How this book came to be
Hi, this is Sun Wu, author of Strategy for Executives, the book on which this website is based. This section is for those interested in learning more about the process I went through to write the book and how this came to be.
If you are looking for a list of all the materials referenced in the book, you may want to visit the bibliography section, and if you are looking to buy a physical copy, you can purchase one from Amazon.
But if you are interested in the personal story behind the book, and my view on why I believe there’s a place for it, then keep reading.
I hope this gives you a better understanding of the book and its content, but more importantly of all the hard work that led to it.
Everything started almost two decades ago when I was in charge of market development for a large corporation in the industrial sector.
My job was to evaluate all new businesses that came our way, and like many other developers, I had created my own methodology for the elaboration of the feasibility studies, based on my formal studies and personal research.
I already had a specialization in Feasibility Studies, but my passion for the subject also led me to take a Masters Degree in Operations Management, because I genuinely wanted to understand the underlying drivers, or “formulas,” involved in the creation of profits.
Being an engineer by training (I majored in both Electrical and Mechanical Engineering), I saw feasibility studies as a perfect combination of technical and business matters, so their study became my main focus of attention.
Whenever I saw a class that had anything to do with project development or feasibility analysis, I’d take it, and in every trip I made I’d go to local libraries to pick “all” the books I could find in the subject.
Over time, my feasibility studies library grew to over 100 books, and I got to train with top specialists from the World Bank, the Project Management Institute (PMI) and had the honor to study social evaluation of infrastructure projects under Ernesto Fontaine, one of the so-called Chicago Boys.
As part of my job, I had to teach my methodology to other managers in different areas of the company, so that they could originate and pre-screen good business opportunities on their own.
At the time, my framework was divided into five different areas of analysis or “studies” which had to be taken into account when evaluating a new investment opportunity: Marketing (e.g. product, demand, distribution channels and market trends), Organizational (organization design, labor), Technical (size, location, technology), Social and Environmental (communities, environmental impact, waste management) and Financial (costs, revenues, returns, taxes depreciation and so on).
The final report (the feasibility study) would be the combination of these “chapters.”
Within each section, my framework listed a number of factors and variables, “inputs” if you will, that needed to be considered for the analysis. This was like a master checklist that told me what to include and what to leave out.
For example, in the technical section, the framework would remind me to include the costs of the initial inventory needed for the project, while the marketing section would list different techniques to forecast the project’s demand based on the particular nature of its market.
With that, every time a new business opportunity showed up, I’d go to my master document to get a list of the things that I needed to look for, and pick the techniques I’d use to evaluate the project.
On the other hand, every time I ran into a new technique or idea, I would update the master document making clear annotations to specify under which conditions that particular technique was applicable, when it should not be used, and how it could complement the information provided by the rest of the tools listed.
For a while, it worked like a charm, and the master document got to be around 100 pages long, and with it, I evaluated over $1 billion worth of investments, many of which were successfully deployed.
Everything worked well, until I decided to add strategy into the mix.
Then strategy came by
In my mind, rather than an isolated effort, a project investment had to be the “result” of a clear strategy, so it made sense to add the strategy formulation process to the master, so that both executives and market development people, had a common language and a clear transition from intentions to projects.
The initial integration of strategy into the master feasibility framework was a big success, and my work got a lot of traction internally because of it.
I went on to create a “Competitive Intelligence” system, which tracked each of our competitors’ moves, calculated their margins and market share and tracked the Herfindahl-Hirschman Index of the industry.
I was doing everything by the book and had secured a very visible spot in every business review, putting my work in front of the highest-level executives from both our local units and from our headquarters in the US.
However as I tried to integrate the latest strategy ideas into the master, I began seeing some cracks.
The explosion of the consulting industry in the 80s and 90s created a number of groups (more like sects) that would develop their own frameworks and promote different ways to do things, fragmenting the knowledge base and competing against each other.
Mismatches became more abundant and techniques were now competing with each other. In most cases, integrating a new idea meant to reject others that had worked well for some time.
Michael Porter’s work, then the reference for strategy practitioners, was under the attack of the consulting industry which tried to disqualify his ideas to sell you theirs, so all of a sudden the things I knew about strategy were quickly becoming outdated.
Over time, it was clear that the more I learned about strategy, the less I knew.
I later moved on and went to work at the company’s headquarters, but I kept updating the master framework as I could.
In trying to expand my knowledge of the subject, I went on to take MIT’s Strategy and Innovation executive certification program at their Sloan School of Management, and focused my classes on the accounting side of strategy, the development of new products and multisided platforms.
The classes were superb, but they weren’t enough to close the gaps. So over the following years I took three additional specializations: Business Strategy with the Darden School of Business at the University of Virginia, Marketing Strategy with IE Business School, Financial Management with University of Illinois at Urbana-Champaign and Artificial Intelligence: Implications for Business Strategy with the MIT Sloan School of Management.
As I went through each of the classes, I would keep updating the master, making connections between the ideas that played well together and rejecting those that were too radical, weren’t backed by sufficient implementation data, or that cannibalized or negated the rest of the ideas.
I wanted to have my own personal guide, to help me create a good strategy for my organization and my teams under any conditions.
It truly helped me that I was leading the development of an innovative technology platform at the time, which helped me test these ideas with colleagues and customers.
It also helped that I was traveling a lot during this time (for example, in 2016 alone I flew around 100 times), which gave me the time to study new materials and write notes in between flights.
At some point, it was evident that if I wanted to make sense of all these annotations and materials, I had to come up with a way to bring order to them, and that’s when the idea hit me: a unified strategy framework, based on a few fundamental rules, that could help me and other executives create strategy from scratch.
A unique source that I could use to guide my decisions and train new team members, even if they were new to strategy.
That’s how the idea of condensing it into a book format came to be, and is the origin of Strategy for Executives, which you can now download for free here.
Why I believe this book is needed
To my knowledge, this is the only book that teaches strategy from scratch written by a practitioner, not a scholar, and I believe that it is important that readers see strategy from the perspective of a person who has the responsibility to implement it.
We executives are the ones who may have to let people go and see our businesses crumble as a result of our decisions. For scholars, the brilliance of the idea is the real value they find in their theories, even if they haven’t had the chance to personally implement them.
In an interview with CNBC, Warren Buffet said that he never trusted economists’ predictions about the economy, because he never met a single super-wealthy economist that’s ever made money in securities.
And if you think about it, practicality is not the strength of intellectuals. They can’t think pragmatically like executives do, and they never have the pressures that come along with a high-level management position, so implementing their ideas is not their specialty.
Probably the best example I can give you is to analyze the real-life work of two authors whose works are the pillars of my own framework: Professors Michael Porter and Clayton Christensen.
They are both well-regarded legends in the strategy field, but both have had real-life failures in trying to implement their own ideas.
Monitor Group, for example, was a strategy consulting firm founded by Professor Michael Porter, the legendary Harvard professor who is by far the most widely regarded intellectual in the subject and who has been the face of modern strategy for the last 40 years.
But Monitor Group filed for Chapter 11 bankruptcy in 2012, unable to pay its bills as it sold its business to Deloitte Consulting.
Monitor’s consulting work slowed dramatically after the 2008 financial crisis and never recovered. In November of 2012, the company couldn’t even pay the rent for its Cambridge headquarters and missed interest payments to private lenders, which drove the firm into its bankruptcy.
But the tragic demise of Monitor was not the only time strategists failed to follow their own advice.
In 2000, Professor Clayton Christensen, who claimed a spot as one of the most influential
Christensen’s theory of disruption, which is extremely popular among tech executives, tries to explain how some products with particular characteristics enter the low end of a market almost unnoticed by incumbents, but over time come to dominate those markets beating the incumbents out of business.
Through the Disruptive Growth Fund, Christensen and his partners sought to use the professor’s ideas to pick stocks that according to their tests followed a “disruptive trajectory.”
In just under a year, the fund’s investments lost 64% forcing its liquidation. In comparison, the NASDAQ lost only 50% within that same period, so the fund’s investors would have achieved better results by picking stocks randomly.
Christensen, who always exhibits a remarkable intellectual humility, a rarity among strategy gurus of his stature, admits the limitation of his framework. In 2007 he told Business Week that “the prediction of the [disruption] theory would be that Apple won’t succeed with the iPhone … But history speaks pretty loudly on that.”
He recognizes that his theory is a work in progress and that should always remind entrepreneurs to take the theory’s suggestions with a grain of salt. When asked for his opinion about a particular company’s strategy he usually answers “I don’t have an opinion, the theory has an opinion”.
Strategy scholars most times overstate the true value of their analysis and believe that analysis and process can replace rationale which is, in my opinion, the main flaw in their theories. In my view, strategy has to be 80% facts and 20% guts, and both things can only be obtained from experience.
In reality, strategy concepts and tools are just a complement to insights and intuition. Just as Christensen likes to say, these theories only provide “opinions”, not prescriptions.
There’s no such a thing as “generic” strategy advice and history speaks loudly about it. Each company is different and so must its strategy be.
There’s a reason why you’ve never seen a strategy guru as the CEO of a high-growth organization. Because in reality, “management” is way more than just strategy.
In the end, what executives need is a good understanding of the strategy principles and a clear view of their options, but they must combine those tools with their knowledge and insights to craft their own strategies.
My idea with Strategy for Executives is to provide a fundamental work that can be used to understand and create strategy, and that serves as a common language between executives and their teams.
Finally, I’d like to wrap this section with a hypothetical but serious question about strategy: if every single penny of your personal and family savings were invested in the stock of a publicly traded company, and you had the chance to hire the CEO of that company, who would you hire?
Would you give the job to a strategy expert, who can articulate the laws and rules of strategy better than everyone, or would you rather bring in a pragmatic leader whose success has been in part due to strategies that seemed to contradict those same fundamentals, like GE’s Jack Welch or Amazon’s Jeff Bezos?
Exactly, that’s what I thought you’d answer.
To close this story, I’ll leave you with the wise words of Warren Buffet, the best investor of all time, in that CNBC interview we mentioned before:
“If you look at the whole history of economists, they don’t make a lot of money buying and selling stocks, but people who buy and sell stocks listen to them. I have a little trouble with that.”