2006: Contemporary Strategy Analysis 5/E & Cases 5/E, Book Review by Sheila Wright, R & D Management, Vol 36, No 5, pp 548-551

Book reviews The third aspect of the aesthetic dimension is the ability to lead mythologically. As a typology the authors present an overview of the Greek gods and their virtues. So, there is for instance the god Athena. She seems nearly perfect, except her lack of emotion that leaves her remote from the people who revere her. From her Olympian vantage point she has a strategic overview. At the same time she is not fully connected with every day life. According to the authors, for instance Shapiro, the CEO of Monsanto, can be identified as an Athena type. They illustrate this with several quotes. One of the citations of Shapiro that, to my opinion, perfectly fits to the Athena character, although the authors presented it in the context of ‘dramatizing leadership’, is the following: ‘We are entering a time of perhaps unprecedented discontinuity. Businesses grounded in the old model will become obsolete and die. At Monsanto we are trying to invent some new businesses around the concept of environmental sustainability. We may not yet know exactly what those businesses will look like, but we’re willing to place some bets because the world cannot avoid needing sustainability in the long run’ (HBR, 1997). This double use of a quote, in this case both in the context of ‘leading mythologically’ and ‘dramatizing leadership’, indicates the subjective character of the authors’ method of interpretation and labelling as well as the plural character of CEO’s opinions and behaviour.

This brings me to a critical remark next to my appreciation and overall positive evaluation of the book. The authors see both creativity (as represented by the artist) and ethics (as represented by the priest) as two aesthetic domains. I don’t see any reason for this conceptual combination of creativity and ethics under the heading of aesthetic leadership. Even more, it is rather confusing. It is a pity that ethics, seen as a subcategory of aesthetics, lacks the importance and attention that it serves and needs these days. That counts for western countries as well as for eastern European countries. A methodological point relates to the normative impact of the HBR-interviews. The authors discuss this already themselves, and they conclude as follows: ‘It seemed to us that, in the interviews with CEO’s, HBR names the gods and goddesses and produces, disseminates and protects their mythology. Furthermore, the theories, concepts, ideas, stories and heroes selected by HBR’s editors for inclusion in their magazine provide key elements of modern management mythology’. As a final conclusion I may say that the book reflects both a conceptual and practical interest regarding modern leadership. And, although it lacks its own sound and recent empirical basis, it is really worthwhile reading it.

Contemporary Strategy Analysis (5th ed.). Edited by Robert M. Grant, Blackwell Publishing, 2004, ISBN 1405119985 hardback, 1405119993 paperback, d65 hardback, d29 softback, pp 548.

complement the new fifth edition of the text. That is not to say that the ‘cases’ book cannot stand alone because it can. It just makes sense to take advantage of the author’s consideration and thought in selecting cases which illustrate the key points in his main text. I will confess to liking this text from the outset as its stated aim is ‘to equip managers and students of management with the core concepts, frameworks and techniques of strategic management which will allow them to make better decisions both for their companies and themselves’. In other words, this is not a theory text for theory sake and that can’t be a bad thing. Many writers are quite able to produce a text which is deep in obscure theory, intellectual gymnastics and mathematical equations to show off their misguided belief that numbers are the

Cases to Accompany Contemporary Strategy Analysis (5th ed.). Edited by Robert M. Grant, Blackwell Publishing, 2004, ISBN 14051 2408 3, d22.99, pp 377. This popular text has now moved into its fifth edition and has a companion text titled Cases to Accompany Contemporary Strategy Analysis. Previous readers of this latter text may recognise the format as Cases in Contemporary Strategy Analysis. The new title reflects a tighter fit with the text book and as such, its primary role is to

548

R&D Management 36, 5, 2006

OLAF FISSCHER University of Twente

r 2006 The Authors Journal compilation r 2006 Blackwell Publishing Ltd

Book reviews only thing which counts in business, but will all that make a difference to a firm’s performance? If not, then that produces a truly inaccessible text which is of no practical use to anyone. Texts like this abound in the strategic management field. Robert Grant has produced no such text and his effort to explain and analyse different approaches to differing business and market situations is to be applauded. Throughout the text the author draws attention to two driving forces evident in business today and they are competition and turbulence. This affects how a firm might be able to achieve competitive advantage and determines not only how many, but which, routes might be open for consideration. The link between strategy formulation and strategy implementation is afforded great attention which is not normally the case. Often, a text can run out of steam when it gets to the implementation stage. Of great concern these days are issues of ethics and standards of behaviour. As the author contends, this does not necessarily negate the view of strategy as a profit driver, but it does pay attention to the wider context within which strategy is implemented. The author himself does not promise significant originality in this text, but the application of concepts, frameworks, theories and ideas is well accomplished. This in itself makes this text stand out from the crowd. Part I introduces the concept of strategy and provides a good overview of the process. The author brings in such hoary chestnuts as: what is wrong with SWOT? The military tendency of most strategic language and the meaning of strategy, yet the emphasis is still current, with the goal being to understand how the historical concepts can aid strategic decision making. The evolution of strategic planning is traced from the 1950s which saw budgetary planning, financial budgeting and systems running the firm to the early 2000s where innovation, alliances, networks and co-operation strategies dominate the thinking. The delineation between corporate and business strategy is explained, as are the various levels within a firm which will affect the decision making powers of those concerned. A mature discussion ensues regarding how strategy is made. This is an interesting use of words and not one which is usually made. I am reminded of a very famous photographer who rather than talk about taking photographs talked about making photographs. The distinction was quite clear in his mind. The former was a mechanical act and the latter was more of a creative process. In that respect, the author is r 2006 The Authors Journal compilation r 2006 Blackwell Publishing Ltd

putting a marker down in the sand, in that his stance is one of creating strategy, not robotically engineering it. Part II concentrates on the tools of strategic analysis embracing, goals, values and performance measures within a firm, industry analysis, competitive analysis, resource/capability analysis alongside structure and management systems reviews. The author, having claimed nothing especially new in the text, does introduce additional concepts such as the balanced scorecard and also provides a comprehensive ‘value metrics’ framework which should keep the accountants happy! The various roles of how stakeholders, shareholders and accounting drive influences are identified and discussed reminding the reader that they simply cannot do just as they wish in this process. In most cases, there are the objectives of others to be taken into account. The usual frameworks such as industry analysis, segmentation analysis are debated fully, as is strategic group analysis, with game theory and competitor analysis given some attention within this section. One might argue that in today’s dynamic strategic decision making world, the latter two topics perhaps deserve a little more attention but then again, where do you stop? A similar focus is placed on resource and capability analysis, including knowledge management and organisational structure options. This gives a rounded approach to the ‘what do we want to do?’ and ‘can we do it?’ conundrum. Several applied examples are given in this section to illustrate the points made. Part III looks at the analysis of competitive advantage. This is perhaps the more predictable section of the book as the focus is on cost vs differentiation. No author in their right mind is going to leave this out, and ours is no exception, but I do wonder if it is really necessary to work through each and every possible method again, as well as the good old value chain? In any case, it is about time that somebody pointed out that differentiation is nothing more than segmentation on a grander scale. Such decisions, along with product range and customer service offerings which deliver such an advantage, generally lie within the realms of the marketing function, rather than the corporate strategy framework. Without an understanding and intimate knowledge of the finer points of the marketing strategy, such decisions, taken in isolation, could be positively dangerous to the firm’s health. Of significantly more value is Part IV where different industry contexts are identified and

R&D Management 36, 5, 2006

549

Book reviews evaluated. A thorough discussion on industry evolution is provided and attention is drawn to a plethora of influencing factors such as understanding demand growth along with the creation and diffusion of knowledge. More familiar concepts such as product differentiation, industry structure, international trade and alternative approaches to understanding the dynamics of an industry are provided. One of the more recent issues for managers in technology-based industries has been the management of innovation and the challenge of disruptive technology. This is handled in some detail with again, an entire chapter devoted to the profitability of innovation, the process and mechanisms for the effective protection of innovation. Risk management and alternative strategies to exploit innovation are discussed fully. The author refers to work done by Clayton Christenson in this respect and interested readers may enjoy his latest text ‘Seeing What’s Next’ which focuses on using theories of innovation to predict industry change. The timing of innovation and the persistent dilemma of whether to lead or follow is debated with some interesting examples of differing scenarios and the eventual outcome. It is interesting to see from this that followers appear to win more frequently than leaders so maybe there are lessons for us all here. The organisational characteristics of an ‘operating’ style are contrasted with an ‘innovating’ style of firm, which gives a good indication of the type of management style which is most effective in each case. It is commonly believed that most industries in the western world are in maturity, if not saturation with respect to demand and growth potential. As such, to have a chapter devoted on how to achieve competitive advantage in such circumstances is valuable. It also addresses strategies for declining markets, another tough nut to crack. It is in these circumstances that the finer points of strategy really start to take effect. Ways of achieving cost advantages are explained: economies of scale, low-cost inputs, low overhead management, asset surgery, product and market pruning. In a cost-driven industry, sometimes it is more profitable to de-market the product than to support non-economical segments. Altough decisions have to be made. Incremental and piecemeal production investment is needed to take full advantage of what might be a minimal ‘per unit’ saving but when multiplied across the entire production capacity, becomes a significant bottom line contribution. 550

R&D Management 36, 5, 2006

Corporate strategy and its multi-faceted agenda is addressed in Part V. The scope and requirements for vertical integration, value chains, cost/benefit analyses and relationship design are covered in much greater detail than normally seen. Consideration is also given on how the overall motives of growth, risk reduction and profitability can be achieved through diversification. A historical perspective is provided and comparisons are drawn between the diversification strategies of a sample of Fortune 500 and larger European firms. A useful road map of the evolution of management thinking and management practice in relation to diversification strategies makes for interesting reading. As you might expect, global strategies for the multinational corporation revisit the national influence on competitiveness debate and run through familiar models. Throughout this section, the emphasis is on relating location for competitive advantage and addressing the benefits for national differentiation. Options and patterns of how industries have internationalised, as is the need for consistency between strategy and national conditions as is the smart identification of a strong geographical location for production plants. The final two chapters are titled ‘managing the multi-business corporation’ and ‘current trends in strategic management’. As both these topics are likely to resonate with most readers, it a shame that they have been slotted at the end of the text rather than nearer the front. Within these final sections the author discusses, among other topics, portfolio planning, value creation, SBU strategy formulation, strategic management styles, corporate style typing, change drivers, competition and turbulence, downsizing, complexity theory, capability-based structures and new modes of leadership. It could safely be argued that all of these areas are the foundation for a robust strategy and should be analysed, addressed and incorporated into a robust strategy statement for the future rather than being examined after the event. It is just a matter of working through the process logically, and these final two chapters, although interesting and valuable in themselves, just seem to be in the wrong place in the interests of creating a natural flow to the thought process. Moving on to the cases book we find 17 highly relevant cases which illustrate the points being made in the text. Many are suitable for crossanalysis of themes and can be taught as integrated cases embracing several concepts. The focus r 2006 The Authors Journal compilation r 2006 Blackwell Publishing Ltd

Book reviews throughout though is decision making and not simply analysis for analysis sake. Being somewhat shorter than the typical Harvard Business School case which typically drowns the reader in data and red-herrings, these cases are entirely suitable reading for not only the busy executive, but the lecturer and student looking for an understanding of a concept in a time constrained environment. It is not necessary to have pages of data to pose a sensible question for debate, in fact one could argue that the mere presence of data focus the reader on precisely the wrong end of the decision making continuum. These cases hit the mark just right. The subject matter and company names will be familiar to most and it is good to see a mix of North American and European firms represented as well as firms of differing sizes. The line-up is inviting: Madonna  Laura Ashley Holding plc: The Battle for Survival  The US airline industry in 2004  Ford and the world automobile industry  Wal-Mart stores Inc., March 2004  Eastman Kodak: meeting the digital challenge  Organisational restructuring within the Royal Dutch/Shell group  Harley-Davidson Inc., February 2004  Online broking strategies: Surviving the downturn at Merrill Lynch, Charles Schwab and E* Trade  EMI and the CT scanner (A) and (B)  Rivalry in video games

r 2006 The Authors Journal compilation r 2006 Blackwell Publishing Ltd

 Eni SpA: Building an international energy major  Bird’s Eye and the UK frozen food industry  Euro Disney: from dream to nightmare 1987– 1994  Richard Branson and the Virgin group of companies in 2004  General Electric: life after Jack  AES Corporation: rewriting the rules of management The author can take credit for all but two and a half of these cases so to suggest that he might know how these fit with the text would potentially be a significant under-statement. The issues under consideration within the cases are complex yet interesting, but isn’t that a fair reflection of today’s business environment for most firms? The days of year-on-year steady sales growth with predictable customer behaviour and a nicely balanced supply:demand relationship are long gone. I commend both books to the interested executive, the lecturer and the student. There is much of value within and much to learn.

SHEILA WRIGHT Leicester Business School

Reference Clayton, C.M., Scott, A.D. and Erik, R.A. 2004 Seeing What’s Next, Harvard Business School Press, Boston, MA, USA, ISBN: 1-59139-185-7.

R&D Management 36, 5, 2006

551