“There is nothing so practical as a good theory.” It was during the 1940s that Kurt Lewin, the founder of social psychology research, pronounced these words that were to become so well-known to students and scholars in the social sciences. In 2012, another psychologist, Anthony G. Greenwald, professor at Washington University, reversed the quotation, declaring, “there is nothing so theoretical as a good method ”.1 Beyond their stylistic effect, these two quotations represent an effort to draw together theory, methods and practices.
This dual perspective has guided us in writing this book. For too long, those who produce theories in strategy and those who devise and implement strategy inside companies have either ignored or misunderstood one another. However, in the early days when company strategy emerged on the academic stage, nothing could have foreseen the slow but sure drifting apart of theory from practice.
This drift arose in the theoretical camp with the development of strategy as a specialised field in teaching and research. The quest for academic legitimacy led scholars to strive to build up a specific theoretical corpus for this field, borrowing freely from industrial organisation economics, the sociology of organisations and behavioural psychology. As a consequence, strategy gained in legitimacy, scientific rigor and academic influence. However, at the same time, it also drifted away from its original roots and ambition, which viewed strategy from a general approach that synthesized and encompassed the other management disciplines, and was directly linked to companies and their top managers. The fundamentals of strategy were incarnated by scholars who divided their time between teaching, publishing and consulting. This was the context that presided over the inception of strategy as an academic discipline in American business schools in the 1960s. This new discipline, described at the time as business policy, was supported notably by H. Igor Ansoff at Carnegie Mellon University and Edmund P. Learned, C. Roland Christensen, Kenneth R. Andrews and William D. Guth at Harvard Business School. Since then, the structure of teaching and research in strategy has been defined according to the dichotomy between strategic analysis (Learned, Christensen, Andrews and Guth) and strategic management (Ansoff ). In this business policy context of teaching and research, the strategy professor and the strategy consultant might well be one and the same person.
The theory-practice drift mentioned above was also observed for strategy practitioners. Indeed, CEOs, corporate executives in charge of strategy and strategy consultants all developed their own tools, without feeling the need to attach these to the theoretical corpus in vogue. In fact, the theory-practice drift occurred as a consequence of certain constraints weighing on strategy practitioners. First, these practitioners face short timeframes. They often have to renew their tools, adapting them to ever more complex company environments and following fashion effects that also impact on strategy. This short timeframe also explains the difficulty of simplifying ever more specialised and compartmentalised academic production to make it accessible to companies and managers. Second, practitioners rarely possess the codes that would allow them to demonstrate the practical value of academic research by transforming it into tools and methodologies directly applicable to the company context. Third, consultants have made a point of differentiating themselves through a certain form of opacity and agility in developing and using their tools and methodologies. Clayton M. Christensen , Dina Wang and Derek Van Bever , in their article published in 2013 in the Harvard Business Review, 2 underline this situation as something that is inherent to big strategy consulting firms. These authors show that solutions and recommendations for client companies are produced inside the “black box of the consulting room” (p. 108), without clients being able to access the process that leads to the production of solutions and recommendations. Thus, client companies are unable to easily appropriate the consulting deliverables because they lack a shared theoretical framework, if indeed one exists. Christensen , Wang and Van Bever then highlight consultants’ propensity to shift too easily from one “big idea” to another. This form of hyper-agility, imposed by the need to follow novel trends in strategy, prevents them from investigating the theoretical frameworks underlying emerging strategy tools. Finally, these consultants are obliged to propose in-house tools that ensure the legitimacy of their brand and secure their relationship with client companies, resulting in a plethora of tools for dealing with similar strategic phenomena and issues but using different analysis criteria. Thus, McKinsey , Arthur D. Little and the 1960 Boston Consulting Group matrices all assess the competitive position and attractiveness of the company’s strategic business units but use different perspectives and measures. Similarly, A. T. Kearney’s and the Boston Consulting Group’s profitable growth matrices analyse the company’s growth strategies but with different growth and profitability measures.
This book comes at a time when new business models are emerging in strategy consulting. The traditional consultant’s “solution shop” business model is no longer the only one available (see the article by Christensen , Wang and Van Bever for more details). This business model, which accounts for the success of large consulting firms such as Bain & Company , McKinsey or the Boston Consulting Group , was built on general strategy consulting that resembled a Swiss Army knife: it covered a wide range of strategy missions, relying on the renowned expertise of their consultants, obligation of means and high consulting fees. This “solution shop” business model was often implemented on one hand, by consulting firms specialised in devising and proposing strategy for client companies, and on the other, those specialised in accompanying and leading the strategic change.3
Three new business models have emerged recently. The “knowledge builder” business model charges client companies to access a network including market and competitor databases, industry experts, strategic intelligence technicians, and big data specialists. The added value of this service is found in the interfacing between the client and the different players producing the knowledge bases. Emblematic players of this new business model for strategy consulting are Gartner in technology (with GartnerG2 and Gartner Dataquest databases), IDC in strategic intelligence and IMS Health in pharmaceuticals. The “temporary expert agency” business model has developed as an extreme form of implementing and accompanying strategic recommendations. Here, consultants offer an ultra-customised, high-end service that usually spans an extended timeframe (from 6 months to 2 years). In practical terms, this business model generally places one or several senior consultants at the client company’s exclusive disposal. Missions have a strong operational emphasis with consultants fully embedded with the client company and its teams. In the simplest form of this business model, the consulting firm transfers a consultant who then takes on the role of transition manager to conduct post-acquisition integration, restructure a division or oversee the implementation of a joint venture . This consultant has a very specific profile: he/she is highly specialised in transition missions and has already successfully managed several similar operations in the past. For a client company that lacks such specialists inside its organisation, or which is embarking on restructuring, refocusing or external growth operations for the first time, the transition consultant-manager has high added value. In a more complex form of the “temporary expert agency” business model, the consulting firm can provide an entire multi-specialised management team and transfer it to the client company to staff its main operational and support functions. This temporary management team, or task force, is entrusted with full autonomy to explore and create a new business or rapidly launch a start-up for the client. All such ventures entail strategic opportunities and high growth and profit potential, but their implementation, future evolution and market and competitive context are highly uncertain. As George Stalk Jr. and Ashish Lyer, consultants at the Boston Consulting Group, have shown, the client company can use consultants to create a “temporary organisation” that is run as a “strategic option”.4 If the venture realises its full potential, the temporary organisation gives way to a permanent managerial structure and the client company can recruit permanent employees. If the venture turns out to be a failure, the temporary organisation can quickly be dissolved without engaging heavy bankruptcy procedures and avoiding high restructuring and layoff costs. Even if the consulting fees are high (costing from two to four times more than a permanent senior manager in the client company), the advantages in terms of flexibility, reversibility and uncertainty control, not to mention experiential learning and the appropriation of new capabilities, are incomparable for the client company.
Another business model has recently emerged as the consequence of strong pressure to reduce consulting fees. Described as a “consultant network,” this business model relies on freelance senior consultants specialised in one activity of the consulting value chain . These consultants are recruited occasionally by consulting firms or broker consultants in contact with the client company. The distinctive capability of broker consultants in this business model is made up of their network of independent, specialised consultants and their precise knowledge of each network consultant’s expertise; this means they can group them together intelligently whenever a new consulting mission is signed. These ephemeral and highly flexible consulting firms have greatly reduced fixed and administrative expenses, allowing them to charge lower fees on certain missions, extend their client base and specifically, reach small and medium enterprises (SMEs), which until now could not afford the services of large strategy consulting firms.
This book aims to rebuild bridges between the theoretical and practical fields of strategy. More specifically, our objective is to root the tools of strategic consulting into the corresponding theoretical corpus; we incorporate these tools into incremental sequences of analysis to produce value-added consulting methodologies. In this book, we present six consulting missions that correspond to strategic analysis, repositioning and growth issues that all CEOs and top managers face at one stage or another during their company’s lifecycle: Assessing the environment, defining a strategic positioning , choosing a growth strategy, expanding internationally, combining strategy and innovation or (re)designing the business model. Each type of mission corresponds to a chapter and each chapter is organised as follows:
- The consulting mission and its content;
- The theoretical background;
- The methodology and tools for the mission.
The six different consulting missions were chosen on the basis of our own experience in both strategic management consultancy and executive education programmes with senior executives from various companies and industries. Building on this experience, we have sought to present the best tools and methodologies from the most famous strategy consulting firms, while systematically underlining the theoretical background, appropriate context, mode of use, and potential limitations. To our knowledge, this book is the first to highlight the theoretical background to the methodologies and tools of strategic consulting, putting them into context. In this way, we hope to bring the theoretical corpus of strategy closer to its practical application inside companies.
The volume has two key intentions, one professional, the other pedagogical. On the professional level, it is aimed at company CEOs and top managers who seek a methodological guide to assessing, rethinking and redesigning their company strategy; it is also of use to consultants who wish to take on a complete methodology for the main strategic consulting missions and appropriate the theoretical background to better explain and justify their recommendations and deliverables. On the pedagogical level, this book is intended for students at the MBA, Masters or graduate levels who wish to acquire strategy consulting methodology to seek employment as consultants or want to use this methodology in their future managerial position. This pedagogical dimension is also relevant to consultants who today, besides their role as experts, have also become “knowledge disseminators” among their peers and clients. It is also of interest to CEOs and top executives who will find relevant contextual support to help them self-train in...