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“Most of my work happens at the intersection of medicine, public health and business, so strategy and stakeholder management are my daily bread and butter. Strategy-In-Action allows us to make strategy in a way that doesn't just end up in a dusty filing cabinet, but mobilizes all relevant stakeholders, leads to coordinated actions and ensures targeted outcomes. This indispensable book will transform the way you think and act strategically.”
--Prof. Dr. Thomas D. Szucs, Chairman of the Board, Helsana; Director, European Center for Pharmaceutical Medicine, University of Basel

"Strategy-In-Action is highly systematic, but still manages to keep the human element at the core of strategy. It has helped us to unify our leadership team around one vision and one strategy. I strongly recommend this very helpful and worthwhile book to any CEO who needs to build alignment and an actionable strategy that mobilizes people across the company. Read Strategy-In-Action. Then build and execute the future you want."
—Steven Esses, CEO, Arotech

"I was highly skeptical in the beginning—I am known as a skeptical guy—but now I wish I had had your tools 35 years ago when I was starting out. Strategy-In-Action gives you everything you always wanted to know about strategy but were afraid to ask. The book distills all the complexities of strategic design and action into a simple 7-step process you and your people can actually manage and align around. Believe me, I have tried it and it works. You can get to the future your company needs and you want."
—Werner Brandmayr, former President & Managing Director, ConocoPhillips Holding Europe

“I have personally experienced the power of the Strategy-In-Action methodology. We developed a shared understanding around obstacles, breakdowns and objectives. We identified immediate action steps that optimized our deployment and designed energizing 100-day ‘Catalytic Projects.’ Strategy-in-Action provides insight into how to recognize and identify traps (such as the illusion of hope and the attachment to old solutions) as well as a formula for vision and action. The adrenalin is pumping again, and we have results that were virtually impossible before Strategy-In-Action.”
—Lawrence Obstfeld, CEO, Image Navigation

"Strategy-In-Action offers readers a systematic, almost foolproof methodology for building the company's strategy with maximum ownership and results. Instead of the traditional separation of strategy design and implementation, Strategy-In-Action lets all stakeholders live and learn dynamically from the action. This book is hands-on, entertaining and efficient—and sure to add value to your company. Just do it!"
—Dr. Alexander V. Herzog, CFO Ruf Group, CEO AVATECH & Ruf Services

“Most leaders and managers are drowning in information and the time clock of change continues to accelerate. Traditional strategic planning does not meet this rapidly evolving environment and new business paradigm. Strategy-In-Action—Marrying Planning, People and Performance provides a pragmatic approach and tool kit for strategic planning in our fast, globalized and wired world. Thomas and Ed have produced a practical template and checklists that can be used to guide, develop and sustain winning strategies. Most importantly, they combine the 'hard' elements of strategy planning with the 'soft' human elements that makes the difference in successful and sustainable execution. This is especially important given the dynamic social and cultural changes in business and the need for a more values-based, collaborative and empowering methodology. The book contains numerous interesting and practical case studies from their many years of business and consulting experience that emphasize a new logical, efficient and common-sense approach. A must read for anyone involved with strategic planning in the 21st century.”
—Dr. Martin Cross, Chairman, Medicines Australia

“Strategy-In-Action is highly readable and filled with great examples. The title shows that strategy is not static or a one-shot exercise, but a dynamic and ongoing process. The building blocks are well-structured—you could use Strategy-In-Action as a checklist. ‘Boiling It Down’ sections at each chapter ending provide orientation and help readers find their way into the chapter later. I especially appreciated the focus on leadership styles and culture during the strategy process, since culture eats strategy for breakfast any day.”
—Markus Hotz, Chairman, Insights Schweiz AG

“This is the rare business book that goes beyond theory and actually helps you accomplish. We made an outstanding return on our investment. When we started, we were fragmented all over the world. Now there is more transparency and inter-plant sharing of best practices; people contribute beyond their perimeter. We uncovered the value of our people and leaders; now we will keep empowering the teams. We no longer hide issues but put them on the table; we are much more imaginative, finding new ways to meet the goal. I can only say: Read Strategy-In-Action, apply its methods to your enterprise, and you will get a very good payback and personal satisfaction.”
—Alexandre Figueiredo, Vice President, Comfort & Trim Systems, Faurecia

“Having experienced various team building exercises over the years that did not fulfill my expectations, I was quite skeptical at the start about this methodology. I have changed my mind. We have used Strategy-In-Action to create a shared understanding of what was missing or blocking us, we aligned on a joint vision and strategic intent, and we carried out 28 catalytic projects aimed at causing breakthroughs that we can now scale up or replicate (or, if one failed, take it off the agenda). I recommend this book to any senior manager who needs to mobilize a large-scale, complex organization for the future.”
—Bruno Le Stradic, then Director Earth Observation, Navigation & Science Satellites, Astrium, an EADS Company

“A crucial book and approach that will change the way you see—and do—strategy. In the 21th century, leaders have to cope with day-to-day operational constraints and at the same time stand in a strategic future. Being this kind of stategist is a huge challenge. Thanks to the Strategy-In-Action approach and tools we offer our clients, for several years now, a new way of thinking, communicating, acting and getting results. Congratulations, Thomas and Ed, you awake people to be the change for the future of their companies.”
—Jean-Guy Perraud, President, Hexalto

"This is the only strategy book I know that gives a truly holistic view of strategy. It integrates strategy alignment, highly pragmatic execution and performance, and the human element in one seamless process. Call it my professional bias, but I especially liked the people component, which is all too often lost in the strategy literature—and more importantly in the process."
--Dr. Frank Waltmann, Head of Learning, Novartis AG

Four months later, the mortgage crisis hit that ended up taking down venerable companies like Lehman Brothers, and pushed other venerable companies, like AIG, to the edge of the abyss.

We argue that these two events are connected. The mainstream way of thinking about strategy not only gives “experts” a bad name. It is also the type of thinking that fails in practice. And it is possibly the type of thinking that contributes to companies getting stuck in the status quo.

Already a decade before, we had asked ourselves what strategy approach would yield sustainable success. Now that the crisis rocked the United States and reverberated around the world, causing millions of people to lose their jobs, their homes, and their investments, it dawned upon us that the calamity was merely a symptom of a deeper malady. Corporate and government strategy is all too often designed behind closed doors and imposed top-down, the implementers have no voice in its design, and most stakeholders are either cogs in the firm’s wheel or excluded from strategic thinking altogether. It is no wonder that this linear, one time, A-to-B approach is inadequate to meet the demands of an increasingly dynamic environment that imposes a higher velocity of change with each passing day. Traditional strategy is good for building a house or a sewage system for Mumbai, it simply is not good enough for unpredictable change, or for any endeavor that involves people.

It dawned upon us that business must retool its strategy principles and practices, or it will be condemned to repeat history and be rocked again by the tsunamis that get unleashed when planners devise static, top-down strategies for nations or companies, as happened from Chrysler to GM, from Circuit City to The Sharper Image, from Linens ‘n Things to Germany’s Escada, from Air America Radio to Wachovia, from Bear Stearns to Washington Mutual, from Lehman Brothers to Iceland’s Landsbanki.

Makes sense, you might say, but why yet another book on strategy? After all strategic planning, its do’s and don’ts, successful and failed strategies have been the subjects of many books, articles, and seminars. And much material out there is really useful. To give a highly partial and subjective tip of the iceberg: Michael Porter’s comprehensive works on market analyzing, market strategies and long-term competitive advantage are a must for anyone in the business of creating and executing strategies. Porter’s Competitive Strategy was about understanding markets, a company’s competitive position in them, and strategies in response. His Competitive Advantage dealt with building value chains for lasting competitive advantage. In Crossing the Chasm, Inside the Tornado, Living on the Fault Line, and The Gorilla Game, Geoffrey Moore looked at strategies and tactics for building shareholder value in emerging companies and markets. Although targeted at high-tech Silicon Valley start-ups, Moore’s concepts proved relevant for all firms in fast-paced markets.

Sumantra Goshal and Christopher Bartlett, in The Individualized Corporation, showed the importance of involving stakeholders in strategy design. The late C.K. Prahalad highlighted The Core Competence of the Corporation, and later the near-limitless reservoir of resource-poor entrepreneurs for innovation, The Fortune at the Bottom of the Pyramid. Prahalad collaborated with Yves Doz on learning from best practices worldwide in The Multinational Mission: Balancing Local Demands and Global Vision.

In extensive interviews for Built to Last and Good to Great, Jim Collins and his team explored common characteristics of successful companies. Larry Bossidy and Ram Charan’s Execution focused, as the title said, on getting things done. They discussed key components of developing a corporate environment that meets commitments effectively.

But how do you do it?

There is a dearth of books about the real, down-to-earth How of managing strategy design-and-implementation in the 21^st century, with its multiple stakeholders, empowered consumers, culture change, the Internet, transformative technologies, and constantly changing strategic landscapes. When the rubber meets the road, how do you build vision and strategy in a way that your people align around them? How do you get the perspectives of all key stakeholders without watering down the focus or wasting time? How do integrate the strong egos of your executives in the team without losing creativity, ideas or innovation? How do you combine planning and action in a single seamless process? How do you mobilize people for strategic, catalytic action? How do you deal with pushback, with breakdowns in communication, with domestic implementers or international partners who feel left out? How do you make sure you get early feedback from the action so you can see if you’re on the right track before it’s too late—and before you run up millions of dollars in sunk costs?

“What we are really trying to do,” said David Ulrich, a professor of business administration at the University of Michigan, “is say that leaders need an integrated set of tools around both behaviors and results which will deliver firm strategy and the combination of behaviors and results.” That is exactly right—in theory. As Albert Einstein put it tongue-in-cheek, “In theory, theory and practice are the same. In practice, they are not.” Exhortations to “engage all parts of the organization” or “invite people” or “maximize participation”¹ or the principle that “Strategy making must be subversive” or “democratic”² are completely correct but woefully inadequate. They sound good on paper, but so what? How does that help you on Monday morning in the office when push comes to shove and things go so fast that you cannot see the wood for the new trees that have grown over the weekend?

With all due respect, few strategy gurus or consultants ever had to run sizable companies and test their noble and well-meaning prescriptions in the action of producing results. We have. Ed Borey spent his early career in a series of positions with Global 1,000 companies and later as COO, CEO, chairman, and board member in small-and mid-cap public company environments. Ed is a veteran of strategy design and execution. Before joining the board of Arotech (where he ran into Thomas), Ed had seen a lot. He led multiple turnaround initiatives, grew one company from $300 million to $800+ million revenue, led another through a Chapter 11 restructuring, brought two public companies private, and has acquired, consolidated or divested multiple operations.

As CEO of Swiss Consulting Group from 1997 through 2012, named a “Fast Company” by Fast Company magazine in 1998, Thomas D. Zweifel has worked with 40+ Fortune 500 companies as well as government and UN agencies, entrepreneurs and the military, on strategy alignment and execution, coaching one team to produce $74 million in additional revenue and another to achieve $200 million in cost savings. Not least, he again and again had to swallow his own medicine and test his strategy approach on his own company to this day (he is now partner and managing director of Manres AG). We have both worked with CEOs and implementers on the frontlines enough to know what it takes to build alignment company-wide, turn large ships around, facilitate large-scale change, and mobilize people for decisive action that matches the organization’s strategy.

Ed and Thomas met in November 2006, at a Board of Directors strategy session of a high-tech company. We were both struck by how one of us would delve into an idea and the other would build on it. Without even talking to each other before the meeting, one of them would play bad cop with the company’s chairman when the other was diplomatic, and vice versa. On the first break, when Ed went to De La Concha Cigars on Avenue of the Americas, Thomas spontaneously joined him. On the way back Thomas said he had been working on a book about strategy and asked Ed if he might like to co-author the book. Ed agreed on the spot. The result is what you are holding in your hands. You be the judge whether or not it was a good strategic move; at the risk of being biased, we think so. Marrying Ed’s four-decade track-record as a CEO, Board Member, General Manager and all around troubleshooter with Thomas’ three decades of building strategy alignment and developing leaders on the job, in the action of producing breakthrough results, brings about innovation to both strategy and leadership.

We call it “Strategy-In-Action”—a holistic approach to the formulation and execution of strategy. It is about designing strategy not based on theory or lofty principles, but in the aftermath of action. It is about converging strategic and day-to-day operational activities into one seamless boost that drives the organization forward. It is about the dynamic human factors involved in developing and executing a strategy, and the methods for best results.

This is not theoretical. We have perfected the process over time, in the action and through much trial and error. The framework reaches from analysis to design, execution, to after-action review of results and back to analysis again. Strategy-In-Action aims to give CEOs, board members, and senior managers seven simple—though not always easy—building blocks. Written from the vantage of the CEO, it is applicable to all those within the company who need to overhaul company strategy and/or build a shared and actionable strategy, and for all those in government, nonprofits or the military who need innovative strategies to carry out the people’s business and/or make change.

Strategy-In-Action stands on three core principles. One, strategy and execution must be twins joined at the hip. Strategy without execution means at best opportunities lost and resources wasted, and at worst forgotten files that gather dust on the shelves of oblivion. Execution without strategy means blind activity that leads to poor results and unintended consequences. Two, each phase of the process is equally important. And three, who “the strategists” are is transformed. The participation, alignment, and commitment of the company’s most important resource, its people (stakeholders, gatekeepers, decision-makers, implementers, even end-users) is critical to making it all happen.

The book flows organically so managers can use it like a cookbook. It is full of cases and stories that illustrate what works and what does not; and these stories are from all sectors, corporate and government, nonprofit and military. We go with Peter Drucker who said that all organizations are essentially the same in that they all have to organize people to meet organizational goals, whether they are a business or a government agency, a church or an army.

Chapter 1 explores why traditional strategy is bankrupt and sifts through stories and cases in search of the answer. It gives a mini-history that leads up to the predicaments we now face, shows how the world has changed and how strategic planning has failed to catch up, since conventional strategic planning suffers from eight fallacies. Chapter 2 asks what is different about Strategy-In-Action and comes up with thirteen differentiators. Each of the next seven chapters focuses on one of the seven steps of Strategy-In-Action. Chapter 3 shows how to forge a shared understanding, the foundation of broad-based alignment across company levels, functions and regions. Chapter 4 is about building a joint strategic vision that inspires all stakeholders, gives focus, and serves as a magnet for action. One of its stories is how even the automotive industry, which has been rather stuck, is experiencing a jolt of energy from some visionaries.

In Chapter 5 the reader learns how to co-create the “dashboard” (as Jack Welch liked to call it when he was at GE) of key performance indicators, and how to avoid counter-productive metrics. Chapter 6 is a guideline for generating the drivers—thrusts and synergies—based on all the analysis and design work so far. Chapter 7 covers three key elements that must be integrated in strategy but are all too often overlooked or avoided: Leadership, power, and culture. Chapter 8 is about the component of Strategy-In-Action that ties together design and implementation: catalytic pilots that test the strategic assumptions in the laboratory of action and yield quick wins.

The final step, in Chapter 9, is essential to the cyclical nature of Strategy-In-Action as a process not a project: how to sustain momentum by getting feedback from the action to the strategy, standardizing strategy and action, and scaling up. The book concludes with Chapter 10, a troubleshooting guide designed to help leaders in the action when push comes to shove. The chapter provides one of the most potent techniques that separate leaders from the pack: how to not be stopped by a breakdown, but instead use breakdowns as raw material for breakthroughs.

We thank our clients, our companies and our colleagues who have helped us develop and test our approach in the laboratory of the market for three decades (and in Ed’s case, four) and led us to a highly predictable strategy approach for addressing the increased challenges posed in the 21^st century. We thank our colleagues at Swiss Consulting Group Inc. and at Manres AG, for being used by this methodology in the service of helping our clients achieve the future they want, and for their constant striving to find what works in the action. We thank our previous readers for their interest in and feedback to our ideas.

Thomas’ wide-ranging conversations with Tapas K. Sen fifteen years ago led to an article and stimulated the original idea for a book on Strategy-In-Action. Thomas is also grateful to Harry Korine for helpful suggestions and challenges to our ideas, Stefan Hangartner for a helpful review of the manuscript, and Dov Gordon for throwing himself into the game head-first without really knowing how. Thomas is indebted to The Hunger Project for pioneering the planning-in-action methodology, and for freely sharing its intellectual property.

Ed is grateful to Homer Hoard, Mike Anderson and Mark Parrish as CEOs who took an early interest in him, worked with him to evolve his strategic skills, and gave him his first strategic playing field. He also thanks long-time Organizational Development and Strategic practitioners Patricia Moore and Ron Scott for years of discussion and collaboration in developing the Strategy-In-Action framework.

Above all, we are grateful to our families. Susan Borey has been best friend, wife, closest advisor and partner to Ed for four decades. Gabrielle, Tina and Hannah give Thomas a future to live for, without which strategy would be meaningless.

Norbert Reithofer, CEO of BMW, recommended that his board members read The Black Swan. The book has shown that seemingly impossible events—black swans—tend to happen, and that they have especially strong effects, as did the breakdown of Lehman Brothers that plunged the world economy into a crisis, precisely because nobody expects them. At a time of extremes, Reithofer says, predictions have become impossible.

Gone too are the times of certainty for Reithofer’s countryman Wolfgang Reitzle, chief of Linde, a 1.5 billion euro company that makes gases for the energy, chemical and food industries. “It has never been more difficult than today,” Mr. Reitzle said, “to give a precise prediction of future economic development.”³

When seemingly plausible scenarios smacked up against reality in the most recent recession, it dawned upon executives “that strategic planning doesn’t always work,” in the words of the Wall Street Journal. That’s putting it mildly. “This downturn has changed the way we will think about our business for many years to come,” said Office Depot chairman and chief executive Steve Odland in an interview. Walt Shill, head of Accenture’s North American management consulting practice, was more blunt: “Strategy, as we know it, is dead.”⁴

Is that so? Or is strategy evolving to a model that is more of a match for this century? What we know: traditional planning does not allow for the flexibility, adaptation, or accelerated decision-making needed in times of rapid and unpredictable change. This insight is far from new; it has been a growing realization for CEOs and strategists for the past two decades with the advent of the Internet and e-commerce, a globalizing economy and virtual teams, flattening corporate hierarchies and free agents who are much less loyal to the company than the “company men” of one or two generations ago.

Some companies have weathered sea changes in global markets and become dynamic catalysts, including Amazon, Apple, Caterpillar, Google, IBM, Intel, Microsoft, Nordstrom, Novartis, Nucor, Procter & Gamble, Starbucks or 3M, to name a few. But they are exceptions, and they cannot rest on their laurels. Others have had difficulty recognizing innovations, shifts in the marketplace or even understanding their marketplace’s needs in the first place. Nokia, swallowed by Microsoft in late 2013, is only the latest example. A generation ago, Swiss watch companies were in for a rude awakening. They had been the main producers of wristwatches at least since 1790, when the city of Geneva alone exported over 60,000 watches a year. By the mid-18^th century Swiss watchmakers had exported some 500,000 watches. By the turn of the 20^th century they ruled the global watch industry; by 1968 they commanded over 65 percent of the watch market worldwide and over 80 percent of industry profits.

Throughout their undisputed reign, they had held on to tried and true rules of the game, doggedly producing the same first-class watches with high-quality and expensive manual labor. But by 1970 their luck turned; nimble Japanese copycats dumping their low-cost, high-quality watches on world markets outmaneuvered them. Unlike their skeptical Swiss competitors, leading Japanese watchmakers like Hattori-Seiko embraced the new quartz technology eagerly and benefitted from a massive drop in costs: The average production price of a quartz watch plummeted from $200 in 1972 to 50 cents in 1984.⁵ The result: By 1989 Seiko alone produced some 15 pecent of the 690 million watches worldwide, while Switzerland’s watch industry took a nose dive, and 50,000 of 62,000 Swiss watchmakers lost their jobs. In 1970 there had been 1,620 watch companies in Switzerland; fifteen years later their number had shrunk to 600, and their world market share was down to a meager 15 percent.

Ironically, the researchers who had developed the first electronic quartz watch were, of all people, Swiss. But when they introduced their cutting-edge idea at a 1967 conference of Swiss manufacturers, it was roundly rejected. Yes, the quartz watch performed like a watch, it looked like a watch, but it lacked “real watch” components like gears and mainsprings. In short, it did not fit the Swiss watch paradigm.

If the Swiss watchmakers suffered from too much attachment to the past, the Swiss bank UBS suffered from too much derring-do, at least until August 2007, when Peter Kurer, the bank’s then-general counsel, thought he deserved a vacation. A tumultuous summer had seen the forced closing of an in-house hedge fund and the ejection of the bank’s chief executive. Enough was enough. But when Kurer returned from a lazy sailing turn in Corsica, things got only worse. By the middle of 2007, UBS had amassed more than $20 billion in super-senior collateralized debt obligation (CDO) tranches. Reportedly, and amazingly, senior investment banking executives had no idea these tranches existed: “We had twenty people on the beach looking at grains of sand when the tsunami came and wiped everybody out,” said one banker familiar with UBS operations.⁶ The tsunami did roll in and the tide turned. In October 2007, the bank revealed its first losses of $4.4 billion, and several high-ranking executives had to stand down. In December, as UBS prepared to announce a further $10 billion loss, Mr. Kurer and other executives hurriedly arranged for a much-needed cash injection from the Government Investment Corporation of Singapore. Another $4 billion loss followed in January 2008. How could UBS, which had made a name for itself as one of the most prudent global banks, take one of the biggest blows of the credit crisis? To be fair, UBS was not alone: A bubble of loose credit had made some companies reckless. In the United States alone, 152 financial institutions went bankrupt, filed for bankruptcy protection, or closed down and went into receivership during the crisis. How come nobody saw the tsunami coming? What had gone wrong?

Financial services companies were not the only ones to suffer. Take the U.S. automobile industry. For 77 years in a row, in good times and in bad, General Motors sold more cars than any other company. But in the first quarter of 2008 another company beat GM’s sales by 160,000 more cars: Toyota. The Japanese multinational even embarked on a joint venture with GM designed, in part, to help the venerable firm revamp its production system. But despite over 3,000 articles analyzing its best practices, and although its principles were widely copied, Toyota continuously stayed ahead of the pack⁷—at least until its 2010 recalls for unexplained braking problems hampered its reputation, and its chairman Akio Toyoda was forced to admit to the U.S. Congress that “Quite frankly, I fear the pace at which we have grown may have been too quick.”⁸ But even amid its woes, the world’s biggest carmaker saw U.S. sales surge 41 percent in March 2010 from a year earlier (and in China and Japan 33 percent and 51 percent respectively), while several of its U.S. rivals flirted with bankruptcy. For too long, U.S. carmakers had focused on North American demand for large cars and trucks when fuel costs were low, and ignored the increasing marginal cost of union labor content in each vehicle produced. Why couldn’t GM or Chrysler prevent their fall from grace at the time (their fortunes have improved since then)?

Or take media and entertainment: how can traditional media deal with new media, especially the onslaught of targeted online advertising? Will “old” media like newspapers, magazines, or television soon be out of business? The ailing recording industry, despite hunting down illegal downloads of its songs and albums, saw sales of CDs plummeting by 15 percent, to 500.5 million units, from 2006 to 2007 alone. During the same period, music sales online rose by 45 percent to 844.2 million tracks; by April 2008 Apple Inc.’s iTunes Music Store had become the top U.S. music retailer.⁹ By 2010, iTunes sold 70 percent of all music downloads worldwide, making it the world’s largest legal music retailer—seven years after its inception. The trend is clear: music has moved to the Internet. How can traditional record companies, book publishers, and print media deal with the shift?

In games, Nintendo, Sony and Microsoft’s Xbox are under siege from Angry Birds, Fruit Ninja and other inexpensive, or free, downloadable games, particularly for mobile phones and tablets. After shipping close to 100 million Wiis, in 2012 Nintendo did something unimaginable just a few years ago: it posted its first-ever loss in its era as a video games company. Nolan K. Bushnell, founder of Atari and godfather of the games business, said that game consoles may soon be too expensive for few but the hard-core players: “These things will continue to sputter along, but I really don’t think they’ll be of major import ever again.” The company has made strong comebacks before, but it faces a big obstacle: Nintendo’s games play on its own devices only. Should it change its strategy and create games for devices made by other companies, including the hundreds of millions of iPod Touches, smartphones and tablets out there? “It’s the hardest strategic decision Nintendo has had to face in a long time,” said Robbie Bach, the former head of Microsoft’s Xbox business.¹⁰

In education, massive open online courses, or MOOCs, harness the power of crowd-sourcing technology to offer elite college-level courses—once available to only a select few, on campus, at great cost—for free, to anyone with an Internet connection.¹¹ The first MOOC of note was in 2011 when Sebastian Thrun, a Stanford University professor, offered a free artificial-intelligence class—attracting 160,000 students in 190 nations. A wildfire ensued; other elite research universities like Harvard, Princeton and MIT, as well as online course companies like Udacity, Professor Thrun’s spinoff; edX, a joint venture of MIT and Harvard; and Coursera, a Stanford spinoff, have sprung up to offer open higher education to everyone. The price tag: zero. This development presents challenging questions: How can lower-tier universities compete and convince their students that their courses are worth the price of admission? What about quality assurance of the product—how can plagiarism be prevented? What will the millions of students now enrolled in hundreds of online courses actually learn? And what should be the business model that will allow universities and education companies to make money with MOOCs?

In transportation, the global airline industry broke back into the black in 2007. The airlines had made great strides in streamlining. They had improved their fuel efficiency by 19 percent since 2000 while cutting non-fuel costs by 18 percent, and achieved a net profit of $5.6 billion, for the first time in seven years. But they had little time to celebrate. Several companies flew into nasty weather when in April 2008, ATA, Aloha Airlines, and Skybus suspended operations and filed for bankruptcy. One major carrier, Delta, said its fuel costs would rise to $2 billion that year alone. “Oil skyrocketing above $130 per barrel has brought us into uncharted territory,” said Giovanni Bisignoni, director general of the International Air Transport Association. “Add in the weakening global economy and this is yet another perfect storm.”¹² Globally the industry lost $50 billion in the past decade—$11 billion in 2009 alone.¹³ To cover their ballooning costs, many airlines raised fares, added fuel surcharges, and charged travelers $25 or more for checking a second bag. (Some airlines now make passengers pay for their first bag too.) Not to mention the declining on-board service. Business travelers are all too familiar with the policy on most domestic U.S. or European flights that they must pay for sandwiches; American Airlines charges for wine on flights to and from Europe.) Dean Headley, co-author of the Airline Quality Survey, said of the industry: “Oil prices have forced them to say, ‘We can’t consider the customer as much as we’d really like because we have to stay in business.’”¹⁴ The price hikes could not have come at a worse time. Facing a slowing economy themselves, many business and leisure travelers had to cut back on their flying. Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines, said that the “business model” of the industry “is changing out of all recognition.”¹⁵ Why hasn’t the airline industry—with a few valiant exceptions such as Southwest—come up with actionable strategies?

In energy, British Petroleum suffered a major blow to its reputation in the spring and summer of 2010 when the “Deepwater Horizon” oil spill in front of the Louisiana Gulf Coast produced the largest man-made disaster in United States history. But the root cause, despite what many analysts claimed, was not faulty equipment or bad drills or bad crisis management. The real problem lay with the company’s top-down decision-making, its exclusion of key stakeholders from strategy design and even from day-to-day operational decision-making. By June 2010, BP’s go-it-alone attitude and shortsighted strategy had taken a heavy toll: its stock had lost more than $100 billion, or more than half its value.

Governments are just as affected as business by short-term thinking. Back in the 1960s, the National Aeronautics and Space Administration (NASA) spent $24 billion (in 1969 dollars) to send twelve astronauts to the moon, $2 billion per astronaut. But in the generation after the Apollo program ended, the engineers who carried crucial knowledge in their heads either retired or died, or both, without ever passing their know-how on to their colleagues. Important blueprints were either catalogued incorrectly or not at all, and the people who drew them up were no longer around to draw them again. The result: NASA is now reinventing the wheel. The estimated cost to American taxpayers (in 2005 dollars): $100 billion.¹⁶ How could that happen?

And NASA is but one agency. What should be the strategy of the United States (or any country for that matter) in the twenty-first century? For example, how can the United States fight global terrorists not organized in hierarchies but in loosely connected cells—in one word, networks? Military planners talk about NetWar, which requires strategies utterly different from the good old days of nation-against-nation warfare or the equally frightening but quite neat and orderly bipolar world of the Cold War.

Finally, bad strategy affects international organizations. The World Bank rolled out a $300 million plan to supply rural African farmers with hand-pumps to improve safe water. The noble initiative suffered from one problem: The pumps were designed with men in mind. Planners in Washington, D.C. had fallen prey to a common misperception—not surprisingly, since when we hear “African farmer,” most of us picture a man; but 80 percent of Africa’s food is grown by women farmers (the only sector where men produce more than women do is in housing and construction). So the World Bank delivered pumps too large for women; only men could use them. Worse, the Bank failed to train locals in repairing the pumps, since illiterate farmers could not read the instructions; they simply threw the pumps away when they broke and returned to their age-old practice of using contaminated public cisterns or murky ponds. The result was untold disease, from typhus to malaria, not to speak of $300 million down the drain.

Not surprisingly, strategy approaches reflect the times in which they are conceived. That is not to say there are no lessons to be learned from history. And much of the work done has been of great value. As the Spanish philosopher George Santayana wisely said, “Those who do not remember the past are doomed to repeat it.” In this context, we propose a mini tour of strategy history. The idea is to get at the key historical underpinnings of the current strategy paradigm. We want to find the nuggets that can help us build the strategic approaches of the future. Below is a sampling of some of the major ideas that have influenced our thinking.