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Business Level Strategy

Business Level Strategy

Chris Zook, a partner at Bain & Company, and co-head of their strategy practice was interviewed on HBR IdeaCast by Sarah Green.  Chris  is also the co-author, with James Allen, of Repeatability: Build Enduring Businesses for a World of Constant Change.

Importance of Simplicity, Alignment and Feedback

The focus of the interview was on business level strategy and the importance of three critical design principles that Chris and James uncovered.

Below are highlights from Chris’ interview with Sarah Green:

  • We asked 377 executives what was the number one barrier to achieving their goals. And 85% of them answer it in a way that was related to the broad theme of complexity.
  • We asked CEOs what was their number one issue in their job.  And they actually said– and we’d never heard this before– they overwhelmingly said it was managing their time and energy in the face of growing complexity.
  • We began a process of interviewing CEOs, and executives, and building another database of about 200 companies with a lot of their practices and characteristics of their strategies in search of what we call the design principles of enduring strategies.
  • And what we found were three design principles that, when all three were adhered to at a very high level, resulted in businesses, on average, being able to have as much as five to six times longer duration of maintaining competitive advantage. And all three of them we’re actually related, in some way, to the theme of simplicity. What we found– I guess the headline, in a way, for the whole study– is the idea that complexity proved to be the silent killer of profitable growth.
  • The first one is the  presence of an extremely clear form of differentiation in your most important core business, uniqueness against your competitors so that it just really jumps out at you and hits you in the face.
  • We got hold of some data on 300,000 employees from hundreds of employee surveys of companies. And what we found is that in only about 40% of the cases did the average employee in the average company– not even the worst company– say that they had any idea about what the strategy and its key objectives were.
  • The way I would characterize the second design principle is the absolute ability to hard wire the key four, five, or six principles or ideas of the strategy. So just think of the Ikea example, all the way through the organization into front line routines using a small number of principles and beliefs that we’ve been calling the non-negotiables. And so the existence of these non-negotiables in a company and their use in driving the strategy, almost like the operating manual, a strategy to the front line, was the second design principle
  • The third design principle, which is about feedback loops and systems for learning around the four or five absolutely most important variables of the strategy that are really highlighted, that link to people’s pay perhaps, that are not necessarily financial measures.

Business Level Strategy

Good Strategy’s Non-Negotiables

An interview with Chris Zook, partner at Bain & Company and co-head of the firm’s global strategy practice. He is the coauthor of Repeatability: Build Enduring Businesses for a World of Constant Change . TRANSCRIPT Welcome to the HBR IdeaCast from Harvard Business Review. I’m Sarah Green. I’m talking today with Chris Zook, a partner at Bain & Company, and co-head head of their strategy practice. He’s the co-author, with James Allen, of Repeatability: Build Enduring Businesses for a World of Constant Change. 

Business Level Strategy

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