Lords of Strategy by Walter

¶ … Lords of Strategy by Walter Kiechel (pp. 171-254)

The Lords of Strategy by Walter Kiechel is an examination of how and American enterprise shifted from a philosophy of scientific management (what Kiechel calls 'Taylorism') to the current favored emphasis on external strategy. The work suggests that modern business underwent a fundamental paradigm shift, in addition to the small, more obvious paradigm shifts of different business 'fads.' In his chapter entitled "Struggling to make something actually happen" Kiechel puts forth the idea that while the first era of strategy management theory took place in the academy, it was not until the 1980s that applications such as BCG (a matrix model that prioritized certain aspects of the product lifecycle) took hold in practice.

The chapter "Breaking the world into finer pieces" provides a humorous, occasionally irreverent look at the development of 'business-speak' or managerial literature promising profitability to companies. The author has a great deal of 'fun' mocking people's love of constructing visuals and PowerPoints of Porter's models of analysis, particularly his value chain. However, Kiechel ultimately has great praise for Porter and Porter's ability to break down strategy in a comprehensible manner. Porter's key insight was the importance of differentiation as a strategic tool. Before, selling items at low cost was thought to give an automatic advantage to businesses, despite the fact that in the 'real world' this was not always the case. Offering specialized goods was another way to 'stand out' in the marketplace. Some businesses thrived parlaying a 'boutique' product that consumers could not get anywhere else while other companies based their profits off of volume alone. The BCG matrix was also refined to allow for different strategies applicable for different products, in different marketplaces.

The chapter "The wizards of finance declare strategy's true purpose," details how management strategy grew more technical in nature in the wake of the leveraged buyout movement (LBO), and the end of the dominance of 'mom and pop' investors in major segments of the financial industry. VBM (value-based marketing) was the prominent trend, which stressed the need to sell off unprofitable 'turkeys' rather than fattening them up at the expense of more profitable businesses divisions. Even the stalwart company Coca-Cola embraced VBM and began selling off vast swaths of its least profitable enterprises. An alphabet soup of new concepts were created within the financial industry to strategize how to invest, when to acquire new assets, and when to sell off parts of the company to improve one's bottom line.