ESCP Europe

I found this book to be particularly bad. The authors had some good insights like dont allocate resources across many opportunities; rather, pick your best ones and allocate them there. But most of the book focused on completely non-actionable information. For example, if you have the best endowment (i.e., you are much bigger than the competition, have low debt levels, and have historically spend a lot on R&D relative to your competitors) you are more likely to earn outsized returns for your shareholders (which is how they measure good strategy). Of course as of right now, there is nothing you can do about that. They do acknowledge that some of their advice is non-actionable, but seem to miss the boat that almost none of their advice is actionable. For example, outside of your endowment your trends also significantly impact your ability. Trends reflect how strongly your industry is growing and how strong your geography is growing (e.g., China vs the UK). Of course you could completely change industries or move to an area like China to benefit from better geographical trends, but it seems far fetched that anyone could do either of these things without significant capital and knowledge. The last area they discuss, moves, are what they believe are the items truly under your control. But the items they discuss in this section are almost as intractable as the others. Specifically, moves are programmatic M&A, dynamic allocation of resources, strong capex, strong productivity gains (i.e., overall margins and labor productivity), and improvements in differentiation (i.e., great gross margins deriving from being able to charge high prices because of a great product or generate outsized returns because you are operationally better than the competition). So basically 1) make good acquisitions regularly, 2) allocate resources regularly and to the best opportunities, 3) spend money on capex wisely, 4) make sure you continue to manage your overhead better than your competitors, and 5) build products that your customers like better than the competition even though you charge more than they do. If this all seems like well of course thats what I should do, but how do I do that thats what I thought by the end. Basically a lot of run your business better than the competition and you will end up earning more money than they do! I would not recommend this book if you are looking for practical ways to improve your strategy. Instead, check out Good Strategy, Bad Strategy which is significantly more useful and entertaining to read to boot.

TABLE OF CONTENTS Introduction: Welcome to the Strategy Room 1 You are not alone 2 The villain is the social side of strategy 4 Where is the outside view? 6 Making big moves happen 8 The journey ahead of us 9 1. Games in the Strategy Roomand Why People Play Them 13 The social side of strategy, in action 15 The dreaded hockey stick 17 Can we handle the truth? 20 Playing the inside game 21 Send in the guru 22 The wrong problem for human brains 23 The biased mind 25 Now add social dynamics to the mix 27 When the inside view remains unchecked 31 2. Opening the Windows of Your Strategy Room 37 The right yardstick 40 Your business lives on a Power Curve 42 What we see on the map 44 Why you are where you are 49 A fresh perspective with the outside view 53 3. Hockey Stick Dreams, Hairy Back Realities 57 The rise of the hairy back 58 Getting to yes 60 A haircut from finance 60 Bold forecasts 62 Timid plans 68 Corporate peanut butter 70 Shooting for the known 70 Real hockey sticks 72 4. What are the Odds? 75 The knowable probability of success 77 Flight paths of the upwardly mobile 80 A tale of three companies 83 Where are the odds in the strategy room? 85 The push for certainty 87 You are your numbers 89 5. How to Find the Real Hockey Stick 93 Whats different this time? 94 Check the facts 95 The odds that matter: Yours 96 The 10 variables that make the difference 99 Endowment 100 Trends 101 Moves 102 It all matters 103 The mobility dashboard 105 Know the odds 109 Is that all? 110 6. The Writing is on the Wall 115 A very different conversation about strategy 118 Tennis or badminton? 119 Industries are escalators 120 Change your industry or change industries 123 Consider changing locations, too 124 Go micro 125 The need for privileged insights 127 Acting on the writing on the wall 128 The four stages of a disruptive trend 130 Stage one: Signals amid the noise 132 Stage two: Change takes hold 134 Stage three: The inevitable transformation 136 The hardest stage 136 Stage four: Adapting to the new normal 139 7. Making the Right (big) Moves 143 Big moves are essential 146 Cornings story 150 Programmatic M&A and divestitures 150 Active resource re-allocation 152 To re-allocate, you have to de-allocate 156 Strong capital programs 156 Caution on capex 158 Distinctive productivity improvement 158 Running fast and getting nowhere 159 Differentiation improvement 162 Are you playing to your advantage? 165 Big moves make for good strategy 166 8. Eight Shifts to Unlock Strategy 173 From annual planning ... to strategy as a journey 175 From getting to yes ... to debating real alternatives 177 From peanut butter ... to picking your 1-in-10s 181 From approving budgets ... to making big moves 184 From budget inertia ... to liquid resources 188 From sandbagging ... to open risk portfolios 190 From you are your numbers ... to a holistic performance view 193 From long-range planning ... to forcing the first step 196 The package deal 198 Epilogue: New Life in the Strategy Room 201 Acknowledgments 205 Appendix 207 About our sample and method 207 A note on economic profi t and total returns to shareholders 209 How the odds look different from the top or bottom 209 Life at the top 211 Life at the bottom 211 Notes 215 Index 227.