Perspectives on Strategy: From the Boston Consulting Group [Hardcover]

Don't buy this book unless it is for nostalgic reasons. As a guide for decision-making and policy-setting it is hopelessly outdated. Some of Hendersons statements, such as: "High margins and market share go together", send shivers down the back. Even some of the newer material, such as the article on Economic Value Added, is clearly in the wrong. And it almost totally misses out on what is today perhaps the most important perspective on corporate strategy: the focus on value, e.g. the linking of financial theory and corporate strategy.

The book is a collection of short essays by BCG founder Bruce Henderson, as well as by some other senior BCG staff on various consulting topics. The essays are part of the Perspectives series of articles regularly sent to senior management of large companies as a marketing instrument of BCG.

They tend to be relatively short (up to 1.200 words apparently) and most are now fairly dated. They are interesting material from a historical point of view, so that one can see how consulting thinking (of which BCG was a key player) developed over time. I also found the relative one-dimensionality quite interesting - namely the approaches are generally relatively simplistic and naturally lead to dire complications later on - i.e. each seems to have only a hammer as a tool so all problems must be treated as nails. While this approach is good for selling consulting, I'd be wary as a client. Basing corporate strategy on the outdated and relatively simplistic concepts presented herein would be dangerous to say the least.

I would truly hope that BCG thinking has evolved from this level in the years since the book was published (1998, although some pieces date back to the early 1970s) but judging by some more recent summaries of the consulting industry (The Management Myth: Why the Experts Keep Getting it Wrong is an excellent example, well worth reading) and own experience, it might not have done so.

What I also found shocking is the relatively cheap feel of the book, as if it was printed at home, as opposed to done professionally. In this respect some of the McKinsey & co. publications I have seen (such as Die smarte Revolution in der Automobilindustrie.: Das Auto der Zukunft - Optionen für Hersteller - Chancen für Zulieferer - different topic, same type of advertorial publication) are much more polished.

This book offers still another example of articles published years ago (in this instance, 1998) whose key insights remain relevant. It is dedicated to Bruce Doolin Henderson (1915-1992) who founded the Boston Consulting Group and served as its president and CEO for several decades. Henderson also wrote the introductory essay, "Strategic and Natural Competition," and a number of others throughout this anthology. Each of the articles appeared in BCG's "Perspectives" publication, and offers a concise analysis designed to help stimulate senior management thinking on a range of business topics. Henderson once observed that he wanted their impact to resemble "a punch between the eyes." The co-editors of Perspectives on Strategy are Carl Stern and George Stalk who also contribute articles.

It remains for each reader to select those articles of greatest interest and value to her or him. Here are excerpts from three I especially enjoyed:

"Companies like Wal-Mart, Honda, Canon, The Limited, or Banc One have learned this lesson [i.e. to identify and develop the hard-to-imitate organizational capabilities that distinguish a company from its competitors in the eyes of customers]. Their experience and that of other successful companies suggests four basic principles of capabilities-based competition:

"1. The building blocks of corporate strategy are not products and markets but business processes.

"2. Competitive success depends on transforming a company's key processes into strategic capabilities that consistently provide superior value to the customer.

"3. Companies create these capabilities by making strategic investments in a support infrastructure that links together and transcends traditional SBUs and functions.

"4. Because capabilities necessarily cross functions, the champion of a capabilities-based strategy is the CEO." (`Competing on Capabilities: The New Rules of Corporate Strategy,' George Stalk, Jr., Philip B. Evans, and Lawrence E. Shulman, 1992)

* * * * *

"Don't relay on asking customers what they want. They almost never really know. It's the rare individual who can predict his or her own behavior or understand the inchoate emotions that motivate action. And few customers can forecast the premium they'll be willing to pay for a unique new value proposition.

"What they can do is articulate their dissatisfactions. Let these dissatisfactions guide you to the most promising cells of the opportunity cube. What matters most are not so much the specific deficiencies of existing products as the broad customer dissatisfactions - for example, frustrations born of time scarcity, inconvenience, or unfulfilled yearnings for affiliation." (`From the Insight Out,' Michael J. Silverstein, 1995)

* * * * *

"Corporate strategy is more than the summation of individual business strategies. Corporate strategy must provide for tomorrow's success as well as today's. For this reason the corporate organization is different from each business organization [in that it] requires a unifying theme that highlights where the overall company is and what the next strategic challenge will be...

"Successful business units pass through four phases in their development toward maturity. [i.e. Creation in terms of finding the opportunity, Growth in terms of making it real, Advantage in terms of gaining/sustaining a competitive advantage, and Efficiency in terms of tying it down]. Each phase is fundamentally different from the others in orientation [and execution]." (`Sustained Success,' Alana J. Zakon and Richard K. Lochridge, 1984)

Although their publication dates may suggest that material provided in these and other articles is obsolete, in fact the key concepts are still relevant because their authors possess exceptional analytical skills as well as a broad base of real-world experience. I also appreciate their superb writing skills when providing a wealth of information and insights with commendable brevity. However, other readers may prefer the more recently published The Boston Consulting Group on Strategy co-edited by Carl Stern and Michael Deimler (2006).

Those who share my high regard for this volume are urged to check out two volumes in the "Harvard Business Review on..." series, on Strategy and on Advances in Strategy, as well as David Dranove and Sonia Marciano's Kellogg on Strategy, Wharton on Competitive Strategy co-edited by George S. Day and David J. Reibstein, and The INSEAD-Wharton Alliance on Globalizing: Strategies for Building Successful Global Businesses co-edited by Hubert Gatignon and John R. Kimberly.