Strategy as repetition?

In a recent HBR column, Director of Ashridge Strategic Management Centre at Ashridge Business School, Andrew Campbell claimed "The Basic Principles of Strategy Haven’t Changed in 30 Years." At one level, he makes a good point. Corporate executives can waste an awful lot of time attempting to formulate a new management theory only to discard it and approach strategy the same way as everybody else. But there are very real dangers, to which Campbell – in the commentary, at least – does not see fit to refer.

Campbell starts with a basic assumptions of finance – that if you want to exceed your cost of capital (or 'WACC'), you must earn higher returns than your competitors. Campbell's basic point is that competition falls either to price or to cost, unless you compete in an "unusually attractive sector." So far, so good.

The problem is not that Campbell is wrong, per se; rather that he omits a long list of qualifiers and other skills and practices needed to move a company to the right place. And, secondarily, that falling back on doing what you've always done tends to produce the same results or very similar ones; little changes.

Your challenge in the face of stiff competition is not to rewrite [Porter’s] theory, but to be creative about applying it.
— Andrew Campbell

In the last 30 years, the positioning (e.g. Porter) versus resource-based theory of firm (e.g.Hamel and Prahalad) debate has raged. Also, there have been extensive contributions from the strategy-as-process school of thought. Campbell is caught in the common MBA mindset: that we know how to do this stuff; just doing it diligently and all will be well.

Unfortunately, the last 30 years have also seen fundamental changes in the complexity of firms' strategic contexts as well as their operating environments. The firms that, within a strategic horizon, can exert one of Porter's five forces may not presently be visible. Technologies are altering not only products but supply chains and distribution chains immeasurably. And not all capital is the same; different firms have different portfolio objectives and will prefer different firms' presumed risk profiles almost 'idiosyncratically'. Different types of owners have different requirements for value creation and different horizons over which return will be expected (and, often, different exit objectives).

Essentially, Campbell's HBR commentary glosses over the differences in capital owners' risk preferences, the resource mix and competencies of the firm and the firm's strategic anticipation and resilience. Most tellingly, the "be creative about applying it" maxim usually gets lost in translation and comes out as "get another MBA-qualified strategy advisor to run you through the same process again without ever seriously questioning your assumptions." In short, his article adds little insight. I'd skip it.

View The Basic Principles of Strategy Haven’t Changed in 30 Years online