1. strategy+business
issue 69 WINTER 2012
Best Business Books 2012
by Alice schroeder, phil rosenzweig, shaun holliday, krisztina “z” holly,
j. philip lathrop, sally helgesen, and james o’toole
reprint 00148
2. BEST
BUSINESS
BOOKS
best books 2012 introduction
2012
CONTENTS Biography
Virtuosity Squared
Strategy
Considering Competition
Marketing
Brand New
Alice Schroeder Phil Rosenzweig Shaun Holliday
1 56 61 66
s+b’s TOP SHELF s+b’s TOP SHELF s+b’s TOP SHELF
Jean Edward Smith, Amitava Chattopadhyay Jim Stengel, Grow:
Eisenhower in War and Rajeev Batra, with How Ideals Power
strategy+business issue 69
and Peace (Random Aysegul Ozsomer, The New Growth and Profit at
House, 2012) Emerging Market Multina- the World’s Greatest
tionals: Four Strategies for Companies (Crown
Disrupting Markets and Business, 2011)
Building Brands (McGraw-
Hill, 2012)
Illustrations by Harry Campbell
3. NEW
and improved! This promise gets slapped
on business books as often as on household
cleansers. Many books are new each year,
but those with genuine insight and value are very rare indeed.
We take the time to find them. In strategy+business’s Best
Business Books 2012, our team of distinguished experts — some
veterans of this annual special section, namely James O’Toole,
Sally Helgesen, Phil Rosenzweig, and “Z” Holly, and some
newcomers, Alice Schroeder, J. Philip Lathrop, and Shaun Holliday —
review 21 tomes published between the autumn of 2011 and
the autumn of 2012 that fulfill their promise.
Be sure to take a close look at our Top Shelf selections —
our reviewers’ picks as the best of this year’s best business books.
They include a new appraisal of Dwight David Eisenhower that will
best books 2012 introduction
prompt you to consider your own effectiveness as a leader, a realistic
plan for improving healthcare that eschews political rhetoric for
practical solutions, an exploration of cloud computing that gets
beyond the surface technological story to look more deeply at how
it will change business practices, and four more books that merit
your time and attention. — Theodore Kinni
Innovation Healthcare Organizational Capitalism
Context Is King Beyond the Rhetoric Culture Of Markets and Morals
Krisztina “Z” Holly of Reform Small Talk James O’Toole
70 J. Philip Lathrop Sally Helgesen 83 55
2
74 78
s+b’s TOP SHELF s+b’s TOP SHELF s+b’s TOP SHELF s+b’s TOP SHELF
Thomas M. Koulopoulos, Joe Flower, Healthcare Marvin R. Weisbord, Jonathan Haidt,
Cloud Surfing: A New beyond Reform: Productive Workplaces: The Righteous Mind:
Way to Think about Doing It Right for Half Dignity, Meaning, and Why Good People
Risk, Innovation, the Cost (Productivity Community in the Are Divided by
Scale, and Success Press, 2012) 21st Century: 25th Politics and Religion
(Bibliomotion, 2012) Anniversary Edition (Pantheon, 2012)
(Jossey-Bass, 2012)
Reprint No. 00148
4. B E S T B U S I N E S S B O O K S 2 0 12 / B I O G R A P H Y
Jean Edward Smith, Walter Isaacson, Mark Kurlansky, Birdseye:
Eisenhower in War and Peace Steve Jobs The Adventures of a Curious Man
(Random House, 2012) (Simon & Schuster, 2011) (Doubleday, 2012)
BIOGRAPHY
Virtuosity Squared
by Alice Schroeder
best books 2012 biography
GREAT IDEAS OFTEN EMERGE from the collision of two
disciplines. So, it seems, do great leaders. The subjects
of this year’s best biographies — Dwight Eisenhower,
who led two of the world’s largest organizations, the Al-
lied forces in Europe during World War II and the U.S.
government; Steve Jobs, who built the world’s most
valuable company; and Clarence Birdseye, a self-taught
biologist who pioneered a technology that revolution-
ized food production — each illustrate how often in-
dividual success is rooted in a merging of disciplinary
virtuosity.
Eisenhower combined political genius with superb
executive skills. Jobs wed the sensibility of an aesthete
to an innovator’s appreciation of technology. As for
3
Birdseye, he once said that he “was not cut out for a can be read as a chronicle of World War II, a presiden-
career in pure science and wanted to get into some field tial coming-of-age story, or a portrait of the United
where [he] could apply scientific knowledge to an eco- States as an emerging global superpower. Business read-
nomic opportunity.” ers, though, should also regard it as an outstanding
case study in leadership; in an alternative universe, one
Politics and Management cannot imagine Eisenhower running General Motors
Eisenhower in War and Peace, Jean Edward Smith’s pow- Company into bankruptcy.
erful story of the 34th U.S. president, is my choice for Smith portrays Eisenhower as a decisive yet
the best biography of the year. Dwight David Eisenhow- thoughtful leader who had a genius for manipulating
er was as close to a man for all seasons as we have had written and unwritten rules, bureaucracy, and social
among presidents. He successfully led the military, the maps. He made the U.S. presidency look so easy that
government, and a university. “Ike” himself has receded into a faint image of an avun-
strategy+business issue 69
Smith, a political scientist, historian, and political cular leader who presided over a dull, prosperous era.
economist, is well prepared to tackle Eisenhower’s life, Smith corrects numerous errors in accounts by others
having previously written biographies of Franklin D. and gives us Eisenhower in full: not only the most pop-
Roosevelt and Ulysses S. Grant, the latter another gen- ular president in modern U.S. history, but also one of
eral who won a war by overwhelming force. Eisenhower the most effective.
5. B E S T B U S I N E S S B O O K S 2 0 12 / B I O G R A P H Y
Eisenhower ended the unwinnable war in Korea, facility at Pennsylvania’s Camp Colt, where he com-
Smith reminds us, “with honor and dignity,” and he manded 10,000 men and 600 officers. There, Eisen-
sent the Seventh Fleet to protect Formosa from invasion hower’s logistical skills brought him to the attention of
by China. On the domestic front, he tamed inflation, the War Department.
balanced the federal budget, and quelled unemploy- Smith is adept at painting the picture of this and
ment with the massive public works project of building other episodes that illustrate concretely how Eisenhower
the interstate highway system. Eisenhower unwound learned to be a leader through a combination of man-
the excesses of McCarthyism, ended military foot- agement skills and personal and political diplomacy.
dragging over desegregation, and appointed the judge It was at Camp Colt that Eisenhower first displayed a
who gave Rosa Parks her seat in the front of the bus. talent for befriending powerful people, many of whom
In one of his most difficult decisions, he sent the 101st were his diametric opposites. One of the delights of
Airborne Division to Little Rock to put down defiance Eisenhower lies in following the maneuvers of the man’s
of a court order to desegregate the schools. Of course, lifelong campaign to captivate everyone who crossed his
he also made mistakes — we have Eisenhower to thank path. The egotistical, flamboyant George Patton was
for the CIA coup that overturned a government in Iran, Eisenhower’s first major conquest, and Patton promptly
with repercussions still felt today. handed him another by introducing him to Brigadier
Perhaps Eisenhower’s most significant legacy, General Fox Conner.
best books 2012 biography
though, was to show the value of cooperation and re- Conner wielded immense power as chief of staff to
straint. He thawed the Cold War, beat back attempts General John J. Pershing, who had led U.S. forces in
at gunboat diplomacy by U.S. allies, and worked easily World War I. Conner became entranced with Eisen-
across party lines. He also crushed two attempts by the hower, and trained him in military history, psychology,
National Security Council to use atomic weapons after and “the art of persuasion.” In a dramatic example of
World War II, insisting on a policy of deterrence instead. the power of mentorship, he rescued Eisenhower from
Nothing in Eisenhower’s early life pointed to his trouble, intervened on his behalf over and over, and ar-
brilliant future. He was born in 1890, the third of seven ranged for him to work directly for Pershing.
sons raised by a pair of religious eccentrics in Abilene, Luck by all accounts featured prominently in
Kan. With no funds to attend college, Eisenhower made Eisenhower’s career — so much so that Patton declared
the most of a lucky break — the beginning of a lifetime his initials D.D. stood for “Divine Destiny.” Yet Smith
pattern — when he won a competitive examination for illustrates repeatedly that Eisenhower advanced because
he never wasted his oppor-
tunities. Under Pershing,
Eisenhower made the U.S. presidency he exhaustively studied the
4
look so easy that he has receded into a battlefields of World War
I. He graduated first in
faint image of an avuncular leader who his class after winning ad-
mission to the exclusive
presided over a dull, prosperous era. Army War College. His
staff work sent him to key
strategic posts in Paris, the
an appointment to West Point, an opportunity usually Philippines, and the Panama Canal Zone. In another
given to those with political connections. lucky stroke, Eisenhower was put in charge of creating a
At West Point, Eisenhower graduated 61st out of wartime mobilization plan that brought him into con-
164 cadets in his class, where he was known mostly for tact with financiers and businessmen.
his practical jokes and football skills. His early military By the start of World War II, Eisenhower had
career was undistinguished until he took a course in the served in the military for 27 years. His career progress
Army’s first tank school and realized the new technol- was glacial by the standards of today’s wireless world.
ogy would revolutionize battle tactics. As a result, less Yet one of Smith’s insights is that the military’s then
than three years out of West Point, Eisenhower was rigid promotion system gave its officers experience and
charged with creating the first stateside tank training authority, which encouraged independence of thought.
6. B E S T B U S I N E S S B O O K S 2 0 12 / B I O G R A P H Y
When George Marshall chose Eisenhower as chief of president reached a crescendo, Eisenhower set what
the army’s war plans division in 1942, Eisenhower was must be a record for coyness by lingering in Europe
a protégé of nearly every important army general officer, with NATO rather than filing in the early primaries.
and understood mobilization in a European theater bet- His sponsors — determined as always — won him the
ter than anyone. nomination through a brokered convention that resem-
Smith details Eisenhower’s ascent from staff offi- bled a coup. Once more, Eisenhower made the most of
cer to wartime leader of the Allied forces as a triumph his opportunity; during the eight years he spent in the
of executive ability, political acumen, and judgment White House, his legacies multiplied as fast as his popu-
honed through harsh experience of battles barely won. larity ratings rose.
Eisenhower was a weak strategist. His skill at build- Smith’s magisterial book sparkles throughout with
ing consensus served him poorly as a field commander, lessons from Eisenhower’s life and career. Late in his
but helped him become a military statesman who held years, the former president warned that the U.S. must
together a fractious alliance that included FDR, Win- “avoid becoming a community of dreadful fear and
ston Churchill, Joseph Stalin, Charles de Gaulle, and a hate, and be, instead, a proud confederation of mutual
handful of strong-willed generals. The toughest, loneli- trust and respect.” Forging these confederations was
est decision Eisenhower faced was whether Allied forces how Eisenhower changed the world. It’s a worthwhile
should cross the English Channel lesson to consider as we face the
best books 2012 biography
on June 6, 1944. Smith’s account challenges of our own age.
of Operation Overlord is absorb-
ing both as a military story and Aesthetics and Technology
as a personal drama. Eisenhower Walter Isaacson opens Steve Jobs
staked his career on the decision with the tale of a wavering court-
to launch D-Day, and it led to the ship in which Jobs first seeks him
victory that catapulted him into out to write his biography, then
the White House. becomes skittish, and finally re-
Eisenhower is an evenhanded commits when his pancreatic can-
account that reveals the sources cer advances and it is clear Jobs’s
and reasoning behind its conclu- story will soon end. Jobs spoke
sions, a signature of a great his- openly to Isaacson of his enemies,
torian and confident researcher. friends, erstwhile friends, and, to a
Smith does not shy from showing lesser degree, himself. Others filled
Eisenhower’s flaws, including a in the rest of the portrait of one
5
fundamental impenetrability that of technology’s most charismatic
occasionally turned to coldness. Smith lays out his pas- titans — along with providing a much-needed check on
sionate wartime affair with his bright, attractive British Jobs’s tendency to create his own reality.
driver, Kay Summersby. While Eisenhower contem- Jobs saw his importance in his ability to stand at
plates marrying Summersby, he gushes a flood of in- the intersection of the humanities and the sciences, a
sincere letters to his wife, Mamie: “I desperately miss theme that he suggests and Isaacson adopts for the bi-
you.…” Then he drops Summersby by sending her an ography. By this, Jobs did not mean he simply stood
impersonal note when he returns home after the war to there; he plainly saw himself as transmuting these disci-
re-embrace Mamie — and his ambitions. “George Pat- plines through the alchemy of his genius into a perfect-
ton would have said a warmer goodbye to his horse,” ed whole. (Jobs never claimed to be modest.) He cared
notes Smith. about the tiniest details and relied on a powerful intu-
After the war, Eisenhower, who claimed he wanted ition to bring emotional resonance to designs that he
strategy+business issue 69
to semi-retire and live on a farm, took on high-profile insisted be executed flawlessly. Trying to copy Jobs, one
work while Harry S. Truman finished out his second source observes, would be like trying to copy Picasso by
term as president. He set Columbia University’s fiscal using red paint. In fact, the lessons in his story are most
house in order as its president and served as supreme powerful when considered as a cautionary tale.
commander of NATO. When calls for him to run for Steven Paul Jobs was born in 1955, the son of an
7. B E S T B U S I N E S S B O O K S 2 0 12 / B I O G R A P H Y
unmarried Wisconsin university student and a Syrian niak as engineer and Jobs in the role he would even-
Muslim teaching assistant, who put him up for adop- tually settle into permanently: visionary and promoter.
tion. His adoptive father, Paul Jobs, a high school drop- Jobs’s journey as a manager and business partner cov-
out with a passion for mechanics and woodworking, ered much rougher ground. Among the many unfortu-
instilled in his son an appreciation for the sanctity of nate episodes are his ungracious treatment of Wozniak
craftsmanship. Growing up in what would become Sili- and his love–hate (mostly hate) relationship with Bill
con Valley, the boy was surrounded by friends whose Gates, who was generous in his comments about Jobs
parents were engineers. for the book, only to be repaid with insults. Jobs’s great-
To his credit, Isaacson makes clear that Jobs was est business error took place when Apple went through
by no means destined for greatness. Had he been raised a Silicon Valley rite of passage, the transition from the
as a Syrian–American by his “dreamy, peripatetic” birth founder–CEO to professional management. Jobs lost
mother in Wisconsin, there is no telling how his life the confidence of CEO John Sculley through his insis-
would have turned out. As it did transpire, Jobs often tence on (mis)managing the Macintosh division, which
was his own worst enemy. This point is made unmis- led to his ouster as chairman. But being rejected by his
takably, and entertainingly, through accounts of his bo- own brainchild at age 30 focused Jobs on what mat-
hemian, bizarre, selfish, willful, and cruel behavior. tered. The ensuing years brought the NeXT computer;
Early on, Jobs forces his much-loved adoptive par- animation by Pixar; and eventually, a second chance at
best books 2012 biography
ents to cripple themselves financially by sending him Apple that yielded iTunes, iPhoto, the iPod, the iPhone,
to expensive Reed College — then bristles at the con- and the iPad.
cept of a curriculum, drops out after six months, hangs Isaacson details these stories as evolutionary rungs
around auditing classes that suit his aesthetic tastes on a ladder of creativity. One innovation follows anoth-
(such as modern dance), and lives on money scrounged er, as Jobs and his company ascend to iconic heights.
by cashing in soda bottles for deposits. (Eventually, he Each of these products also came to market accompa-
gave his parents Apple stock.) The younger Jobs trips nied by lots of collateral damage. Jobs’s relationships in
on LSD, pirates Bob Dylan tapes, flirts with the Hare business were complicated by the fact that he was, as a
Krishna movement, and refuses to bathe. At one point, contemporary describes, “full of broken glass” as a re-
a Hindu holy man in the Himalayas spots, or perhaps sult of his early abandonment to adoption. He was “the
smells, Jobs, and grabs him in order to lather and shave opposite of loyal…anti-loyal,” according to a colleague:
him. Unfortunately, the lesson did not stick. a tyrant at work and a “frighteningly cold,” reject-
Jobs would later attribute much of his success to ing narcissist in his personal life, who attracted people
this period, even making the preposterous claim that through brief displays of interest, only to mistreat and
had he not audited a calligraphy class, “it’s likely that no abandon them.
6
personal computer” would have had multiple typefaces Implicitly, Steve Jobs raises the question of whether
or proportionally spaced fonts. Fortunately, he soon be- indifference to social norms and a degree of madness
gan working with Steve Wozniak, a former high school are requirements of creative genius. As he rises, Jobs
classmate who had a sizable tolerance for grandiosity. lives on fruit to ward off mucus, soaks his feet in the
The two had bonded as teenagers over an idea spotted toilet to relieve stress, offends his colleagues with his
in an Esquire article by Wozniak’s mother that described filthy body, falls into fits of tears during business meet-
how hackers pirated free phone calls. Wozniak built a ings, and turns orange from eating only carrots.
circuit that could control AT&T’s routers, which Jobs In a sense, Jobs is the un-Eisenhower. He is indif-
figured out how to package and market at a 78 percent ferent to working through procedures and following
profit margin. This experience taught the two teenagers rules, including the most basic rule of acknowledging
they could “control billions of dollars’ worth of infra- reality, which Isaacson describes in multiple breathtak-
structure,” writes Isaacson. It also, says Wozniak, “gave ing scenes of lying and self-deception. Seductive as a
us a taste of what we could do with my engineering Svengali-like, “mesmerizing but corrupt” preacher, Jobs
skills and his vision.” It was the first of many visions enchants business partners into making deals that he re-
based on breaking rules. vokes on a whim. Outraged at the thought of anyone
Reunited in 1976, the pair founded Apple Comput- stealing his ideas, he takes pride in pilfering intellectual
er in the proverbial garage with US$1,300, with Woz- property from Xerox. Stopped for speeding, he honks
8. B E S T B U S I N E S S B O O K S 2 0 12 / B I O G R A P H Y
at the policeman for not writing the ticket fast enough. Most people think the Birds Eye brand emblazoned
Because Jobs’s rule-breaking attitude is part of his suc- on packages of frozen vegetables has something to do
cess, these stories are amusing, up to a point. But when with an actual bird. But Kurlansky tells us otherwise. In
he horrifies his friends and family by refusing conven- Birdseye: The Adventures of a Curious Man, he relates the
tional medical treatment for a curable form of cancer, story of Clarence Birdseye, the man who changed the
his willfulness becomes a tragic flaw. way the world eats by figuring out how to flash-freeze
Jobs’s lack of introspection complicated Isaacson’s food on an industrial level. Thanks to Birdseye, by
task. (At one point, he simply ignores a question about the 1930s, people who previously had lived on mushy
why he felt a kinship with two belligerent, driven — canned goods in the winter were enjoying fresh-tasting
and doomed — fictional characters, King Lear and food year-round.
Captain Ahab.) Steve Jobs also was completed while Jobs Ever since childhood, Birdseye was an amateur
was dying, and published a few weeks after his death. naturalist who kept his eye on turning a profit from his
One can’t help but wonder how the timing affected the hobby. Born in Brooklyn in 1886 to a prominent and
interviews, as well as what fruit might remain on the wealthy family, he encountered the wild as an 8-year-
tree in the form of sources who did not cooperate. old when his family bought a farm on Long Island.
The biographer’s portrait, despite stories and com- Two years later, he trapped a dozen live muskrats and
mentaries that soften the edges, is shipped them to a customer he
best books 2012 biography
of Jobs as detestable genius. His found in England. While attend-
charisma apparently made some ing college at Amherst, he sold
people loyal to him. But Jobs, in his frogs to the Bronx Zoo for reptile
own words as quoted in the book, chow, and collected rats of a near-
is anything but charismatic, which ly extinct species from behind a
means readers who encounter him butcher shop to sell to a geneticist.
on paper are unlikely to feel it. Birdseye was forced to drop
Fifty years from now, when out of Amherst when his parents
the iPad and the iPhone are super- fell into financial distress around
seded, what will people remember 1908, during one of the worst
about Steve Jobs? His crystalline banking and economic crises in
focus. His defining taste. His per- U.S. history. He took a job with
fectionism. His intuitive salesman- the U.S. Biological Survey count-
ship. And a pragmatic streak that ing coyotes in New Mexico and
expressed itself in understanding Arizona and hunted the ticks that
7
design from the user’s point of view. caused Rocky Mountain spotted
Jobs admired the titans of industrial design, people like fever, but eventually his commercial instincts led him
Raymond Loewy. In the end, he became one of them, into fur trading. After collecting bobcat and coyote
and more, because he also had the will and the wiles skins in the western U.S., he moved north to search for
to forge his creative genius into the world’s most valu- fox and ermine pelts by dogsled in Labrador.
able company. Birdseye entertains readers with stories of its sub-
ject’s consumption of delicacies as varied as skunks
Science and Business and horned owls, a particular favorite being fried rab-
Mark Kurlansky, author of Cod: A Biography of the Fish bit livers. Birdseye was omnivorous and obsessed with
That Changed the World (Walker & Co., 1997) and Salt: food, and in the frozen North, a “hunger for the taste of
A World History (Walker & Co., 2002), likes to take freshness had a lasting effect,” Kurlansky writes.
his readers down the mineshaft into narrow subjects It was in Labrador that Birdseye discovered the
strategy+business issue 69
— in this case, the life of an unusual man — and use flash-freezing process that would transform food pro-
those subjects to unearth hidden realms in the commer- duction. Kurlansky keeps the story moving, although
cial universe. Here, he also fills an important niche by the second half of the book, which details how Bird-
documenting the life of an entrepreneur who changed seye invented the freezing equipment and brought his
the world. product to market, is necessarily dry compared to the
9. B E S T B U S I N E S S B O O K S 2 0 12 / S T R AT E G Y
account of the early years in Labrador. A highlight is To be great, a biography must do more than tell
Birdseye’s aptitude as a promoter, which was essential to us an interesting life story; it must teach us something
winning over resisters, whether culinary conservatives new and worthwhile about ourselves or the world. This
or people suspicious that the new technology was tam- year’s best biographies do just that: They illuminate
pering with God’s intentions. By the mid-1940s, U.S. realms forgotten and unknown, and contain lessons
households were convinced: In 1945 and 1946, they that range from inspirational to cautionary. Above all,
bought 800 million pounds of frozen food. the lives of Eisenhower, Jobs, and Birdseye give us a col-
Birdseye’s success came from a marriage of two lective portrait of the enormous potential that can be
qualities. He needed his business skills to make his unleashed when two fundamental, and even opposing,
scientific ambitions a reality, just as Jobs needed his skills are combined in a single human being. +
aesthetic sense to ignite his technological visions and
Eisenhower needed his political genius to lever his exec-
utive ability. Birdseye died at age 69 in 1956, a year af-
ter Jobs was born. The business he built had become so Alice Schroeder
ubiquitous that the man himself was forgotten. It took alice@aliceschroeder.com
is an investor, journalist, and best-selling author of The
50 more years for Kurlansky to arrive and recognize the Snowball: Warren Buffett and the Business of Life (Bantam
need for a biography. Books, 2008), selected as a 2009 s+b best business book.
best books 2012 strategy
Amitava Chattopadhyay and Rajeev Ikujiro Nonaka and Zhichang Zhu, Benoit Chevalier-Roignant and Lenos
Batra, with Aysegul Ozsomer, The New Pragmatic Strategy: Eastern Wisdom, Trigeorgis, Competitive Strategy:
Emerging Market Multinationals: Four Global Success (Cambridge University Options and Games (MIT Press, 2011)
Strategies for Disrupting Markets and Press, 2012)
Building Brands (McGraw-Hill, 2012)
STRATEGY
Considering 8
Competition
by Phil Rosenzweig
IN 2005, ONLY 44 of the companies on Fortune’s Global
500 list were from emerging markets. In 2010, there
were 113 emerging-market companies on the list, an
increase of more than 150 percent. What led to this sig-
nificant increase in just five years?
That’s the question taken up in this year’s best
business book on strategy, The New Emerging Mar-
ket Multinationals: Four Strategies for Disrupting Mar-
kets and Building Brands, by Amitava Chattopadhyay
and Rajeev Batra with Aysegul Ozsomer, professors at
10. B E S T B U S I N E S S B O O K S 2 0 12 / S T R AT E G Y
INSEAD, the University of Michigan, and Koç Univer- India, Korea, Mexico, and Turkey, but also from Guate-
sity in Istanbul, respectively. In a strong field, the book mala, Jordan, Taiwan, Thailand, and more.
stands out for taking on the important topic of global Two of the strategies are familiar. Some EMNCs
competition, and presenting original findings in a man- are indeed the stereotypical cost leaders, using their ad-
ner that’s engaging and accessible to practitioners. vantaged cost structures, often related to wage differ-
The authors’ central argument is that the new gen- entials, to achieve competitive success in new markets.
eration of emerging-market multinational companies Others are knowledge leveragers, drawing upon their un-
represent a trend that will transform the global economy. derstanding of home country customers to achieve suc-
These EMNCs (the authors’ abbreviation) are no longer cess elsewhere, perhaps following the diaspora of home
content to play a secondary role in their industry. They country emigrants.
have, write the authors, “the ambition, vision, and con- More interesting are the growing numbers of
fidence to want to become global giants themselves.” EMNCs pursuing a third strategic path. They are
Some of them, such as South Korea’s LG Electronics and seeking to employ their particular advantages of knowl-
China’s Lenovo, have been well known for years. Oth- edge and innovation while avoiding direct competition
ers, including India’s Wipro, Taiwan’s HTC, and China’s with powerful incumbents. These niche customizers
Haier, have only recently raised their global profile. And identify specific customer segments, often small and ap-
still others are just starting their parently unattractive within larger
best books 2012 strategy
ascent to the global stage; these in- markets, where they can use their
clude India’s Apollo Tyres, Turkey’s expertise to establish strong beach-
Arçelik, and Brazil’s Natura Cos- heads and eventually expand their
meticos. If the current trend con- positions. An example is Mahin-
tinues, the list of high-performing dra & Mahindra Ltd., which used
companies from emerging markets its expertise in producing small
will grow, and extend to more and tractors in India to expand into
more industries. the niche markets of lawn care
For some established multina- and golf course maintenance in
tional corporations (MNCs), The the United States and Australia.
New Emerging Market Multina- Similarly, Haier chose not to enter
tionals will explain the strategies the U.S. market with large refrig-
being followed by new competitors erators, but instead went after the
that are already roiling their mar- niche market for small refrigera-
kets. For others, the book offers tors, suitable for dormitory rooms
9
a glimpse of the future, in which or wine cellars, and only later ex-
their competitors will come from all over the world. panded its product line.
For EMNCs aspiring to succeed in the global arena, The fourth strategy, that of global brand builders,
the book explores the immense strategic challenges to represents the most dramatic approach. Just a few years
come. Not only must they compete against large and ago, many EMNCs either were original equipment
established incumbents, but they must overcome dis- manufacturers or sold low-value branded products. To-
advantages, some real and others perceived, associated day, many of these companies have developed global
with image, brand, and culture. Any successful strategy brands known for their high quality, including not only
must not only neutralize the advantage of incumbents, familiar names like HTC and Wipro, but also, as not-
but find new sources of competitive advantage. Hence ed earlier, Natura Cosmeticos and Apollo Tyres. This
the reference to disruption in the book’s subtitle. transformation is especially ambitious, but it holds the
The book debunks the idea that today’s EMNCs promise of the highest margins and a position of parity
strategy+business issue 69
are succeeding only because of advantaged cost posi- with the best companies in the world.
tions or generous resource endowments. The authors The authors contend that to succeed on the world
identified four strategies in the course of their research, stage, EMNCs aspiring to be global brand builders face
which included the study of 39 EMNCs, not only from two challenges: one concerning the need to establish a
the largest emerging economies such as Brazil, China, business of global scale, and the other related to build-
11. B E S T B U S I N E S S B O O K S 2 0 12 / S T R AT E G Y
ing a global brand. “Without a sustainable global busi- Japanese companies, including Matsushita and Toyota,
ness model, building a global brand is a waste of time succeeded in creating brands with global appeal and
and resources,” they write. “On the other hand, a global shattered the “low quality” image of Japanese prod-
business built on an unbranded commodity basis is not ucts. But they struggled to solve the problem of attract-
likely to be very profitable or sustainable long term.” ing and retaining local talent, and to become global in
Both are essential and each one reinforces the other, yet outlook. A new crop of EMNCs would do well to ac-
they require very different capabilities, confront differ- knowledge how one source of strength — a strong and
ent obstacles, and move at different rhythms. distinctive culture — can become a limitation on the
One might argue that all MNCs, no matter their broader global stage.
country or era, have faced these twin challenges, but the The New Emerging Market Multinationals is an
authors think that the challenge facing EMNCs today important addition to the strategy bookshelf because
it helps us understand the
logic behind the rise of com-
If the current trend continues, the list panies from emerging mar-
of high-performing companies from
kets, including many new
powerhouse firms in elec-
emerging markets will grow and tronics, vehicles, services,
best books 2012 strategy
healthcare, and other in-
extend to more and more industries. dustries. The book serves a
broader purpose as well, and
reminds us of eternal stra-
is greater. Achieving global scale in the 21st century, tegic questions, such as how to identify, develop, and
when incumbents are already large and well developed, sustain a competitive advantage in crowded and unfor-
calls for particular care. For some, it means avoiding giving fields.
direct confrontation by expanding first in peripheral
markets; for others, it involves large and complex ac- Confucius Says
quisitions, such as Apollo Tyres’ acquisition of Dunlop, A complementary perspective is provided by Pragmat-
Tata Motors’ purchase of Daewoo Trucks and Jaguar, ic Strategy: Eastern Wisdom, Global Success, by Ikujiro
and Lenovo’s takeover of IBM’s personal computer divi- Nonaka, professor emeritus of Hitotsubashi University’s
sion. Developing a global brand, meanwhile, calls for Graduate School of International Corporate Strategy,
a step change in how an EMNC presents itself and is and Zhichang Zhu, a lecturer in management at the
perceived by customers around the world. Hull University Business School in the United King-
10
Not surprisingly, the authors, who are marketing dom. Like the authors of The New Emerging Market
professors, devote much attention to the topic of brand Multinationals, Nonaka and Zhu cite evidence of the
building. But they are wise to note that without a solid tectonic shift in global competition caused by the grow-
organization to back it up, efforts to establish a pow- ing number of emerging market multinationals, in par-
erful brand will eventually come to naught. Creating a ticular mentioning those from East Asian nations. But
sustainable business model is achieved through the hard rather than looking to business activities — such as
work of attracting and retaining talent, of pursuing in- brand building, market segmentation, and leveraging of
novation and quality, and of building processes that capabilities — to explain this trend, Nonaka and Zhu
can handle daily tasks including procurement, logistics, examine the broader societal elements of culture and
and sales. They quote Priti Rajora, Wipro’s head of tal- philosophy.
ent management, who commented that one of Wipro’s Is the rise of EMNCs, and the development of the
greatest challenges was to evolve from being an Indian economies from which they come, testimony to some
company to being one in which any employee from wisdom shared among Eastern cultures? Conversely, are
anywhere in the world had an equal opportunity to rise the recent problems in the West, including debt crises,
within the company. financial meltdowns, and economic stagnation, linked
Such a view is especially important in light of re- to flaws in the philosophies that underpin their societ-
cent history. Looking back just one generation, several ies? It is an intriguing thesis and well worth exploring,
12. B E S T B U S I N E S S B O O K S 2 0 12 / S T R AT E G Y
in part to better appreciate the fact that strategy is a re- mately self-defeating.
flection of, and embedded in, a larger context. The authors find evidence of pragmatism in Asian
The authors illuminate the relationship between companies, including Honda, Canon, Lenovo, and
strategic action and its social context through a sweep- Haier. They also discuss Nobel Peace Prize joint win-
ing examination of ideas in Eastern and Western phi- ners Muhammad Yunus and Grameen Bank. The revo-
losophy and literature. As the book’s title suggests, their lutionary microfinance bank Yunus founded in Bangla-
central focus is pragmatism, by which they mean “the desh is a notable example of pragmatism because of its
purposeful accomplishment of idealistic, informed, dis- willingness to adapt and experiment, according to the
ciplined experimentation” that blends a sense of pur- authors. But they recognize that pragmatism is not the
pose and idealism with flexibility. “Pragmatism is not exclusive domain of the East. It is present in the think-
anything goes or opportunism without purpose,” they ing of Aristotle, for example, and they note that it also
write. Rather, it requires learning and sound judgment. resembles what Jerry Porras and Jim Collins called “core
Pragmatic strategies, say Nonaka and Zhu, succeed values” in their influential book Built to Last: Successful
due to “sheer down-to-earth vigilance and flexibility.” Habits of Visionary Companies (HarperBusiness, 1994).
The authors contend that pragmatism is rooted in Con- Indeed, among the first exemplars of successful prag-
fucian thinking, and they find matism cited in Pragmatic Strat-
more recent evidence of it in mod- egy are Bill Gates of the Microsoft
best books 2012 strategy
ern Chinese reforms, citing catch- Corporation and Michael Dell
phrases, such as “crossing the river of Dell Inc., smart entrepreneurs
by touching stones,” and Deng whose important influences prob-
Xiaoping’s dictum that the color of ably did not include Confucius,
a cat is of no matter so long as it but whom the authors nonetheless
catches mice. highlight for their willingness to
At the heart of the book, the experiment and adapt.
authors discuss three tenets of In the concluding chapter of
“enduring Confucian wisdom”: this scholarly and probing book,
Wuli (the material–technical), Shili the authors suggest that Shared
(the cognitive–mental), and Renli Wisdom, Global Success might
(the social–relational). Wuli, which have been a better subtitle. Prin-
focuses on technical efficiency, ciples of balance and a goal of
involves getting the fundamental achieving common goodness are
elements of the organization work- indeed crucial in today’s world,
11
ing well together. Shili, which is concerned with cre- and reminding ourselves of the shared wisdom that un-
ativity, provides a vision of a desired future. And Renli, derpins managerial action is of high importance.
which speaks to the value of social legitimacy, concerns Yet for all its strengths, I still have a few quarrels
achieving common goodness. with this book. The recent growth of emerging econo-
Rather than following a linear logic of setting goals mies might seem to be the result of pragmatic policies,
and taking action, or ends driving means, these three but it’s worth recalling that Deng’s comment about the
concepts are mutually reinforcing, and each can be color of a cat was meant as a corrective to years of doc-
seen as a point of departure. When approached prop- trinal Communist ideology, which was itself a reflection
erly, pragmatic strategy creates a balance among the of Chinese thinking. Indeed, Confucianism is often
three, say the authors, that generates value “efficiently, connected with ideas such as obedience, hierarchy, duty,
creatively, and legitimately by getting fundamentals and filial piety, hardly what we associate with pragma-
right, envisioning a valued future and realising com- tism. Current successes notwithstanding, it is question-
strategy+business issue 69
mon goodness.” Harmony and balance are the keys to able whether China’s emphasis on central initiatives,
success here; efforts to emphasize one tenet over the like its succession of five-year plans, is better under-
others will fail. Thus, strategies based on narrow finan- stood as a reflection of pragmatism or as evidence of a
cial goals or notions of efficiency that ignore social and traditional Chinese emphasis on hierarchical direction.
human consideration are not only incomplete, but ulti- Further, almost any example of success can be described
13. B E S T B U S I N E S S B O O K S 2 0 12 / S T R AT E G Y
as the result of pragmatism. Terms like core vision and theory adds the competitive dimension, as each player’s
balance and adaptability are easy to infer ex post when moves take into account the actions of rivals.
companies are successful, but are conspicuously absent Competitive Strategy is replete with mathematical
when companies fail. formulas and discussions of theory that can be daunt-
These concerns notwithstanding, Pragmatic Strat- ing, but the authors do several things that make the
egy remains a fascinating book that spurs us to think book a worthy read for all strategists. First, they offer
about strategy in its broader philosophical context, and many examples from the business press to ground the
advances important hypotheses about the values and book in real-world decisions. They illustrate the prob-
ideas behind the growing success of companies with lem of how best to expand capacity, for instance, by cit-
roots in Confucian thinking. ing Virgin Atlantic’s choice in 2004 to double its fleet
with the purchase of 13 Airbus 340s, large four-engine
Option Games aircrafts, in an effort to match rival British Airways in
An equally scholarly book, but one that addresses a very scope, and Air Canada’s choice in 2005 to purchase the
different aspect of strategy, is Competitive Strategy: Op- Boeing 787 Dreamliner for its superior fuel efficiency
tions and Games, by Benoit Chevalier-Roignant, a re- on long-haul flights. The decisions the companies made
searcher at University of Texas at Dallas, and Lenos Tri- were very different: Virgin preferred a large, lump-sum
georgis of the University of Cyprus, one of the leaders capacity expansion; Air Canada followed an incremen-
best books 2012 strategy
in the field of real options. For readers interested in the tal and flexible approach. But both can be understood
theoretical underpinnings of competition and strategic by the combined power of game theory, which consid-
choice, it’s an important contribution to the field as well ers competitive forces, and the insights of real options,
as an engaging book. which examine sequences of decisions over time.
The authors explore two theoretical traditions — Second, the authors provide brief interviews with
game theory, which comes from economics, and real leading thinkers in game theory and real options, in-
options, which traces its roots to finance — and show cluding Princeton economist Avinash Dixit and Nobel
how their insights can inform many kinds of strategic laureates Reinhard Selten and Robert Aumann. These
decisions. Game theory, of course, has long contrib- interludes provide additional perspective and help il-
uted to our understanding of moves and countermoves luminate key concepts, as well as adding personal and
in competitive situations. More illuminating for many idiosyncratic accounts of their careers. The result is that
readers will be the treatment of real options, which is a the reader gains a sense of how the field has developed
more recent theoretical development, but can help man- and an appreciation of how two separate strands of
agers think in terms of the sequence of decisions they thinking, one from economics and one from corporate
make over time. finance, can inform strategic decisions.
12
Many kinds of options, such as puts and calls in the Competitive Strategy, like Pragmatic Strategy, is rich
stock market, can be traded in financial markets, but the with ideas that will stretch and challenge the reader. The
distinguishing feature of real options is that they can- New Emerging Market Multinationals is less intellectual-
not be traded. Instead, they are opportunities that ac- ly demanding but perhaps more immediately practical.
crue only to the owner of an asset, and include decisions What the three books share, however, is a willingness
such as whether to expand an existing plant or close it to bring fresh thinking to some of the most important
and build a new one. Whereas traditional analysis of de- questions of global competition and business strategy. +
cisions like these has employed calculations made at a
fixed point in time (such as net present value and dis-
counted cash flow), the contribution of real options is to
introduce a temporal dimension and show how strate-
gists can respond flexibly as circumstances change.
Phil Rosenzweig
Most compelling, as well as original, is an integra- phil.rosenzweig@imd.ch
tive approach to strategy that combines the two ap- is a professor at IMD in Lausanne, Switzerland, where he
proaches, which Chevalier-Roignant and Trigeorgis works with leading companies on strategy and organiza-
tion issues. He is the author of The Halo Effect...and the
call “option games.” Real options help illuminate the Eight Other Business Delusions That Deceive Managers (Free
decision to invest or expand, and the addition of game Press, 2007).
14. B E S T B U S I N E S S B O O K S 2 0 12 / M A R K E T I N G
Jim Stengel, Grow: How Ideals Laurence Vincent, Brand Real: How Doc Searls, The Intention Economy:
Power Growth and Profit at the Smart Companies Live Their Brand When Customers Take Charge (Harvard
World’s Greatest Companies Promise and Inspire Fierce Customer Business Review Press, 2012)
(Crown Business, 2011) Loyalty (Amacom, 2012)
MARKETING
Brand New
by Shaun Holliday
best books 2012 marketing
THERE IS ALWAYS A LOT OF NOISE around marketing.
And marketers listen to it religiously in their search for
the new, new thing and the edge it can confer, especial-
ly in highly competitive sectors such as consumer pack-
aged goods. But sometimes the noise can drown out
core messages about the essence and essentials of a suc-
cessful product, service, or brand, and obscure our view
of its future direction. This year’s best business books
on marketing — all from veteran practitioners — rise
above the twittering crowd by delivering the kinds of
insights that make for compelling listening.
An Ideal Brand
Jim Stengel, whose name is as widely recognized among
13
contemporary marketers as the names of the Procter
& Gamble brands he helped build — Pampers and Jif,
among others — is a retired executive who is not content brand ideal is the most powerful lever a business leader
to rest on his laurels. His first book, Grow: How Ideals can use to achieve competitive advantage.
Power Growth and Profit at the World’s Greatest Com- Although business scholars may challenge his claim
panies, which took root from ideas seeded during his in degree, they are unlikely to challenge it in concept.
career, is an ambitious, groundbreaking effort to define After all, Peter Drucker pegged marketing as one of
the future of brand management, supported by a study only two results-producing functions in a business (the
of tens of thousands of brands put forth by companies other was innovation). And the importance of aligning
around the world. organizational design, culture, and capabilities to the
In Grow, Stengel examines the extraordinary power company’s vision and strategy is well known, as is the
and performance that can be harnessed when a brand’s potential of a company pursuing an inspirational ideal
strategy+business issue 69
purpose is defined by a distinctive, fitting “ideal.” A to unleash exceptional power and commitment in its
brand ideal is focused on improving the lives of cus- employees. Until Grow, however, little had been done to
tomers, and is managed by a company that passion- put a value on a brand ideal, and limited practical guid-
ately identifies with the beliefs and values underlying it. ance had been offered on how to identify one and make
Stengel claims that defining and activating a distinctive it central to the company as a driver of focus, growth,
15. B E S T B U S I N E S S B O O K S 2 0 12 / M A R K E T I N G
and competitive advantage. Stengel addresses these poseful manner. This process of discovery results in an
questions directly. ideal statement, which the author articulates for each of
The assumption that brands can make a sizable the Stengel 50 brands. Some examples: “Amazon.com
contribution to shareholder value is foundational to exists to enable freedom of choice, exploration, and dis-
Stengel’s thesis. In fact, brand and business success are covery.” “Dove exists to celebrate every woman’s unique
synonymous to him because “a brand is what a busi- beauty.” “Google exists to immediately satisfy every cu-
ness is all about in the hearts and minds of the people riosity.” “Louis Vuitton exists to luxuriously accentuate
most important to its future.” To support this thesis, the the journey of life.”
author cites Millward Brown Optimor’s body of work, The final question — how do you make the brand
which calculated that brand value now accounts for ideal the center of the company? — is addressed through-
more than 30 percent of the aggregate market capital- out the book. Stengel breaks his answer into four broadly
ization of companies in the S&P 500. stated “must-do” tasks: build a culture around the ideal,
Further, Stengel (in partnership with Millward communicate the ideal to engage employees and custom-
Brown) designed a new research study of brands, the ers, deliver a “near-ideal” customer experience, and evalu-
“Stengel Study of Business Growth,” which analyzed ate your progress and people against the ideal. These four
10 years of data from more than tasks are highlighted with in-depth
50,000 brands. It found that the case studies of various brands, in-
best books 2012 marketing
50 companies whose brands were cluding Discovery Communica-
most strongly associated with im- tions, Pampers, and Zappos, as
proving people’s lives — the “Sten- well as with a plethora of shorter
gel 50” — generated a return on examples.
investment that outpaced the S&P Grow is the year’s best busi-
500 by nearly 400 percent. ness book on marketing because it
Stengel attributes this huge leaves us with a better understand-
performance differential to ideals ing of a brand as the embodiment
— “nothing unites and motivates of a company and its people. It
people’s actions as strongly as ide- inspires by helping us imagine the
als,” he writes. He says a brand great things that could happen if
ideal defines what a brand is and we united our efforts in service of
is not, and illuminates its strengths a distinctive higher-order brand
and weaknesses, as well as current ideal aimed at bettering the lives
and potential points of parity and of our customers.
14
differentiation. (One of the best lines in the book is a
quote from Discovery Channel general manager Clark Brand Aid
Bunting, “Great brands say no.”) A brand ideal creates If you think of a brand ideal as a promise, Brand Real:
enduring connections, uniting and inspiring everyone a How Smart Companies Live Their Brand Promise and In-
business touches. It enables a leader to articulate and fo- spire Fierce Customer Loyalty is a terrific companion vol-
cus on what is most important in a company. It attracts ume to Grow. It is a pragmatic and comprehensive guide
people who are most suited, energized, and committed on how to deliver on a brand promise, which is, writes
to delivering what matters most to customers and trans- author Laurence Vincent, head of the Brand Studio at
forms an enterprise into a “customer-understanding ma- United Talent Agency, “a covenant with consumers” in
chine.” And it stimulates innovation, in a never-ending the form of a commitment to deliver value. Communi-
quest to better serve the ideal. cating and fulfilling this commitment has always been
How do you develop a brand ideal? Stengel says difficult; today it is more of a challenge than ever — in
that first you must discover how your brand is linked to part, Vincent says, because the millennial generation is
“one of five fields of fundamental human values” (joy, populated with “highly skeptical, media savvy, and very
connection to others and the world, the desire to explore vocal” consumers who place a particularly high premi-
new horizons, pride, and social responsibility), and then um on a brand’s authenticity and credibility.
activate those links in a distinctive, authentic, and pur- Brand Real tells us in no uncertain terms how to
16. B E S T B U S I N E S S B O O K S 2 0 12 / M A R K E T I N G
make a brand promise stand up at every consumer brand experience, and focus their own attention on de-
touch point. To achieve this, the book covers the wide livering against those expectations, again and again.
territory of brand marketing; focuses in on the key is- The object is to win what Vincent calls the “mem-
sues, such as brand architecture and communications ory game,” by creating links in the consumer’s mind be-
strategy; and provides practical advice for addressing tween what the brand is and why it matters. He argues
those issues. that these links among cues, expectations, and experi-
“Real brands” are those that fulfill, and often ex- ence are fundamentally important, because we all favor
ceed, customer expectations. These brands, accord- brands (such as Apple) that consistently meet or exceed
ing to Vincent, make promises they intend to keep our expectations, and we punish the ones that don’t.
and make tough strategic decisions about what to of- Brand Real mirrors Grow in its strong advocacy
fer and not offer customers, and they grow without of staff engagement as an essential element in brand
straying from their sense of purpose. For example, he success. “From the executive suite to the front lines to
writes, “Southwest Airlines has prospered by not doing the investment base,” declares Vincent, “the best way
some things that other airlines do: no assigned seats, no to sustain a real brand is to align the people behind it
first-class cabin, no meal service. These omissions…are with the brand promise.” That is, branding begins in-
fundamental service decisions that drive the business side a company, by ensuring that the values and the
model and they contain memo- behaviors of the people working
best books 2012 marketing
rable attributes that make the there are a direct reflection of the
brand salient because they sup- brand. If they aren’t, Vincent says,
port the brand’s promise to deliver it’s because of one or more of five
great value through low fares and factors: ignorance, doubt, incom-
friendly service.” petence, poverty (a lack of resourc-
Vincent thinks that compa- es), and a lack of incentive. And if
nies should measure a brand’s suc- the employees do not reflect the
cess by the expectations it creates brand, the brand experience will
and the results that it delivers to be flawed and the brand promise
users. This requires a reality check will be placed at risk.
that mandates answering three At a time when many com-
simple, but often ignored, ques- panies are thinking of branding
tions about a brand: What is it, as an exercise in creating a com-
why does it matter, and how does pelling logo, a sticky website, an
it create value? entertaining advertisement, or an
15
Brand Real is filled with use- aesthetically pleasing package,
ful lessons for marketers. For example, Vincent clarifies Vincent reminds us that branding is first and foremost
the difference between a brand’s promise and its posi- a strategic act. It requires “purposeful conduct” in the
tioning. A brand’s positioning is the perceptual terri- quest to influence how people behave, both customers
tory it claims relative to its competitors. A brand prom- and employees. And like any other business strategy,
ise incorporates its positioning, but also articulates the branding should serve as a guide for “mission-critical
brand’s reason for existence and defines the benefits of decisions in capital investment, human resources, re-
the brand experience in terms of three dimensions: how search, product development, and operations manage-
people think, what they do, and how they feel. ment.” That’s why Brand Real is as relevant to the CEO
Vincent makes a strong argument for brand sim- as it is to the CMO.
plicity, which is based on his belief that brands exist be-
cause consumers hate uncertainty and therefore rely on A Buyer’s Market
strategy+business issue 69
cues as to what they should expect from products and If Doc Searls is right, the discipline of branding — and
organizations when making purchase decisions. Thus, indeed, marketing itself — could be on the brink of a
brand marketers should not place too much empha- fundamental shift. Soon, claims the former advertising
sis on symbols, such as a name or logo. Instead, they executive, whose insights into the effects of digitization
should seek to clarify the customer’s expectations of the on markets became the platform for his current career
17. B E S T B U S I N E S S B O O K S 2 0 12 / M A R K E T I N G
as a highly regarded technology writer, consumers will Searls’s dramatic prognostications are supported by
be managing business-to-consumer (B2C) companies in ProjectVRM, which he runs and which was launched in
much the same way as those companies are managing September 2006 from the Berkman Center for Internet
their vendors. & Society at Harvard University. The project’s purpose,
This change will create a new kind of market — the he writes, is to “encourage development in an area that
“Intention Economy,” which is vastly different from the has been largely neglected: empowering individuals —
current “Attention Economy,” in which marketers vie to especially customers — natively, outside any corporate
be heard. Searls’s The Intention Economy: When Custom- or organizational framework.” Dozens of companies,
ers Take Charge envisions a market in which customers mostly startups, have already subscribed to the VRM
are kings: Their orders are followed, their every need vision, and they are in the early stages of developing the
is responded to, and they grant sellers an audience only tools and capabilities that consumers will need to take
when they want to. In this economy, digitally empow- control of markets. Personal.com, for instance, provides
ered shoppers will build personal firewalls that block individual users (called “owners”) with a private, fully
out unwanted marketing solicitations, and instead they owned, and fully controlled data vault.
will notify their preferred providers about what they Searls’s vision raises provocative questions for com-
want to buy, when they want to buy it, and how much panies and for marketers. Imagine, for example, an
they want to pay, by issuing the personal equivalent elderly woman who wants a computer that is simple
best books 2012 marketing
of an RFP. enough for her to operate, or a man who wants a wool
Although digitization has empowered consumers sweater in a particular style, or a driver seeking a part
with information and competitively priced goods and for an automobile. Instead of searching for suppliers,
services, until now it has likely had a greater influence what if they put their specs online and companies vied
on the supply side of markets, spawning innovation in to meet their needs? How would your company respond
manufacturing, supply chain management, marketing, if the clearinghouse for supply meeting demand de-
sales, and other business functions. For marketing’s volved to the level of the individual customer and was
“hunters,” digitization has proven to be a high-powered orchestrated by that customer? Could your company
scope, enabling them to track every move of their con- survive in a marketplace in which gaining the attention
sumer prey. It’s no wonder consumers feel more hound- of targeted consumers has given way to paying attention
ed than ever — constantly interrupted by the cacoph- to consumers targeting you?
ony of barking from marketers vying for their attention, It’s hard to answer these questions. If the Intention
and disquieted by the not-so-far-fetched suspicion that Economy does come to fruition, it will likely render ob-
silent trackers are always sniffing at their heels. solete many of today’s marketing practices, which were
Searls argues that the time is coming when custom- designed to capture the attention of consumers. (Searls
16
ers will be “emancipated from the systems built to con- reminds us that the word branding was borrowed from
trol them.” The instrument of their emancipation will the cattle industry, and its intention was to burn a prod-
be vendor relationship management (VRM), the con- uct into the customer’s mind — not an image that will
sumer equivalent of customer relationship management appeal to tomorrow’s customer–kings.)
(CRM). In other words, individuals will adopt the prin- That day is not here yet, however, so read Grow
ciples, practices, and guidelines that today’s companies and Brand Real to learn how to build a better connec-
follow when interacting with them. tion with customers in today’s markets, and then read
What VRM (yawn) lacks in appeal as a brand The Intention Economy to ponder how you might pre-
name, it makes up for in ambition. Searls envisions it pare for the future. +
as a digital tool kit that will create value for consumers
by allowing them to manage relationships and service
requirements with companies on their own terms; by
Shaun Holliday
enabling them to collect their own data and control ac- shaun.holliday@booz.com
cess to it; by giving them the means to express demand is a senior executive advisor in Booz & Company’s
in the open market; and by facilitating negotiated out- consumer and retail practice. He spent much of his
career leading businesses and functions in premier
comes with sellers that, in the best-case scenario, will global consumer companies, including Pepsi Bottling
support value-creating collaborations. Group and Guinness Ireland Group.
18. B E S T B U S I N E S S B O O K S 2 0 12 / I N N O VAT I O N
Ron Adner, The Wide Lens: A New Vijay Govindarajan and Chris Trimble, Thomas M. Koulopoulos, Cloud Surfing:
Strategy for Innovation (Portfolio/ Reverse Innovation: Create Far from A New Way to Think about Risk,
Penguin, 2012) Home, Win Everywhere (Harvard Innovation, Scale, and Success
Business Review Press, 2012) (Bibliomotion, 2012)
INNOVATION
Context Is King
by Krisztina “Z” Holly
best books 2012 innovation
TWENTY-FIVE YEARS AGO, while working on the ad-
vanced manufacturing team for the space shuttle’s main
engine, I watched a co-worker struggling to introduce
a new technology. He was charged with developing a
laser welding technique to replace the finicky electron
beam technology that was destroying million-dollar
parts. But his potentially superior approach was aban-
doned because the people on the shop floor resisted the
change. It was the first time I saw an innovation effort
fail because of context, and I never forgot it.
Since then, and especially while leading efforts to Adner provides an approach and a tool kit for
commercialize research at two universities, I’ve repeat- avoiding Sony’s fate in his book The Wide Lens: A New
edly seen how the complex systems of partners, resourc- Strategy for Innovation. Written in a style and format
es, infrastructure, and cultural norms that surround similar to those of books like Geoffrey Moore’s Crossing
17
most innovation efforts influence their outcomes. In the Chasm: Marketing and Selling Technology Products
today’s complex and rapidly changing world, innovators to Mainstream Customers (HarperBusiness, 1991) and
ignore this context at their peril. This year’s best busi- Jim Collins’s Good to Great: Why Some Companies Make
ness books on innovation help mitigate the risk by ex- the Leap…and Others Don’t (HarperBusiness, 2001), its
amining context from three different, but complemen- well-structured chapters are studded with numerous
tary, perspectives. case studies designed to help readers think about their
company from a fresh perspective — in this case, the
Innovation Ecosystems ecosystem in which they innovate.
Sony ignored context when it delivered the first truly In Part I, the author describes two common con-
viable electronic reading device without an easily ac- textual blind spots: the “co-innovation risk” of not con-
cessible, fully stocked e-bookstore — and suffered the sidering the suppliers and other partners necessary to
consequences. As Ron Adner, a professor of strategy at bringing a solution to market, and the “adoption chain
strategy+business issue 69
the Tuck School of Business at Dartmouth College, de- risk” of not considering which players are needed to en-
scribes it, Amazon’s late-arriving, inferior Kindle quick- sure that end-users can fully realize the value offered by
ly surpassed Sony’s e-reader and achieved market domi- the solution.
nance because of Amazon’s partnerships with publishers Parts II and III, the remainder of the book, are de-
and superior content platform. voted to avoiding these blind spots, starting with what