Gary Hamel

A company surrenders todays businesses when it gets smaller faster than it

gets better. A company surrenders tomorrows businesses when it gets better
without getting different.
Gary Hamel
American academic and consultant
Born 1954

Breakthrough ideas
Strategic intent
Core competencies
Strategic architecture
Industry foresight

Key book
Competing for the Future
The Ultimate Business Guru Book 80

In 1978 Gary Hamel (born 1954) left his job as a hospital administrator and
went to the University of Michigan to study for a PhD in International Business. At
Michigan, Hamel met his eventual mentor, C.K. Prahalad. We shared a deep
dissatisfaction with the mechanistic way strategy was carried out, Hamel recalls.1
Twenty years on, Hamel has established himself at the vanguard of contemporary
thinking on strategy. Hard hitting, opinionated and rigorously rational, Hamel
summarizes the challenge of the 1990s, in a typically earthy phrase, as separating
the shit from the shinola, the hype from the reality and the timeless from the
transient.
Hamel talks in eminently quotable shorthand. Challenge follows challenge;
question is added to question. Go to any company and ask when was the last time
someone in their twenties spent time with the board teaching them something they
didnt know. For many it is inconceivable, yet companies will pay millions of
dollars for the opinions of McKinseys bright 29-year old. What about their own 29-
year olds?
As well as being visiting professor of strategic and international management at
London Business School, California-based Hamel is a consultant to major
companies and chairman of Strategos, a worldwide strategic consulting company.
His reputation has burgeoned as a result of a series of acclaimed articles in the
Harvard Business Review including Strategic intent; Competing with core
competencies; and The core competence of the corporation as well as the
popularity of the bestselling, Competing for the Future. (All of these were co-written
with Prahalad.)
Along the way, Hamel has created a new vocabulary for strategy which includes
strategic intent, strategic architecture, industry foresight (rather than vision) and core
competencies. (Hamel and Prahalad define core competencies as the collective
learning in the organization, especially how to co-ordinate diverse production skills
and integrate multiple streams of technologies and call on organizations to see
themselves as a portfolio of core competencies as opposed to business units. The
former are geared to growing opportunity share wherever that may be; the latter
narrowly focused on market share and more of the same.) Instead of talking about
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strategy or planning, they advocate that companies should talk of strategizing and
ask What are the fundamental preconditions for developing complex, variegated,
robust strategies?
The need for new perspectives on strategy is forcefully put by Hamel. I am a
professor of strategy and often times I am ashamed to admit it because there is a
dirty secret: we only know a great strategy when we see one. In business schools we
teach them and pin them to the wall like specimens. Most of our smart students raise
their hands and say wait a minute was that luck or foresight? Theyre partly right.
We dont have a theory of strategy creation. There is no foundation beneath the
multi-billion dollar strategy industry. Strategy is lucky foresight. It comes from a
serendipitous cocktail, he says.2
The trouble is we have sought to explain strategy by a series of simplistic
frameworks. We have an enormous appetite for simplicity. We like to believe we
can break strategy down to Five Forces or Seven Ss. But you cant. Strategy is
extraordinarily emotional and demanding. It is not a ritual or a once-a-year exercise,
though that is what it has become. We have set the bar too low, says Hamel. As a
result, managers are bogged down in the nitty-gritty of the present spending less
than three percent of their time looking to the future.
The reinvention of strategy occurs against the backdrop of an environment in
which success has never been more important and tenuous. If Bill Gates says that
Microsoft is always two years away from failure, what hope can there be for the rest
of us? Hamel admits that the circumstances under which strategy is created have
changed. In many companies you see institutional entropy. How do you teach
individuals to be enemies of entropy? It is like being a map maker in an earthquake
zone. We are talking about products entering a market which is emerging and
changing. How do you create strategy in the absence of a map?
First, he says, you need to challenge traditional assumptions. The entire thrust of
Hamels argument is that complacency and cynicism are endemic. Dilbert is the
bestselling business book of all time. It is cynical about management. Never has
there been so much cynicism. It is only by challenging convention that change will
happen. Taking risks, breaking the rules, and being a maverick have always been
important, but today they are more crucial than ever. We live in a discontinuous
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world one where digitization, deregulation and globalization are profoundly
reshaping the industrial landscape, he says.3
Hamel argues that there are three kinds of companies. First are, the real makers,
companies such as British Airways and Xerox. They are the aristocracy; well
managed, consistent high achievers. Second, says Hamel, are the takers, peasants
who only keep what the Lord doesnt want. This group typically have around 15
percent market share such as Kodak in the copier business or Avis Avis slogan
We try harder enshrined the peasantry in its mission statement. Harder doesnt get
you anywhere, says Hamel dismissively.
Third are the breakers, industrial revolutionaries. These are companies Hamel
believes are creating the new wealth and include the likes of Starbucks in the
coffee business. Companies should be asking themselves, who is going to capture
the new wealth in your industry? he says.
When Hamel talks of change, he is not considering tinkering at the edges. The
primary agenda is to be the architect of industry transformation not simply corporate
transformation, he says. Companies which view change as an internal matter are
liable to be left behind. Instead they need to look outside of their industry
boundaries. Hamel calculates that if you want to see the future coming, 80 percent of
the learning will take place outside company boundaries. This is not something
companies are very good at. The good news is that companies in most industries are
blind in the same way, says Hamel. There is no inevitability about the future.
There is no proprietary data about the future. The goal is to imagine what you can
make happen.
He argues that there are four preconditions for wealth creating strategies. First, a
company must have new passions. People inside the organization must care deeply
about the future. Strategy has to rediscover passion.
Second, wealth creation requires new voices. In many companies Hamel
observes a lack of genetic diversity. Young people are largely disenfranchised from
discussions of strategy. We need a hierarchy of imagination, not experience. Among
the people who work on strategy in organizations and the theorists, a huge
proportion, perhaps 95 percent, are economists and engineers who share a mechaGary
Hamel 83
nistic view of strategy. Where are the theologists, the anthropologists to give broader
and fresher insights?
Third, Hamel calls for new conversations. Instead of having the same five
people talking to the same five people for the fifth year in a row, more people need
to become involved in the process of strategy creation.
Finally, there is a need for new perspectives You cannot make people any
smarter but you can give them new lenses, says Hamel. Only non-linear strategies
will create new wealth.
There are, of course, other options. Many will continue to ignore Hamels call
for a revolution. It is the easy route. There is a lot of talk about creating wealth for
shareholders. It is not a hard thing to do. Just find a 60-year-old CEO and set a 65-
year-old retirement age and then guarantee a salary based on the share price
growing. The trouble is that it is here, at the stock option packed top of the
organization, that change needs to begin. What we need is not visionaries but
activists. We need antidotes to Dilbert, Hamel proclaims. Revolutionaries always
challenge the orthodoxies of the incumbent. We believe change has to start at the
top, but how often does revolution begin with the monarch?