The Lords of Strategy: The Secret Intellectual History of the New Corporate World
Walter Kiechel III
Harvard Business Press (2010)

A unique aristocracy of iconoclasts

Kiechel suggests that understanding what he calls the “strategy revolution” requires getting beyond three common beliefs: “The first is that at bottom, ideas don’t really matter much in business.” In fact, ideas that are sharp with a purpose to answer questions, solve problems, and facing challenges are essential. Another common belief to be overcome is that strategy has no intellectual history. In fact, “smart companies throughout history have had a sense of how they wanted to make money…What companies didn’t have before the strategy revolution was a way of systematically putting together all the elements that determined their corporate fate, in particular, the three Cs central to any good strategy: the company’s costs, especially costs relative to other companies; the definition of the markets the company served – its customers, in other words – and its position vis a vis competitors.” The third common belief to be overcome is that consultants are at best “hangers-on of only occasional, limited usefulness” or at worst “rapacious parasites whose slightest presence in the corporate body indicates gullibility, weakness, and insecurity on the par of its leadership.”

The “lords” to which the book’s title refers include Henderson, of course, as well as Bill Bain, Fred Gluck, and Michael Porter. Kiechel devotes a separate chapter to each and frequently refers to all of them throughout his lively narrative. Moreover, he also discusses the significance of several others who – to varying degree – also participated in the “invention” of corporate strategy. “This is a story not if paradigm shift, but of the bit-by-bit creation of the first comprehensive paradigm that pulled together all of the elements most vital for a company to take into account if it is to compete, win, and survive.” Given the number if different executives and academics involved in the process of introducing a new business discipline, should come as no surprise that that there have been – since 1963 when Henderson and his BCG associates launched the revolution – numerous and significant complications (and sometimes spirited disagreements) as to what organizational strategy is and isn’t, what it should and shouldn’t be expected to accomplish, how to measure its impact, and when to revise or replace it.

As Kiechel explains, “Implementation was not the only problem dogging the strategy revolution as it tried to consolidate its gains. The tools had to be continually sharpened, if not discarded altogether for something else, as began to become apparent in the 1970s and by the 1980s was glaringly obvious. The experience curve in particular needed reexamination. To their surprise, consultants were also discovering that there appeared to be industries for which low cost was no guarantee of competitive advantage. Enter the possibilities for ‘differentiation’.” (Page 185) Over time, academics and executives as well as consultants gave it intellectual structure, inclusive processes, systematic execution, reliable analytics and most important of all, clarity of purpose. The revolution continues to evolve.