiders, a wrenching manufacturing recession and the fall of the Iron Curtain – not to mention personally experiencing the Loma Prieta earthquake. All of these seemed pretty “black swanish” to me at the time!” Fair point, nevertheless, it seems that strategy has shifted in the last decade to where the planning school no longer has the street cred it once had. It is precisely because we cannot, try as we may, control the variables that factor into business decisions that Mintzberg’s emergent strategy is so useful.
Porter’s ideas are still relevant, my colleagues and I still teach them, so I still believe in them and when I talk to corporate CEOs they still use them as part of their strategy planning thinking. But they are getting a bit long in the tooth for today’s different world. Henry’s emergent strategy ideas simply seem to be more relevant to the world we live in today – they reflect the fact that our plans will fail. This is not to say that planning isn’t useful, but other than some long term technology plans, the day of the 5 year and even 2 year plans has faded and emergent strategy is the reality in most industries that I work with. You must be much more fleet of foot, strategic flexibility is what we are looking for in most industries. The boundaries are more fluid now. For many, albeit not all, knowing what industry you are in is not as clear cut as it once was. This makes industry analysis less easy. The value chain is now shared across firm boundaries and at times, in part, in common with competitors.
Though I think that Henry’s ideas have pulled ahead of Michael’s, I very much keep on an eye on Porter’s thinking. I interviewed him recently for a weekly videocast I do for the Globe and Mail, Canada’s National Newspaper, because his new ideas are very much current. Interestingly both Porter and Mintzberg started to put a great deal of their attention on Health Care about 8-10 years ago. They approach the topic differently. Porter is in the U.S. and Mintzberg in Canada, which have quite different health care systems, yet when I realized this it was clear signal to me that this is an area that I should pay attention to. The other thing Porter has been working on, Corporate Social Responsibility, suggests a fairly fundamental change in how corporate American runs itself. Meanwhile, Henry is working on Rebalancing Society…radical renewal beyond Smith and Marx.
So when it comes to Strategy I think Henry’s ideas are au courant. Yet when I consider their most recent respective work I see that they are looking at two not dissimilar topics, albeit in different ways. We are indeed fortunate that these two outstanding minds are still at it when many others are retired. Still two, too very much keep an eye on!