What I Didn't Learn in Business School

1. Strategy consulting requires objectivity and independence

"Our job is to realize that people like Beckett may have stopped thinking about these issues too soon and to push them to think harder about alternatives."

Maintain perspective. Strategy consultants must remain objective and avoid being swayed by internal politics or preconceived notions. Their value comes from providing an independent, fact-based perspective to challenge assumptions and expand strategic thinking. This requires:

• Gathering data from multiple sources, not just accepting what's presented
• Questioning the motivations and incentives behind different viewpoints
• Pushing clients to consider alternatives beyond the status quo
• Developing recommendations based on rigorous analysis, not just confirming existing views

Consultants should strive to understand the client organization deeply while maintaining enough distance to see the big picture objectively. The goal is to spark new strategic thinking, not just validate current approaches.

2. Core competencies drive sustainable competitive advantage

"A firm's core competencies are those activities it engages in that (1) create economic value, (2) are rare among competitors, and (3) competitors find difficult or costly to imitate."

Identify key differentiators. Core competencies are the unique strengths that give a company sustainable competitive advantage. To leverage core competencies:

• Evaluate activities across the value chain to find sources of differentiation
• Assess whether competencies create value, are rare, and difficult to imitate
• Focus resources on developing and protecting core competencies
• Look for opportunities to apply core competencies in new markets/products

For HGS, Plastiwear technology could become a new core competency if developed and protected properly. The key is to build organizational capabilities around the technology that competitors can't easily replicate.

3. Effective strategy balances analysis with organizational realities

"Real-world strategy isn't about cracking the case."

Consider implementation. While rigorous analysis is critical, effective strategy must account for organizational dynamics and implementation challenges. Key considerations include:

• Stakeholder interests and potential resistance to change
• Organizational culture and decision-making processes
• Resource constraints and competing priorities
• Change management and communication needs

The strategy team had to balance their analytical recommendations with the political realities at HGS, including division interests and the CEO's predisposition. Strategies that look good on paper but ignore organizational factors are unlikely to succeed in practice.

4. Value chain analysis reveals strategic opportunities

"Evaluating any isolated stage of the Plastiwear value chain—like whether or not the retail shirt market was attractive—completely misses the point."

Examine the full chain. Analyzing the entire value chain, from raw materials to end customers, can reveal strategic options beyond the obvious. For Plastiwear, this meant:

• Considering opportunities in fiber/fabric manufacturing, not just end products
• Evaluating different business models (e.g. licensing vs. manufacturing)
• Identifying potential partners at different stages of the value chain
• Assessing where HGS could create and capture the most value

By looking holistically at the value chain, the team uncovered strategic options beyond just entering the retail shirt market. This broader perspective was critical for developing a comprehensive Plastiwear strategy.

5. Alliances and joint ventures can mitigate risk in new ventures

"This kind of JV creates real options for HGS—the option to expand and the option to exit—in the Plastiwear market."

Share risk and expertise. For HGS, a joint venture offered a way to enter fiber/fabric manufacturing while limiting downside risk and leveraging partner expertise. Benefits of this approach include:

• Sharing capital investment and financial risk
• Gaining access to complementary capabilities (e.g. manufacturing know-how)
• Creating flexibility to scale up or exit based on market response
• Maintaining some control over intellectual property

The JV recommendation balanced HGS's need to move quickly on Plastiwear with the reality that they lacked certain capabilities and wanted to limit risk exposure in an uncertain market.

6. Organizational structure impacts strategy implementation

"Plastiwear will be HGS's entry into the fiber and fabric industry. This industry is really different than the oil and gas and packaging industries—different chemistry, different suppliers, different manufacturing, different customers, different marketing."

Align structure to strategy. The team recommended creating a separate Plastiwear division to enable focus and new capabilities. Organizational considerations included:

• Isolating the new business from existing division politics/priorities
• Enabling a more entrepreneurial, risk-taking culture
• Attracting talent with relevant industry expertise
• Allowing for differentiated processes, metrics, and incentives

Trying to develop Plastiwear within existing divisions risked stifling innovation and limiting its potential. The new division structure aimed to give Plastiwear the autonomy and resources needed to succeed in a different industry.

7. Leadership alignment is critical for strategic change

"To me, Beckett is crucial. He runs the largest business unit and I assume has the CEO's ear."

Build coalitions. Implementing major strategic changes requires buy-in from key leaders. The team focused on:

• Identifying influential stakeholders (e.g. division heads, CFO)
• Understanding individual interests and potential objections
• Tailoring arguments to address specific concerns
• Giving preview presentations to build support before final recommendations

Gaining Beckett's support was seen as particularly critical given his influence and initial skepticism. The team carefully considered how to frame recommendations to align with his interests and mitigate perceived threats to his position.

8. Strategic decisions require balancing multiple stakeholder interests

"We've been in close touch, and we intend to highlight the aspects of our recommendations that align with earlier suggestions from Beckett and other HGS managers."

Navigate competing priorities. Major strategic decisions impact various stakeholders differently. The Plastiwear decision required balancing:

• Division interests (e.g. packaging's excess capacity vs. new division)
• Individual career concerns (e.g. Beckett's CEO aspirations)
• Shareholder expectations for growth and profitability
• Board oversight and risk tolerance
• R&D enthusiasm for new technology applications

The team's recommendations aimed to address key stakeholder concerns while still pushing HGS in a new strategic direction. This required carefully considering how different options would be perceived by various groups.

9. Effective consultants integrate analysis with client knowledge

"My value-add was that I could evaluate business alternatives independently and objectively, that I worked with a team of extremely smart people who could get access to a great deal of good information, and that we had the time to focus on the future of this company rather than being caught up in the day-to-day responsibilities of running it."

Combine perspectives. The best strategic recommendations leverage both consultant expertise and client knowledge. Key elements include:

• Rigorous external analysis and industry benchmarking
• Frameworks to structure strategic thinking (e.g. value chain, core competencies)
• Fresh perspective to challenge assumptions and status quo thinking
• Deep client engagement to understand context and constraints
• Synthesis of multiple data sources and viewpoints

The team's recommendations were stronger because they combined their analytical tools and external perspective with HGS's deep understanding of their business and industry.

10. Strategy implementation is an ongoing, iterative process

"Obviously, the details of how we'll move ahead require further deliberation."

Plan for evolution. While the board approved the overall Plastiwear strategy, successful implementation will require ongoing refinement. Next steps include:

• Developing detailed implementation plans and timelines
• Establishing clear metrics and milestones to track progress
• Creating processes to gather market feedback and adjust course
• Building capabilities to support the new strategy (e.g. hiring, training)
• Ongoing communication to maintain organizational alignment

The strategy team's work provides a foundation, but HGS leadership will need to continue evolving the strategy as they gain real-world experience with Plastiwear. Flexibility and learning orientation will be critical for long-term success.

Last updated: September 4, 2024