strategy, management creativity and corporate history

The beginning of any New Year inevitably encourages reflectionon the events and developments of the old one. As such, it is anatural and obvious opportunity to consider and comment onsome the managerial and intellectual contributions made instrategic management. There have been many fine and originalsubmissions to Strategic Change during the last twelve months,each adding something, however modest, to enhance ourunderstanding of markets, management, industries and contexts.

This occasion for historical reflection enables us, as practi-tioners, students and researchers of strategy, to form opinionson the value and worth of what has been written and stated bythose that we look to for the advance and development of thisfascinating, yet complex and demanding, subject.

From my perspective, much of what I have seen during thepast year has been principally concerned with solutions andadvice: how to manage better with greater employee involve-ment, add shareholder value, encourage innovation andimprove implementation — in effect, how to stay ahead ofthe pack and remain there. New management techniques, eachwith their own mnemonic, plus the methodology of the monthfrom the guru of the moment, are still in plentiful supply.

The search for sustainable competitive advantage is, for manycompanies, the holy grail of corporate development: theattainment of a market position secure enough to make itdifficult, if not impossible, for external forces to displace them.Despite the many advances made during the last year or so onhow an organisation acquires and retains a sustainable position,there is an increasing need to focus on management creativityand corporate history as fundamental ingredients in shapingand sustaining advantage.

Strategy,managementcreativity andcorporate history

Editorial

Strat. Change 10: 1 – 4 (2001) Strategic Change

Copyright # 2001 John Wiley & Sons, Ltd. Strategic Change, Jan–Feb 2001

Management creativity

It is apparent that at least three things are rapidly becomingcommodities in business.

1. Information. The analysis of information will not by itselfcreate the new ideas and innovations that constitute theproducts and services of tomorrow: it will only identify ideasalready in existence. Management needs to have surfaced anidea and identified an opportunity before it can evaluate itsmarket potential and estimate its commercial return.

2. Competence. Most companies aspire to be competent as aminimum operating condition. If the management of anorganisation is crafting its strategy on the premise that itschances will be improved by its competitors being moreincompetent than itself, then that is a fragile base forsurvival.

3. State-of-the-art technology. Improved technology is impor-tant but will not, by itself, create and deliver value. Manage-ment has to marshal its creativity and design value conceptsand offerings that embrace the technology presently avail-able. This offers a huge opportunity for innovation, a subjectthat is the theme of the next issue of this Journal.Technological developments require expensive researchand development, sometimes with the possibility of mini-mum reward for some years to come. However, a valueconcept with substantial commercial possibilities can becreated in the mind of a lone entrepreneur, which has beenhappening with many Internet companies.

Creativity then is the new focus, not knowledge. Newthinking is required. Much of the thinking has been principallyconcerned with recognising standard situations and applyingstandard responses. This is the posture that is driven byanalysis, judgement and argument. Attention needs to be paidto what Edward de Bono refers to as What can be thinking. Thismeans constructive thinking, creative thinking and designthinking. In their deliberations over strategy and positioning,many management teams seek to solve their problems byanalysing them, identifying the cause and then removing it. Thisworks well in many cases but in some the cause cannot beidentified, or there are too many causes to be removed. In othersituations, human behaviour is the cause and cannot and willnot be removed. Management is impotent in such cases, asfurther analysis will not help the situation. What is needed is afresh approach and a way forward leaving the cause in place.

Strategists and managers want to be creative but often fail tounderstand its constituent ingredients. Creativity involves skillsthat can be learned and developed, which depend as much onthe systematic application of formal tools as on the expenditure

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of management inspiration. Passive information systems rarelyfacilitate creativity. It is when organisations invest in active self-organising systems that establish asymmetric patterns thatchallenge orthodox thinking and responses that creativitybegins to surface.

Organisations need an approach to the concepts of researchand development as much a proficiency in the technicaladvances. In fact, the first requirement is greater. A single newidea can double the profits of many companies (e.g. HewlettPackard, Intel, The Gap, Cisco Systems and 3M) or provide thebasis for an entirely new one (e.g. Bookham Technology,Powderject and Dataworkforce). Innovation is no longer aperipheral matter or the icing on the cake. Innovation is a keyingredient, without which there will be no cake tomorrow.Change is not a comfortable fit with existing paradigms but adetermined step forward to embrace new ones.

Corporate history

By its very nature, strategy is focused on the future, but mostgood strategies pay attention to, and are well grounded in, thelessons of the past. Those individuals engaged in strategydevelopment benefit from an understanding of three kinds ofhistory.

1. History of the firm. Organisational competencies are invari-ably rooted in history; in order to develop them further, thehistorical development of the business needs to be under-stood. The lack of honest and critical assessment of thecurrent realities of many organisations is due in no smallpart to the deliberate fudging of corporate history and/or theinability to see beyond the established patterns and methodsof doing business. Many of the problems facing Marks &Spencer fall into this category. Conversely, the ability torecognise and accommodate this is the cornerstone of theturnaround now in place at J. Sainsbury.

2. History of the industry in which the firm competes. Part ofthe craft of strategy development is to understand thedynamics of the industry well enough to create one ormore scenarios of its future. Winston Churchill famouslystated that ‘The farther back you look, the farther forwardyou are likely to see’. This is not to say that the strategist ismerely required to extrapolate the current trends into thefuture. Unless the past is studied conscientiously, manage-ment is unlikely to extend its vision to the future. However,there is a warning to be sounded here. The rate and pace ofchange in some markets (notably Internet technologies andE-commerce) means that there are innovative and dynamicorganisations that are shaping their industry in tandem with

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their own corporate development. After five years trading, itis still not clear whether Amazon.com has any enduringstrengths beyond its reputation and its capabilities in on-linecommerce and distribution. It has certainly gained marketpresence, but it has only recently started to make any profitfrom selling books. Similarly, Lastminute.com have recentlyannounced record trading losses despite their claims to beon target for future profits and the market leader in theirsector.

3. Personal history of the organisation’s leadership. It hasbeen argued in this Journal and elsewhere that one of thereal aims of effective strategy and planning is to shape themental models and perspectives that leaders carry aroundwith them. To achieve that effectively, it is vital to under-stand how the current leaders think and to know theirpreferred positions. An understanding of how the ChiefExecutive Officer and the Chairman think as individuals isessential if new positions and strategic alternatives are to beaccommodated and accepted, especially if what is beingadvocated is something with which they do not naturallyagree.

A final point on history worth stating here is that forgetting isoften more important that remembering. The material thatis never remembered in the first place actually harms us lessthan the stuff that is remembered but no longer valid. A study ofthe history of many companies will almost surely identify anumber of accepted truths that are best forgotten. Manysuccessful organisations stay ahead of the game by challengingtruths and assumptions that were no longer valid.

Graham BeaverEditor

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strategy, management creativity and corporate history

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