A few years back, I was in Hsinchu, Taiwan, (aka “Science City”) lecturing on technology strategies to 35 vice presidents and senior executives of one of the world’s largest and most prestigious Taiwanese high tech corporations. As we began to dig deeper into the true definition of “strategy,” a member of the audience asked for my view of the Harvard Business Review. He asked the question because we were discussing the difference between true strategy and what the business world usually passes off as strategy.
I immediately responded to the question by calling the Harvard Business Review a Trick-of-the-Month club. I explained that one month, HBR will say that the key to a company’s success is for it to totally focus on the customer. Two months later, the HBR will say that the key to success is to totally ignore the customer to avoid always being stuck in the present. In neither case does the HBR explain why the approach is sound, nor does the writer connect to any of HBR’s other previous “nuggets of wisdom.” I shared that I’ve noticed that in most cases, these “nuggets” are nothing more than isolated and superficial observations that HBR’s contributors and writers base upon fragmented, anecdotal information. HBR treats readers as nothing more than fat, dumb frogs willing to blindly jump from lily pad to lily pad, not caring that they have no ability to know which pad will be strong enough to support their hefty weight.
After I finished my answer, the entire room of white-shirted executives erupted in uncontrollable laughter. I was shocked and taken back because I didn’t think my answer was that funny, and from my experience, I thought I had just pointed out the obvious. On the next break, I pulled aside one of the executives whom I knew and asked him why that comment about HBR had gotten such a strong response. He smiled and said, “When we talk with American corporate executives about competitiveness and strategy, they tell us to faithfully read the Harvard Business Review. They act as if it is at the forefront of all the latest thinking and wisdom. But when we look at HBR, we see nothing more than a rambling bunch of disconnected tricks. And we are confused. You are the first American to actually state what we see. And you stated it as if it were obvious to everyone and no big deal. That is why your comment received such sincere laughter. You just confirmed what we all know.”
The reason Harvard Business Review can only address competitiveness and strategy, as a “bunch of disconnected tricks,” is that the foundational premise on which the publication addresses these two is incorrect. And it is not a matter of the premise needing updating to realign its focus (e.g., putting a higher priority on R&D) or to add another term (e.g., the gig economy). HBR’s entire premise is false, and we must discard it.
U.S. business schools share the premise that financial manipulation (i.e., finance-based planning) is the foundation for all decision-making for all functions within an organization private or public. In finance-based planning, the basis of all decision-making is the effective acquisition and utilization of funds — fund exploitation. In finance-based planning, the measure of success is how well the organization optimized fund exploitation to accomplish the objective. (The objective can be maximum profit or ROI, increased market share, or in the case of the military, a new tank.) But in all cases during the process, the bottom line question is, “How efficient are you or were you in your exploitation of the funds?” Organizations mistakenly either equate financial efficiency to competitiveness or ignore the need to be competitive.
The correct premise is that maneuvering technology to generate a competitive advantage is the foundation for all decision-making. How effectively an organization out-maneuvers the competition in the acquisition and application of the technology fully dictates the amount of other resources and how they must be utilized to generate a competitive advantage. The other resources include but are not limited to funds, manpower, natural resources, etc…
It is a fact that when dealing from the finance-based perspective, American companies see nothing more than an almost infinite number of disconnected market factors. As a result, the best that these companies can ever achieve from this view are fleeting insights on how some of these factors may correlate to support a competitive advantage. These “insights” mistakenly then become “principles,” and companies who elevate these “insights” erroneously refer to their new “principles” as “strategy.”
In contrast, the technology exploitation foundation (i.e., technology-based planning) abides by the laws of physics. The result is that it is a logically consistent, closed-set environment with no discontinuities.
Take the following simple example. Two young baseball players back years ago wanted to figure out how to hit one out of the park.
The first started observing some of the major league players who went long. He looked at the players’ weight, height, age, attitude, type of bat used, how their coach motivated them, if they used chewing tobacco and if so, what type, and their weight-training schedule. He then compared and contrasted what he observed, threw in a few statistics, and got some insights, (conventional U.S. business approach).
The second young player started with the laws of physics (e.g., Force = Mass x Acceleration, Torque = Moment Arm x Force) and used these laws to examine what he then knew to be the pertinent attributes to determine how players optimize all the variables at their disposal (according to the laws of physics) to generate maximum force at the correct angle and at the correct time.
After all their work, the first player determined that he must chew Red Man, weight train on Thursday nights, be 5′ 11.5″, weigh 195 lbs., and have a coach that hollers allot to be able to hit pitches out of the park.
The second player focused on skeletal alignment, strengthening the flexibility and power of the correct muscles groups, and keeping correct foot placement and weight distribution to generate maximum torque on the swing. Guess who knocked it over the back fence?
The bottom line is that if U.S. companies and America wants to be competitive and rebuild economic health, they must abandon finance-based planning and adopt technology-based planning.
They must move beyond a faulty, fragmented hit-and-miss approach with disconnected market factors that hope on a good day to deliver a competitive advantage in the marketplace and begin addressing the foundational structure — technology exploitation — that acts in a highly logical fashion and dictates how a competitive advantage can be won and lost.
History is written by the winners.