The beating heart
of the enterprise
It’s the strategic
plan, stupid. Have
Leading people is exciting and
inspiring. Formulating strategy? Not
so much. Cynthia Montgomery, a
professor of business administration
at Harvard Business School, urges
CEOs to stop treating the strategic plan as a
dead, dusty document and instead make it the
beating heart of the enterprise. In her recent book,
The Strategist: Be the Leader Your Business Needs, Montgomery
imbues strategy with an existential quality: It is why companies
exist. Done right, it is why companies succeed. Editor-at-large Leigh
Buchanan spoke with Montgomery about why CEOs should learn
to love this misunderstood part of the job.
much are they willing to pay for that?
Another is something like, “We’re the
largest independent wholesaler in the
Midwest.” Well, who cares? A lot of people
have points of difference. But they’re not
points of difference that matter.
Exposure to a group of entrepreneurs
changed the way you had long thought
about strategy. Tell me about that.
For a long time, I had been teaching
strategy, mostly to managers in large
corporations, as a matter of frameworks
and analysis. Then I started working with
entrepreneurs. They talked, sometimes
very emotionally, about hard decisions
they had faced about whether to stay the
course or try to reinvent themselves. And
I realized, first of all, that the way we think
about strategy has become too mechanistic. And second, I realized how responsible these people felt for their strategies
because they felt responsible to their companies and the people working for them.
So I thought we should shift our emphasis
from the strategy to the leader responsible
for that strategy—the strategist.
the company’s identity will be, why it will
matter, and to whom. Just saying why you
are different isn’t enough if you’re not different in a way that matters to a customer.
Think of the distinction Peter Drucker
draws between doing things right and
doing the right thing. Strategy is about
doing the right thing. Here is an exercise.
Take a piece of paper and write down the
purpose of your business. Then describe
what the world is like with you and what
it would be like without you, and see
if there’s a meaningful difference.
What’s a good answer?
Say someone who grows pineapples can
show that the number of days from the
field to the store is fewer than his competitors’. Pineapples are a perishable good,
so that really matters. The customer will
come to him instead of the other guy.
Because he’s connecting the customer’s
needs with his offerings.
What are CEOs spending a lot of time
on at the expense of strategy?
Leadership has become all about people
and culture and these soft things. Yes,
it’s important to get buy-in, but buy-in
to what, exactly? People say, “Which
is more important: formulation of
strategy or execution?” That’s a stupid
question. What’s the point of having a
half-baked strategy executed well?
What is the strategist’s job?
The strategist’s job is to determine what
You’ve asked a lot of entrepreneurs what
makes their companies different. What
are some bad answers you’ve received?
“We’re a one-stop shop.” Usually the
leader thinks that’s more important than
the customers do. So I say, OK, if what
you have relative to competitors is that
you’ve put these things together, why is
that important to the customer, and how
But a lot of CEOs pin their successes
on their people, not their strategies.
I hate it in these annual reports where
they just say, “It’s our people.” That’s