My favorite business book is the very first book ever written on the newly emerging 20th century discipline of strategic management. It is General and Industrial Management , by Henri Fayol, first published in 1916.
Fayol was a French mining engineer. Imagine that! The first book written on strategy is by a Frenchman who is an engineer! He didn't have a M.B.A.! Zut alors !
Why is it my favorite? The answer is simple. Fayol understood the new discipline of strategy better back then than it is understood today.
I can say this because research keeps telling us that 50% of board, executive teams, management, and employees don't "get" the strategies of their organization. Somehow, the subject of strategy has become so inaccessible that 50% of us feel we don't understand it.
On page 1 of chapter 1 of the first book written on strategy, Fayol writes that there are 6 activities that all executives must manage. In other words, he was saying that there is a framework of strategy common to all organizations.
Fayol's page 1 observation inspired our book The Alpha Strategies, Understanding Strategy, Risk, and Values in Any Organization published this year (2013).
In it, we make the case that there are, in fact, 8 strategies common to all organizations. Fayol identified 6 and Peter Drucker identified the other 2 in his, The Practice of Management, 1954.
For Fayol's contribution, I consider him to be the true father of strategic management.
In the first book written on strategy, Fayol had the new discipline largely figured out.
Sort of like Chopin being around when the new pianoforte was first introduced. The piano, with its keys and hammers technology quickly rendered obsolete the flimsy plucked string technology of the clavichord. And Chopin quickly mastered the new machine and could write music for it in a way that has never since been matched.
Well, the same goes for Fayol. He was the first on the strategy scene and he got it right.
Fayol's is presently recognized for his identification of the 5 functions of a manager and his 14 principles of management. But, for us, while significant, these contributions pale in comparison to his first chapter observation on a common strategy framework.
Fayol told us that financial management, organization management, R&D/technology, risk, production, and marketing/sales are activities common to all organizations. Fayol actually used the word "activities" but, for us, the word is synonymous with strategy because we define strategy as being a choice of action; i.e. a choice of activities.
In a nutshell, there you have it. To manage any organization, you need to manage 8 strategies. These strategies are always present in any organization that is up and running whether or not they are documented in a strategic plan!
Imagine if the past 60 years of development of the discipline of strategic management had been centered on the idea that strategy is actually an integration of 8 choices of action common to all organizations, regardless of size or whether the organization is for-profit, nonprofit, or public sector.
We could have avoided countless hours wasted learning manufactured definitions for synonyms for strategy (goals, purpose, objectives, strategy, tactics, etc.) and could have been focused on understanding the complex integration of the activites at the core of all companies.
"Mission" would have been quickly seen as simply being the business definition strategy, 1 of 8 strategies common to all organizations, rather than as being some amorphous concept struggling intuitively to touch on all the other 7 strategies.
We could have avoided the unfortunate notion that all strategy starts with marketing, thereby creating the misconception that strategy is just about marketing.
We could have avoided endless discussions debating whether something was a strategy or a tactic; or a vision versus a mission.
Fayol got it right in the first book on the subject of strategy.
For that, he should be and, in time, he will be duly recognized as the Father of Strategic Management.
And when his observation that all organizations have a common set of strategies is finally understood and embraced, we will have better managed companies. Why? Because the 50% understanding of strategy, as is the case today, will become 100%.
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