Strategy as Revolution

Article Review

Misti Walker

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 Strategy as Revolution - Gary Hamel

In the article, Strategy as Revolution, Gary Hamel posits that there are three

kinds of companies in any given industry. That is, there are rule makers, rule takers,

and industry revolutionaries. In any given industry, the companies that built that

industry are said to be rule makers. Next are rule takers, that is, No. 2 companies that

closely mirror the goals and strategies of the rule makers. These companies hope to

incrementally improve upon a product or process to gain market share. Finally, in any

given industry there are said to be rule breakers, or the companies that revolutionize the

industry or a component within.

To illustrate, consider the personal computing industry. IBM was a rule maker in

this industry. Consider the nomenclature, pc vs. Mac. In the beginning of the personal

computing industry, one would have said IBM vs. Mac. IBM was arguably the rule

maker in this industry. It would follow then, that HP was a rule taker in the industry,

having entered the market after IBM. And then along came Dell, the company that

revolutionized the personal computer, or at least the means of obtaining one.

Interestingly, IBM is no longer in the personal computing game, having sold its laptop

division, the ThinkPad, to Lenovo in 2005. In essence, IBM was facing increased

competition in this industry among forward thinkers that were breaking the rules of the

industry. Increased competition and companies that changed the landscape in the

personal computing arena led IBM to announce that the personal computer was outside

its core competencies. Instead of trying to compete, IBM outsourced its personal

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computing division. Now, IBM can focus on its core competency – that is business

solutions. When a business solution calls for laptops, IBM turns to one of its business

partners, Lenovo, to provide the hardware.

Hamel’s argument is that if companies are not revolutionary in their strategy

making, it is only a matter of time before another company does it better, faster, and /or

more cost effective. For example, consider Polaroid. This company, at its prime, was a

groundbreaker, or “rule maker” in its field. However, revolutionary companies such as

this one must be ever vigilant to keep its rule maker status, lest it fall to the wayside.

Changes in technology and other fields, such as the one-hour photo, caused this

company to rethink its strategy in the early 1990’s. The company went through an era

of diversification and then slimming down to its core competencies, all the while

considering whether instant photography, its core competency, was a thing of the past

due to the rise of the digital camera. In October 2001, unable to revolutionize its

business amid technological advances, the company filed bankruptcy.

This illustration underscores the fact that if a company is not constantly

innovating, it is only a matter of time before it loses market share to competitors that

are. In fact, Hamel asserts that there are ten key principles that companies in any

industry should adhere to in order to become revolutionaries in their field. These

principles can be paraphrased by stating that strategy makers must think outside of the

box. An effective way of achieving this goal is to ensure that employees and

stakeholders at all levels of the organization provide input in the strategy making

process. This is not always an easy task, as Hamel points out, for most companies

have layers upon layers of management between the line worker and senior

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management. Front line employees are often the ones that recognize business “pains”,

yet have little authority to correct the deficiency. Another problem with the strategy

making process is that executives assume that employees will resist change. This fact

has led to the creation of many change management courses at the university level.

However, executives must remember that if change makes their job easier, employees

are apt to embrace it. The problem is that upper management rarely knows what kind

of change could be implemented to make line workers’ jobs easier.

To fix this particular problem, executives need to invite three constituencies to

the strategy making table – that is, young people (a group often underrepresented in

strategy sessions), stakeholders at the geographic periphery of an organization, and

newcomers, or people who are not already disenfranchised by the organization and are

still excited by new opportunities. This coupled with a desire to hear perspectives’ from

all levels in the organization is what leads to revolutionary companies.

This paper, while written in a language more fitting to scholars, provides keen

insight into the business world. The author could simplify the language to make its

appeal more universal. Also, executives don’t have the time or patience to make it to

the end of the 10th principle. The author should summarize these ten points into 2 or 3

central ideas for ease of reading.