As recounted in ‘The Rise and Fall of Management’, from the earliest days of industrialisation down to the present day, perhaps one of the most striking step changes to take place has been the adoption of the strategic perspective. It was not till the mid 1960s that long range planning and what became known as strategic management received much overt attention. First in large companies, then among consultants and, finally, in academe, strategy became a dominant perspective, widely acknowledged as the lynch pin of management theory and practice.
Strategic thinking, however, has always been at the heart of business, right from the start. What about building the world’s first industrial scale silk mill as John Lombe did in Derby in 1717? He had to raise the funds, build and equip that first factory, produce unprecedented quantities of thread, at an acceptable price and quality for markets which had hitherto not existed, using workers who had no previous experience of factory work let alone silk production, and to do it all at a profit which ensured survival and long term prosperity. That whole process was somewhat strategic. And, it involved all of the management specialisms that were to emerge from the division of management labour: financial, technical, manufacturing and marketing.
Those early entrepreneurs and industrialists clearly thought and acted strategically, intent on protecting and developing the business organisations they created. And as they did so, they benefited other stakeholders in the business: customers, employees, shareholders, suppliers and the rest, providing employment and economic advantage for their local community and for the economy as a whole.
When, two and a half centuries later, the strategic perspective first emerged as an explicit sub-division of management, it was initially the concern of the accounting function and was based around long term projections of quantifiable items such as cash flow, profit and capital spend. In an era before much computerisation these processes were labour intensive and expensive. The advent of the early simplifying strategic models, such as Boston Consulting Group’s portfolio, streamlined the strategy process and reduced strategic decisions to varieties of buy, sell and hold. Under this influence, the top decision making mechanisms of large companies were focused on the possibility of making advantageous deals by selling ‘dog’ businesses, milking ‘cash cows’, investing in ‘stars’ and taking change decisions in regard to ‘problem children’.
Thus, the advent of the so called strategic perspective seduced top management from the former concern with customers and products, technologies and employees, to a focus on making deals. Subsequently, under the influence of Friedmanite economics, those deals were to be evaluated solely in terms of their impact on shareholder interests. Maximising shareholder wealth was to drown out all other considerations, even the survival of the company itself. And that, despite company law which in its letter as well as spirit, requires top management to be concerned for the long term interests of their company. Thus the strategic perspective has engineered the destruction of many British companies and whole industries, Cadbury and the confectionery industry being merely a current example, with Tata’s closure of the Teeside Corus steel plants demonstrating a later stage in that same process.