A study of sixteen management fashions from over five decades suggested that over time they had become “broader-based but shorter-lived and more difficult for upper management to implement.”25 When a particular management technique was adopted, few effects on organizational performance could be discerned. Nonetheless, adoption did influence corporate reputation and even executive pay. The research strengthened “previous arguments that firms do not necessarily choose the technologically best or most efficient techniques but, instead, seek external legitimacy by adopting widely accepted and approved practices.”26 Other research suggested that the new ideas that seemed to catch on were considered to be capturing “the zeitgeist or ‘spirit of the times.’ ”27 An analysis of the conceptual development of the word strategy gathered ninety-one definitions for the period from 1962 to 2008. Looking at the way nouns were used, the authors observed an abrupt drop in planning, a rise and then steady decline in environment, with competition showing a steady increase. While the verb achieve was a constant, over time formulate gave way to relate.28
This interest in the role of fads and fashions in enterprises reflected awareness that strategy could not be considered as a product, something that in the form of an input might give direction to an organization or as an output that might order relations with the external environment, but as a continuing practice, the everyday work of many people (not just those at the top) within an organization. Strategy was not the property of organizations but something that people did. This led to the idea of “strategy as practice.” This was a natural continuation of the work of organizational sociologists and psychologists, such as Weick, with their interest in the disparate experiences and aspirations of individuals bound together by the demands of employment and developing social forms that were more or less creative or destructive, both for them and the broader purpose the organization was supposed to serve. It could bring together the macro-level of the institution with the micro-level of the individual with guidelines for observational research.29
One unfortunate consequence of the focus on strategy as practice was to encourage the use of the verb strategizing, meaning “to do strategy.” It also encouraged the idea that this was a ubiquitous activity, “to the extent that it is consequential for the strategic outcomes, directions, survival and competitive advantage of the firm.” This therefore involved multiple actors at all levels.30 Strategy “practitioners,” including managers and consultants, would draw on the established strategic “practices” particular to their organizations, turning these into a specific strategic “praxis” as they engaged with others to generate something called strategy, which in turn reshaped the organizational practices.31 This challenged the idea of strategy as a deliberate, top-down process that was the purview of senior management. As soon as questions of implementation came in, it was evident that micro-level decisions could influence the macro-level performance. This was at the heart of the familiar critique of the strategic planning model. That was not the same, however, as organizations effectively being managed from the bottom up. The decisions of senior managers, for better or worse, more or less influenced by what they understood to be the character of organizational practices, were still normally much more significant than those further down the hierarchy thanks to their reach and the resources at their disposal. Strategy as practice was important when it came to understanding organizations, but so too was strategy as power.
Back to the Narrative
What about strategy as “sensemaking”? If there was one persistent theme it was the attraction of a good story to help convey the most important points. This was evident in Taylor’s story of the hard-working Schmidt, Mayo’s of the Hawthorne experiment, or Barnard’s unemployed in New Jersey. It was behind the whole reliance on the case study method, underscoring the view that the best way to understand the challenges of management was to try to tell a tale around a specific set of circumstances. In much of the organizational literature, as a methodological contrast to rational actor theory, stories were elevated to a vital source of organizational communication and effectiveness.32 This could draw on psychological research which confirmed their importance as ways of explaining the past but also convincing people about future courses of action. With businesses no longer run on military lines and employees expecting to be persuaded rather than just instructed, managers were urged to use stories to help make their case. “Gone are the command-and-control days of executives managing by decree,” observed Jay Conger in 1998, for now businesses were run “largely by cross-functional teams of peers and populated by baby boomers and their Generation Y offspring, who show little tolerance for unquestioned authority.”33 “Stories are the latest fad to have hit the corporate communications industry,” observed columnist Lucy Kellaway. “Experts everywhere are waking up to the something that any child could tell them: that a story is easier to listen to and much easier to remember than a dry string of facts and propositions.”34
Stories made it possible to avoid abstractions, reduce complexity, and make vital points indirectly, stressing the importance of being alert to serendipitous opportunities, discontented staff, or the one small point that might ruin an otherwise brilliant campaign. Stories were to the fore in Weick’s account of sensemaking, allowing “the clarity achieved in one small area to be extended to and imposed on an adjacent area that is less orderly.”35 Peters and Waterman came to appreciate through successive briefings that their ideas worked with business audiences as stories but not as charts and diagrams. They described how their excellent companies were “unashamed collectors and tellers of stories … rich tapestries of anecdote, myth, and fairy tale.” Many business strategy books were essentially collections of stories, each intended to underline some general point.
Stories could come in all shapes and sizes: innocent and unstructured, as well as deliberate and purposeful; about technical specifications or perhaps the antics of a senior manager; elaborate or barely an anecdote; designed for regular re-telling or heard once and then forgotten; intended for a privileged few, and thus sharp and to the point, or knowingly prepared for multiple audiences, and so carefully ambiguous. Narratives could be found in minutes of meetings, presentations to clients, business plans, and even formulaic forms of analysis: in SWOT, analysis “opportunities” represented the “call,” whereas “threats” became antagonists. “As strengths are employed and weaknesses transformed, the protagonist becomes a hero.”
Eventually academics took notice, influenced by the “narrative turn,” so that stories and storytelling came to be identified not only as essential to effective leadership when formulating and implementing its strategy, but at the heart of all communication in an organization, from low-level grumbles and mid-level pep talks up to the high-level visions. Stories were told about senior managers to show how reasonable or out of touch they might be, of past events to show how the organization was once great or had an enduring culture, of the chance insight that led to an exciting new product or the poor calculation that led to a flop. By studying stories, the development and reinforcement of institutional cultures could be explored as well as the beliefs and assumptions that underpinned them. In the constant conversations that made up any organization, this culture could be changed and even subverted, as individuals on the basis of their own experiences told their own stories that qualified or challenged those of senior management, while senior management picked up cues that led them to reappraise key assumptions.36
The narrative field became a battleground. The political practices that we discussed in the last section, as parties sought to present themselves in the best possible light and their opponents in the worst, were evident in the business world as well. Rockefeller’s control of Standard Oil began to unravel as the trust’s dubious claims were undermined by a muckraking journalist. Not surprisingly, one of the greatest storytelling organizations of recent times, Walt Disney Studios, was adept at fabricating stories about its own history, “as artfully constructed and as careful
ly edited as their legendary characters.” Disney was acclaimed for the cartoon characters, such as Mickey Mouse, and the animation techniques. But this required denying others the credit they deserved. Disney’s creativity was played up and his authoritarianism played down. His studios were organized, not at all uniquely, on Taylorist, paternalistic lines, yet employees were referred to as part of a family, an image that was put under strain as union disputes broke out in the 1940s.37 This opened up the basic paradox of stories: they might have great explanatory power and be the most natural form of communication, but that could be at the expense of reinforcing explanations that suited those best able to control the means of communication while making it difficult to mount a challenge. Even the best and most liberating stories could be wide of the mark or else so ambiguous that the intended message was lost. The accomplished storyteller might derive an inspirational message from the mundane, but the inspiration could soon fade should the reality turn out to be more tedious.
The more academic business strategists tended to use their stories largely for illustration, selecting cases which made their points without always asking whether there were comparable cases where the outcomes had been quite different, or whether the same players would always get the same results by employing the approved strategic practices in slightly different circumstances. Sometimes the stories were not only selected carefully, but their telling was also highly contrived. We have seen how those of Taylor, Mayo, and Barnard were embellished. Weick’s favorite story involved an incident during military maneuvers in Switzerland, when a small unit had got lost in bitterly cold weather and was feared lost. The unit eventually returned and the young lieutenant in charge was asked how they had made their way back. Though they had assumed they would die, they had gotten back by means of a map one of the men had in his pocket by which they were able to get their bearings. When the map was examined, however, it turned out not to be a map of the Alps but of the Pyrenees.38 The strategic lesson was that with a map the unit calmed down and took action, which led to the conclusion that “when you are lost, any map will do!”39 But luck would also have been required, as there are not many routes out of the Alps. Unfortunately, there was also no way of knowing whether the story was true or not. Weick received it via the Czech poet Miroslav Holub based on an anecdote told to him from the Second World War.40
Consider another of Mintzberg’s favorite stories, as narrated by Richard Pascale, who we last met working for McKinsey’s researching Japanese industrial success. Between 1958 and 1974, the American motorcycle market doubled but the British share shrank from 11 percent to 1 percent. Japan gained 87 percent of the new market, with Honda alone accounting for 43 percent. Pascale challenged the established explanation for Honda’s successful entry into the American market in 1959, which stressed issues of price and volume. A much more intriguing story that highlighted “miscalculation, serendipity, and organizational learning” had been missed. When Honda sent its marketing team to the United States, the intention had been to compete with midsized bikes, but Honda struggled to find dealers and was plagued by technical problems. Then they received inquiries about the small 50cc SuperCubs they were using for their own transport. So they sold them instead. The moral of the story, according to Pascale, was that over-rational explanations, assuming that what happened was intended, could result in missing the most important reasons for a marketing success. Rather than a determined, long-term perspective, he pointed to the ability of an organization to learn from experience and show agility in the face of unexpected opportunities.41 This lesson was picked up enthusiastically by Mintzberg, who referred to it regularly as he emphasized the importance of emergent strategies. He used it to show that the managers made every mistake in this case, except to learn when the market told them they were going wrong.42 He described Pascale’s article as the most influential in the management literature. Other writers have developed this “lesson” further to turn it into a story about how lowly employees can transform a strategy. Out of this single case study, a series of general propositions were developed about learning organizations.
This was not the only use made of the Honda story. This was one of the great Japanese success stories, from the company’s formation in 1948 to becoming the world’s largest manufacturer of motorcycles and an effective manufacturer of cars by 1964. It fascinated business strategists as a source of lessons for American companies. Andrew Mair warned, however, of the perils of extracting one episode, often imperfectly understood, and drawing large conclusions. For example, Honda had always intended to sell the SuperCub in the United States. This bike made up a quarter of those sent with the American team. The company had, however, supposed that it would first have to prove the worth of its bikes against larger models (which is why they put an emphasis on racing). The error was in not realizing that the American market was actually going to be similar to the Japanese. At any rate, sales collapsed in the late 1960s, and then Honda did have to rely on the larger bikes it had always expected would be the key to its American success. In practice, Honda’s strategy followed the experience already successfully followed in Japan—it was not a leap in the dark.43
Its experience up to this point had demonstrated the importance of ruthless management and robust organization. The postwar Japanese market for motorcycles was huge because public transport could barely cope and gasoline supplies were limited. Unlike other industrial sectors, this one was barely regulated, resulting in something of a Darwinian struggle for survival. During the 1950s there were some two hundred companies competing for this market in what was known as the “motorcycle wars.” This was a time when “doing business was a turbulent and hazardous pursuit involving all manner of lucrative opportunities and nasty surprises.”44 When the wars were over, four companies were left (Yamaha, Suzuki, Kawasaki, and Honda). Of these, Honda (formed in 1948) was the most prominent. Its success was due to a number of factors. It began with Soichiro Honda’s own engineering genius, combined with the financial acumen of his business manager, Takio Fujisawa. They had some wartime experience of mass production techniques and they understood the Toyota production model and the importance of supply chains. Their internal organization was very strong, with careful financial control and—particularly important—great effort put into developing their dealer network.
In the late 1950s, Honda overtook the previous domestic leader Tohatsu (which soon went bankrupt). As Honda then went on to car production, Yamaha caught up in market share and, believing its rival to be distracted, decided to build a brand new factory with the aim of becoming the market leader. Instead, Honda mounted a strong defense leading to a fierce battle between the two (known as the “H-Y war”) in 1981. Honda’s response was neither subtle nor indirect. According to Stalk, who made this clash a centerpiece of his analysis of Japanese competitiveness, this was launched with a war cry, “Yamaha wo tsubusu!” which he roughly translated as “We will crush, squash, butcher, slaughter, etc., Yamaha!” Honda cut prices and boosted advertising expenditures, and introduced a number of new products, so that having the most up-to-date motorcycle became a fashion necessity. Yamaha’s bikes were left looking “old, out-of-date, and unattractive” and demand for them dried up, leaving dealers stuck with old stock. Eventually Yamaha surrendered. Honda’s victory had come at a price but had deterred other competitors besides Yamaha. Stalk was most impressed by the way that Honda had accelerated its production cycles to head off the competition and made this the central lesson he drew for Americans. Although this was undoubtedly impressive, this focus played down the extent to which Honda’s strategy had been brutally attritional, with its price cuts and promotions.
Hamel and Prahalad also used Honda in 1994 as an example of exploiting core competence, mocking the experience curve, demonstrating great ambition and creativity in extracting maximum benefit from the mastery of the internal combustion engine (which allowed them to move successfully into a number of related production lines, from lawnmowers to tractors and m
arine engines), and enabling a challenge to Ferrari and Porsche in the high-end sports car market with the new NSX. They understood the needs of customers without following them slavishly. Yet as Mair reports, the NSX was a costly failure for Honda. This was not the result of only bad luck due to an appreciating currency undermining its competitiveness, but also the choice of market. The interest in sports cars was more a reflection of Honda’s culture than of its core competence and meant that it missed the developing American market in the 1990s for recreational vehicles and minivans. In other areas, a determination to make a technological breakthrough meant that they lacked a follow-on car when it was needed. More generally, the only serious diversity made possible by Honda’s engine technology was from motorcycles to cars. Other products remained a minor part of its portfolio. In fact, its strategy from the mid-1980s to the mid-1990s revealed a “narrow self-definition and a technological stubbornness” and so a lack of responsiveness to consumers.
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