Strategy: Resource Allocation and Everyday Decisions Create
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The cumulative impact of the allocation of resources by managers at any level has more real-world effect on strategy than any plans developed at headquarters.
How Managers’ Everyday Decisions Create—or Destroy— Your Company’s Strategy by Joseph L. Bower and Clark G. Gilbert
Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 How Managers’ Everyday Decisions Create—or Destroy—Your Company’s Strategy 9 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications
Reprint R0702C
How Managers’ Everyday Decisions Create—or Destroy—Your Company’s Strategy
The Idea in Brief
Top leaders’ formal strategies determine how business gets done in your firm— right? Wrong, say authors Joseph Bower and Clark Gilbert: It’s other managers’ decisions about where to commit resources that really drive strategy. Sometimes these choices support corporate plans. Other times, they don’t. Take Toyota: It launched the Echo—a nofrills, inexpensive vehicle—to fight low-cost rivals. But salespeople, seeking higher commissions, steered customers to higherpriced models. How to avoid such scenarios? Understand who’s driving resource-allocation decisions. For example, is a division manager only sending you proposals for projects that will expand his turf? Is an R&D manager giving a large customer too much say over product development decisions? Then step in as needed: Prompt unit managers to ask, “What’s best for the company?” (not their divisions). Form cross-divisional teams to discuss strategic options. By managing your company’s resourceallocation process, you align bottom-up actions with top-down objectives. And you drive your company in the right direction.
The Idea in Practice
To regain control of your company’s strategic process: UNDERSTAND W HO’S DRIVING KEY DECISIONS Bower
The cumulative impact of the allocation of resources by managers at any level has more real-world effect on strategy than any plans developed at headquarters.
How Managers’ Everyday Decisions Create—or Destroy— Your Company’s Strategy by Joseph L. Bower and Clark G. Gilbert
Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 How Managers’ Everyday Decisions Create—or Destroy—Your Company’s Strategy 9 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications
Reprint R0702C
How Managers’ Everyday Decisions Create—or Destroy—Your Company’s Strategy
The Idea in Brief
Top leaders’ formal strategies determine how business gets done in your firm— right? Wrong, say authors Joseph Bower and Clark Gilbert: It’s other managers’ decisions about where to commit resources that really drive strategy. Sometimes these choices support corporate plans. Other times, they don’t. Take Toyota: It launched the Echo—a nofrills, inexpensive vehicle—to fight low-cost rivals. But salespeople, seeking higher commissions, steered customers to higherpriced models. How to avoid such scenarios? Understand who’s driving resource-allocation decisions. For example, is a division manager only sending you proposals for projects that will expand his turf? Is an R&D manager giving a large customer too much say over product development decisions? Then step in as needed: Prompt unit managers to ask, “What’s best for the company?” (not their divisions). Form cross-divisional teams to discuss strategic options. By managing your company’s resourceallocation process, you align bottom-up actions with top-down objectives. And you drive your company in the right direction.
The Idea in Practice
To regain control of your company’s strategic process: UNDERSTAND W HO’S DRIVING KEY DECISIONS Bower