The Secret Origins of Corporate Strategy

09-07-22 Walter KeichelHere is a brief excerpt from an interview of Walter Kiechel, former managing editor at Fortune magazine and author of The Lords of Strategy: The Secret Intellectual History of the New Corporate World. It was conducted by Sarah Green, Senior Associate Editor at Harvard Business Review. To read the complete interview, please click here.

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Green: Welcome to the Harvard Business Review IdeaCast. I’m Sarah Green, and I’m joined today by Walter Kiechel, author of The Lords Of Strategy: The Secret Intellectual History of the New Corporate World.

Walter, thanks so much for talking with us today.

Kiechel: Good to be with you, Sarah.

Green: So, The Lords of Strategy of the title are often from consulting or academic backgrounds. And I think to a lot of business people, what many academics call practitioners somewhat quaintly, there’s that open question about whether these kinds of thought leaders really add value to a business. But you seem to be arguing that they’ve just been misunderstood.

Kiechel: Well, if you believe that it’s important for a business to have the facts, and if you believe that it’s important for a business to be able to recognize patterns and what’s happening to them and how their business works, then I think it’s pretty tough to dismiss the role the consultants can play in helping a company out.

Green: So, when you talk about the secret intellectual history, why isn’t this intellectual history more widely known?

Kiechel: There are three reasons why it’s a secret history. One is that, as you suggest in your first question, most people don’t know about the role of management consultants in coming up with a lot of the ideas that gave form to the strategy revolution.

Secondly, people don’t know about just what consultants do in general I think. Their role, I argued, pound for pound they’re probably the most influential industry in the US, and that they affect so many company’s destinies. And then third, just most people haven’t heard of the people who were the heroes of this book, people and Bruce Henderson.

Green: Well, let’s take a step back and maybe talk a little more about Bruce Henderson, because it’s hard to imagine a business world without strategy now. So take us back to a time before businesses had strategy. What did they have instead?

I know. People often think well, haven’t companies always had strategies since the days when they were putting together the pyramids or something like that? The argument of the book is that, no, the strategy, as we understand it now, is a framework that really was only developed in the ’60s and ’70s. For the first time companies had a way of thinking in a systematic and integrated way about their costs, their competitors, and their customers, and putting those all together. And it was people like Henderson who founded the Boston Consulting Group who first began to put forward those ideas and talk about the importance of integrating them.

Green: So how did we get from there to here?

Kiechel: Well, strategy has succeeded. Do you know any self-respecting companies these days who, if you ask the CEO do you have a strategy? She would say well, actually we don’t have one, we’re just thinking about that. No. All companies have strategies now. The strategies become installed, the concepts developed further, and it’s almost now it’s so common that it’s like speaking prose. We don’t think we’re doing that until somebody points it out– oh, by the way, you’re speaking prose.

Green So when you talk about Bruce Henderson sort of getting the ball rolling, who picked up the ball next?

Kiechel: Well, in some ways it was his best salesman, Bill Bain, who left the Boston Consulting Group, found his own firm, Bain & Company. And because they insisted on working over a period of months and years with companies, they could go and do the kind of analytics that I call greater Taylorism, looking at all their costs and competitors and customer information in a really detailed way. That kind of analytics is just as important as the concepts and strategy.

Green: So, strategy today in business academia is a pretty big deal. But you suggest in the book that maybe it wasn’t always that way. Tell us about that.

Kiechel: Well, only through the efforts of people like Micheal Porter at the Harvard Business School was strategy really introduced as an academic subject. There was a course at Harvard Business School called business policy before that, but they absolutely resisted a lot of the modern ideas that strategy brought with it, and it took Michael Porter really working a revolution first at HBS, and then a comparable thing happening at other business schools to get strategy installed as part of the curriculum.

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To read the complete interview, please click here.

To check out a video, please click here.

Walter Kiechel III is author of The Lords of Strategy. He received JD and MBA degrees from Harvard, and is a member of the New York bar. He got his undergraduate education at Harvard as well, where he was awarded an AB degree with honors and elected to Phi Beta Kappa. From 1968 to 1973, he served as an officer in the U.S. Navy, spending most of the time on sea duty aboard destroyers, an adventure he still relishes.

To read my review of The Lords of Strategy, please click here.

To read my interview of Kiechel, please click here.

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