On Strategy, Implementation and Organization -- Michael Porter

Breaking the Code of Change II, Rotman School of Management, August 2-3, 2000

These participant's notes were created in real-time during the meeting, based on the speaker's presentation(s) and comments from the audience. These should not be viewed as official transcripts of the meeting, but only as an interpretation by a single individual. Lapses, grammatical errors, and typing mistakes may not have been corrected. Questions about content should be directed to the originator. These notes have been contributed by David Ing (daviding@systemicbusiness.org) at the IBM Advanced Business Institute ( http://www.ibm.com/abi).

Michael Porter, Harvard Business School

Have had many discussions with Chris Argyris.

Late entrant to the competition, thoughts on the way to a paper -- flexible in thinking, looking for thoughts.

Meeting's broad issue: how organizations change or don't change.

Implicit problem definition: organizations don't change enough.

In many markets, see a problem of competitive convergence: companies start to look more alike.

Initially, conclusion in strategy was that most strategic failure was due to the environment.

Start with a definition of strategy.

When strategy that way, everybody can agree on it, at that level.

Any definition of strategy must link and become anchored in performance (goal).

Most actionable, observable thing is in what companies actually do.

Raises capability, resources and competencies.

Clarify what we're having problems with companies transforming properly.

Issues with operational effectiveness, best practice improvement.

Can't rely on a definition of strategy that is just grand design.

(Working on a book, was shooting for millennium, but not done).

Five characteristics:

e.g. Neutrogena soap:

Next characteristic of a strategy:


How constant or changing should strategy be?

Question distinction between strategy and implementation:

Org effectiveness vs. strategy:

Problem of too much change or hard change.

Chandler et al. says set strategy, which determines structure, then get feedback.

Tell managers:

This suggests (in discussions with Chris Argyris) need for very deep dialogue in the creation of strategy.

CEO: people coming at you all of the time with proposals.

Question from Michael Beer: The desire to grow causes managers not to make choices: seduced into larger value.

Question: Companies don't have the right strategy, and then converge.

Comment from Mike Jensen: This is the best discussion of strategy he's heard. Distinguishes between OE and strategy. That which is undistinguished, runs us. This will have to separated in incentives and motivations. Will need to fire the HR department, because they don't distinguish.

Comment: The practice of strategy is a problem. There are few people at the top, and then it doesn't mean much to anyone below.

Comment: Institutional identity: creating identity around the firm, losing it around the profession.

Comment: Mobilization and campaigns -- what is the role of leaders. What is the nature of strategic conversations?

Question from Amy: The distinction between OE and strategy, e.g. Toyota's manufacturing system.

Question from Amy: Not only increasing price but decreasing price strategies?

Question: As opposed to moving strategy --> implementation line right (which is push), could move the line the other direction (which is pull).

Comment from Jan to Mike Jensen: Companies need to pursue both OE and strategy, but this isn't two direction

David Miron: When consultants get called into e-business strategy, have a number of different initiatives of which one is an e-business management system, which is a different way to go about this.

Cliff: Who caused Nortel to make the right-turn change to the Internet when Lucent didn't? Frequency of changes. How often does an organization really make a big change?

Discussant: Mike Moldveanu

Five step argument:

Comment from Chris Argyris: How would compose this as a proposition, so it would be disconfirmable? If they understand, will measures fall out? Pain avoidance mechanisms are difficult.

Comment from Larry: On pain avoidance, Archie Norman introduced a counter-structure, a separate organizational system, that he used to attack the organization with, mobilizing people in the trenches, with affective meetings where people can close to blows. "Walking the Plank". Case by Michael Beer on ASDA.

Comment: Trying to tie together. If there is convergence around strategy, this suggests a need for companies to select more differentiated strategies. However, differentiated strategies don't work unless there's fit, which is difficult in itself. NP-hard problems, rather than P-hard.

Roger Martin: Swedish psychologist: people prefer reliability (replicable over and over again) or validity (outcome they seek come true), and trade these off. A reliability person would love OE. Capital markets love reliable companies. Nortel has been hammered for every strategic change in capital markets, and then afterwards, they think that it's a good idea. Can't prove ex ante that these will be a good idea.

Russell: More strategic choice or less strategic choice?

Michael Jensen: Capital market efficiency doesn't mean that they're always right, but they're the best estimate. Problem is executives listen to what analysts (particularly sell-side) say on what the effect will be. Need to understand that for any courageous direction, the markets will react negatively. Analysts don't know what creates value, they just know how to measure it afterwards.

Michael Jensen: Can't have the same measurement system for a new strategy, where the new people aren't into the company, yet. For dot-coms, need to revised reward measures for people to creating things that the stock market is already set.

Chris Argyris: Clay Christensen wrote about disruptive innovations, and have tested it. Mike and Jan say that they've taught a course where they found it wasn't true. What's different.


Some content on this website may be subject to prior copyrights.
Please contact the author(s) prior to reproduction or further distribution of the materials.