Here is a brief excerpt from an article about a unique gathering of strategists from academia, leading companies, and McKinsey. They debate the state of the discipline, with an emphasis on opportunities for innovation in a changing world. It was featured in the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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Over the last 50 years, the theory and practice of business strategy have taken a variety of twists and turns. In the 1960s, strategy was equated largely with corporate planning; in the 1970s, the emphasis switched to diversification and portfolio planning. The focus shifted to the economics of industry attractiveness and value chains in the 1980s, and the 1990s were characterized by a concern with core competencies. More recently, practitioners and academics alike have been grappling with the impact on strategy of rapid market and technological change, growing external risk, and the advent of big data.

What comes next? How relevant are existing frameworks and tools to the needs of leaders seeking to develop and implement winning strategies? And what should be the relative contributions of academics and practitioners to the evolution of the field? In March of this year, McKinsey Quarterly convened a unique group of experts (see sidebar “When theory met practice”), who brought competing and complementary perspectives to bear on these and related issues. What emerged was the sense of a field in flux, with enormous opportunities to generate fresh insights in a changing world, as well as some unfinished business to ensure that the human realities of strategic decision making receive sufficient emphasis.

“In theory there is no difference between theory and practice. In practice there is.” Yogi Berra

Here are highlights of the discussion, moderated by McKinsey Quarterly’s Allen Webb, among five practitioners, five business-school professors, and five current or former leaders of McKinsey’s Strategy Practice, including Fred Gluck, its founder.

Where have all the frameworks gone?

Professor Pankaj Ghemawat (IESE)

At the millennium, I wrote a piece on new management paradigms, which I referred to as Eureka and BOHICA. The latter term was popularized in business circles by John Micklethwait and Adrian Wooldridge at the Economist and stands for “bend over, here it comes again.” The reason for writing it was that there seemed to be a profusion of ideas about strategy that were new or at least claimed to be new. This situation seems to have changed drastically. For example, the management writer Richard Pascale supplied an amusing chart on the ebbs, flows, and residual impact of business ideas and fads for my original piece—but when I contacted him recently, he told me he had stopped updating the series a few years ago because activity had dropped off. Is that true and, if so, is it a matter for concern?

Professor Michael G. Jacobides (London Business School)

Yes, I think we may need new tools or frameworks. When the environment changes profoundly, the maps with which we navigate it may need to shift as well. For instance, from telco to healthcare to computers, sector boundaries are changing or dissolving, and new business models are redefining the competitive landscape. So tools such as Michael Porter’s five forces, created for a more stable, more easily definable world, don’t just lose their relevance—they become actively misleading.

Strategy tools are abstractions from reality that illuminate and identify some features and causal relations while simplifying or omitting others. So their usefulness depends on context, and their effectiveness changes with time. Consider, for instance, the financial crisis. Regulators were caught by surprise in 2008 because they failed to understand how much the financial sector had been transformed from a set of integrated institutions into a host of co-specialized firms that have divergent business models and are linked through the capital markets. Only now are we slowly updating our mental map of the sector and the tools we use to analyze it.

That said, I’d strike a slightly more optimistic note; I believe there’s scope to help people organize and categorize information without having their heads explode. And as a strategy professor, I can’t think of anything better than saying, “Let’s rethink these frameworks together with people who use them in their professional practice, and revise the strategy canon.”

Professor Robert Grant (Bocconi School of Management)

I disagree with the notion that the world is changing and that this has somehow made our established strategy tools obsolete. Most changes in the business environment have been in degree rather than kind: the speedier diffusion of technology, the growing intensity of competition as a result of internationalization, increased concern over business’s social and environmental responsibilities. Most of the core concepts and frameworks of strategy have not been devalued by change. A.G. Lafley and Roger Martin’s recent book, Playing to Win, builds upon the traditional notions that superior performance results from selecting attractive markets and establishing a competitive advantage within them.

What’s changed is not so much the environment as our empirical and theoretical knowledge about strategy. Our understanding of the experience curve has been augmented by deeper insights into the determinants of organizational learning. Our analysis of competition extends well beyond Porter’s five-forces framework, to recognize the role of complements, network externalities, and platforms. Our understanding of the benefits of strategic flexibility has been transformed by the analysis of real options. A major problem is that the theoretical and empirical research in strategy has moved so quickly, and over such a broad front, that its distillation into intuitive concepts and frameworks applicable to strategy-making processes of firms has lagged far behind.

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