How Managers' everyday decisions create or destroy your company's strategy.

Full Abstract

Senior executives have long been frustrated by the disconnection between the plans and strategies they devise and the actual behavior of the managers throughout the company. This article approaches the problem from the ground up, recognizing that every time a manager allocates resources, that decision moves the company either into or out of alignment with its announced strategy. A well-known story--Intel's exit from the memory business--illustrates this point. When discussing what businesses Intel should be in, Andy Grove asked Gordon Moore what they would do if Intel were a company that they had just acquired. When Moore answered, "Get out of memory," they decided to do just that. It turned out, though, that Intel's revenues from memory were by this time only 4% of total sales. Intel's lower-level managers had already exited the business. What Intel hadn't done was to shut down the flow of research funding into memory (which was still eating up one-third of all research expenditures); nor had the company announced its exit to the outside world. Because divisional and operating managers-as well as customers and capital markets-have such a powerful impact on the realized strategy of the firm, senior management might consider focusing less on the company's formal strategy and more on the processes by which the company allocates resources. Top managers must know the track record of the people who are making resource allocation proposals; recognize the strategic issues at stake; reach down to operational managers to work across division lines; frame resource questions to reflect the corporate perspective, especially when large sums of money are involved and conditions are highly uncertain; and create a new context that allows top executives to circumvent the regular resource allocation process when necessary.

Learn Faster Today Improve your study skills

Author information

Author/s: Bower, Joseph L (JL); Gilbert, Clark G (CG);

Affiliation: Harvard Business School, Boston, USA. jbower(-atsign-)hbs.edu

Journal and publication information

Publication Type: Journal Article

Journal: Harvard business review (Harv Bus Rev), published in United States. (Language: eng)

Reference: 2007-Feb; vol 85 (issue 2) : pp 72-9, 154

Dates: Created 2007/03/09; Completed 2007/04/16;

PMID: 17345681, status: MEDLINE (last retrieval date: 12/26/2008)

Sourced from the National Library of Medicine. Abstract text and other information may be subject to copyright.

External Links for this article (including full text providers, if available):

Click Electronic Full-text Provider Links to see options for finding the electronic full text links to this article. Note there may be a subscription or fee required for access to the full text. See our FAQ for information on finding FREE full text articles.

This article may also be located in paper journal collections available in many libraries. Use the Journal and Publication Information above to find the full article.

MeSH headings (categories)

This article was linked to the MESH Headings shown below.

Administrative Personnel
Commerce - organization & administration
Decision Making

These are the highest related articles currently in the database:

Confronting reality. 16 Oct 2004
Zeitgeist leadership. 29 Sep 2005
Training to optimize the response of supervisors to work injuries--needs assessment, design, and evaluation. 29 Apr 2006
American Kidney Fund focuses on education and prevention. Interview by Tamara Ruggiero. 30 May 2006
Business policy practices that predict sales of tobacco. 30 Oct 2006
Make your company a talent factory. 30 May 2007
The secrets of his success. 27 Nov 2004
Running in place? 29 Nov 2004
Two executives, one career. 30 Jan 2005
What great managers do. 27 Feb 2005

See 100+ related articles.