Posted on January 2, 2009 by

Leading Insights from 2008

As we welcome in 2009 it is a great time to reflect on the latest performance and risk thinking from some leading management thinkers from the pages of Harvard Business Review and the Mckinsey quarterly.

Strategy & Performance Management

Can you say what your strategy is? Harvard Business Review

David J Collis and Michael G Rukstad

Can you summarise your company’s strategy in 35 words or less? Would your colleagues express it the same way? Very few executives can honestly say yes to those simple questions. The thing is, companies with a clear, concise strategy statement, one that employees can easily internalise and use as a guiding light–often turn out to be industry stars. In this article, Harvard Business School’s Collis and Rukstad provide a practical guide for crafting an effective strategy statement and include an in-depth example of how the St. Louis-based brokerage firm Edward Jones developed one that has generated success. Read more

The five competitive forces that shape strategy Harvard Business Review

Michael E Porter

In this article, Porter undertakes a thorough reaffirmation and extension of his classic work of strategy formulation, which includes substantial new sections showing how to put the five forces analysis into practice. Read more

Watch the interview

Related book

Competitive Strategy

Mastering the management system Harvard Business Review

Robert S Kaplan and David P Norton

Companies have always found it hard to balance pressing operational concerns with long-term strategic priorities. The tension is critical: World-class processes won’t lead to success without the right strategic direction, and the best strategy in the world will get nowhere without strong operations to execute it. In this article, Kaplan and Norton, explain how to effectively manage both strategy and operations by linking them tightly in a closed-loop management system. Read more

Related books

Execution Premium

Alignment

Strategy Maps

Strategy-Focused Organization

Balanced Scorecard

Strategy as a wicked problem Harvard Business Review

John C Camillus

In this article, Camillus, a professor at the Katz Graduate School of Business, explains how executives can tell if they’re dealing with a wicked strategy problem. In a 15-year study involving 22 companies, he identified five key criteria. If a problem involves many stakeholders with conflicting priorities; if its roots are tangled; if it changes with every attempt to address it; if you’ve never faced it. Read more

Lessons from the past for financial services Harvard Business Review

Matthew Sebag-Montefiore and Nuno Monteiro

A financial services firm’s ability to recover from an industry downturn depends not only on how it reacts during the slowdown but also on its state of readiness when the crunch hits. Here’s what to do both before and during the unwelcome event. Read more

From lean to lasting: Making operational improvements stick Mckinsey quarterly

For companies seeking large-scale operational improvements, all roads lead to Toyota. Each year, thousands of executives tour its facilities to learn how lean production—the operational and organizational innovations the automaker pioneered—might help their own companies. During the past 20 years, lean has become, along with Six Sigma, one of two kinds of prominent performance-improvement programs adopted by global manufacturing and, more recently, service companies. Recently, organizations as diverse as steelmakers, insurance companies, and public-sector agencies have benefited from “leaning” their operations with Toyota’s now-classic approach: eliminating waste, variability, and inflexibility.

Yet in our experience, organizations overlook up to half of the potential savings when they implement or expand operational-improvement programs inspired by lean, Six Sigma, or both. Read more

Adapting lean for customized bank processes Mckinsey quarterly

Many corporate banks and other financial institutions routinely apply the management principles of lean manufacturing to help standardize straightforward business procedures, such as the straight-through processing of securities transactions. The advantages include speedier operations, lower costs, better products, and an improved customer experience. But many of an institution’s most valuable activities involve dozens or even hundreds of steps that may require sophisticated customization and expert judgment from numerous sources—and thus resist standardization.

This was the problem facing a specialized commercial lender that had expanded its sales force to fuel rising levels of business from several industries but couldn’t keep pace with demand for new loans. Read more

A fresh look at strategy under uncertainty Mckinsey quarterly

Although even the highest levels of uncertainty don’t prevent businesses from analyzing predicaments rationally, says author Hugh Courtney, the financial crisis has shown us the limits of our tools—and minds. Read more

Financial crisis and reform: Looking back for clues to the future Mckinsey quarterly

For the many global companies affected by the US business climate, an obvious question in the wake of the financial system’s recent upheaval is the likelihood and extent of impending changes in the country’s regulatory, political, and structural environment. History provides three clear lessons: first, reforms followed every major US financial crisis that led to an economic downturn. Second, the length and severity of the postcrisis recession have historically been approximately proportional to the degree of change that follows the recession. Finally, the resulting shifts commonly extend well beyond the financial-services sector. Read more

Identifying the savings opportunities at investment banks Mckinsey quarterly

Reductions in workforce numbers have been Wall Street’s inevitable, and understandable, response to the global credit crunch. But new McKinsey research shows that the untapped opportunity to cut noncompensation costs is also considerable—possibly amounting to more than $2 billion in recurring savings for some investment banks. What’s more, our analysis suggests that executives can embark on this additional belt tightening without harming a bank’s culture and morale. Read more

How chief strategy officers think about their role: A roundtable Mckinsey quarterly

As companies struggle to meet the challenges of today’s complex business environment by developing short- and long-term strategic visions, the role of chief strategy officer (CSO) has become increasingly prominent. Although CEOs remain ultimately responsible for strategic decisions, they regularly look to the CSO to craft and implement successful strategies. But the role’s relative novelty raises critical questions about its function and the degree of ownership it carries. Read more

Risk

Reduce the risk of failed financial judgements Harvard Business Review

Because subjective judgment is increasingly required to make projections of corporate financial performance, directors and senior executives face a growing risk that their companies will produce inaccurate or misleading statements. What’s more, the accountants and auditors responsible for monitoring these estimates are limited in their ability to mitigate that risk. The potential results of failures of judgment include very unhappy shareholders and directors, a precipitous decline in stock price, and the dismissal of top executives. Read more

The new arsenal of risk management Harvard Business Review

Discussions of risk usually come to the forefront in times of crisis but then recede as normalcy returns. As we write, the global banking system is facing a major credit and liquidity crisis. Losses from subprime mortgages, structured investment vehicles, and “covenant lite” loans are creating a credit crunch that may in turn trigger a global slowdown. In the past year major financial institutions have written off nearly $400 billion, and central banks around the world have initiated emergency measures to restore liquidity. Several other crises have occurred within memory: the U.S. savings-and-loan collapse in the 1980s and 1990s, Black Monday in 1987, the Russian debt default and the related dive of Long-Term Capital Management in 1998, the dot-com bust of 2000, and the Enron-led merchant-power collapse of 2001.

The resounding message is that risk is always with us. Executives need to wake up to that fact. Unfortunately, a growing emphasis on mathematical modeling has rendered much of the risk-management debate and research incomprehensible to those outside the finance function and the financial services industry. As a result, many corporate managers have shied away from the powerful risk-management tools. Read more

Owning the right risks Harvard Business Review

Many fundamental operational, financial, marketing, and strategic choices involve the kind of rigorous quantification of risk that has taken hold in the financial markets. Should we pursue this M&A deal? How advantageous would it be if we became less vertically integrated? Should we manufacture or outsource? How might demand for a product change according to a competitor’s behavior—or slow if China’s economy deteriorates?

The answers to these and similar questions will increasingly depend on whether or not a company is the natural owner of the risks involved. Tools and markets for risk transfer and insurance now allow companies to identify, value, and trade many of the risks they previously shouldered themselves. Read more

Taking improbable events seriously: An interview with the author of The Black Swan Mckinsey quarterly

The author of The Black Swan explains why the rarity and unpredictability of certain events does not make them unimportant. Read more

Visit Nassim Nicholas Taleb’s website

Related books

The Black Swan

Fooled by Randomness

Culture and change

The secrets to successful strategy execution Harvard Business Review

Gary L Neilson, Karla L Martin, and Elizabeth Powers

Research shows that enterprises fail at execution because they go straight to structural reorganization and neglect the most powerful drivers of effectiveness—decision rights and information flow. Read more

When winning is everything Harvard Business Review

Deepak Malhotra, Gillian Ku, and J Keith Murnighan

The primal urge to win often overwhelms rational decision making. Here’s how to tame competitive arousal, head off emotionally charged competitions, or manage them to your advantage. Read more

Choosing strategies for change Harvard Business Review

John P Kotter and Leonard A Schlesinger

In a rapidly changing world managers need to increase their skills at diagnosing resistance to change and at choosing the appropriate methods for overcoming it. Read more

Related books

Heart of change

Leading change

A sense of urgency

Our iceberg is melting

Creating organizational transformations: McKinsey Global Survey Results Mckinsey quarterly

Organizations need to change constantly, for all kinds of reasons, but achieving a true step change in performance is rare. Indeed, in a recent McKinsey survey of executives from around the world,1 only a third say that their organizations succeeded in doing so. Read more

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