Book Review: The Lords of Strategy
OK, this isn’t a book review as much as it is a comparison of how the iterative and rapid “productization” of strategy closely parallels Agile methods of software development. But first, here’s an overview of a particularly good book – Walter Kiechel’s The Lords of Strategy. I flew through the book – not because I wanted it to end but because I couldn’t put it down. It’s an incredible history of the people, organizations and ideas that developed the concept of corporate strategy and it’s full of incredible facts and observations. Take for instance that the notion of strategy consulting as purveyed by the likes of BCG, Bain and McKinsey is only roughly 30 to 35 years old and that perhaps even more interestingly the notion that a company exists to create shareholder wealth is only about 30 years old. The book does a great job of explaining not only the history of the ideas behind strategy consulting, sometimes told alongside the biography of their inventors, but how those ideas affected the industry for better and for worse. Ultimately it describes how these ideas “quickened the pace of capitalism” though the reader is left with figuring out whether we are better or worse off for the change.
What struck me as particularly interesting in this book is the parallels one can draw between how corporate strategy (including the product and services surrounding it) developed and how Agile methods of solution development should work. The germinating idea behind strategy was the identification of the “experience curve” by the Boston Consulting Group. This curve identified through trend analysis that the longer and more experienced a company became, the lower its cost of producing a certain good or service. This notion, though flawed (experience alone isn’t what drives cost), came quickly and was brought to market quickly by BCG. In rapid fashion, the company built upon this to develop the growth-share matrix as its second “product” offering. Both of these ideas together led to a grouping of offerings that suggested companies take on debt, reduce costs, differentiate themselves on price and expand shareholder value. The success of BCG led to McKinsey joining the ranks of strategy consultants, Harvard Business School changing its curriculum (via Michael Porter who had now built his own strategy framework – the famous 5 Forces analysis) and created Bain and Company.
Key here is the evolutionary nature of strategy as a product. In the very early phases, the offerings were quite frankly wrong. We know now that the notion that companies differentiate themselves on price alone in every industry is flawed. But the firms and institutions that supported strategy as a product and intellectual endeavor did not try to offer the absolute best solution – they attempted to bring an appropriate solution to the market and then modify it from there. In effect, for the time, their solution was the minimum viable product. Did their approach work? Billions of dollars of consulting revenue and profits and billions in market value would argue it was an effective approach.
While these companies didn’t realize it at the time, they were in fact practicing agile development. They didn’t know end user requirements – how could they? The market wasn’t created yet. They created a quick offering and iterated upon it, simultaneously changing the market demand and adapting to both the shifting demand and their growing understanding of what strategy needed to become.
Where else might agile methods apply?