INVESTMENT banks tend to be quite smart when it comes to making money. Yet the US banking giant Morgan Stanley has missed out out on some major deals, seen its share price tumble and top executives and star bankers walk, all because its former chief executive officer, Philip Purcell, got his strategy wrong.

As BusinessWeek put it: “It was his inability to develop a coherent strategy and sell it to the troops that led to his undoing. This former McKinsey & Co consultant, who had won a reputation as a master strategist, found himself bereft of ideas when they were most needed.” The new chairman and CEO, John Mack, has identified his key priorities for getting the bank back on track, most of which can be summed up in a word: strategy.

The Morgan Stanley story is more than just an interesting tale waiting for a film script; it illustrates perfectly just why strategy is worth bothering with. Strategy is not just about dull business textbooks and growth charts, it affects everyone’s working day.

Nick Greenspan, a partner at Bain & Company, a businessconsultancy, says that strategies “set the behaviours within a company”. A strategy is not just a vision statement but a “clear set of actions that everyone can work to”.

It determines where firms channel their resources, the staff they hire and how people do their day-to-day jobs. For example: Enterprise Rent-a-Car in the US has made the strategic decision that quality of customer interaction is the key to its business and so hires college graduates for front-desk jobs, making it unique within its market.

In the book Strategy: How to Shape the Future of the Business, Dominic Houlder, associate professor in strategic and international management at the London Business School, lists 14 benefits of strategy including: “Confidence: building up people’s belief in managers and their abilities, in the business itself, their own value to the organisation and the choice they have made to work in it.” A great example of this is the John Lewis Partnership, where all employees, or partners as they are called, know that good customer service is one of the keys to its success over competitors; it is a strategy which has been successfully translated from the top office to the tills.

And that’s the point, a strategy is no use to anyone if it sits on the MD’s shelf gathering dust. Everyone, from Norman in bought ledger to Norma in customer services, has to know why they work there.

Which is why it is important that strategy isn’t something dreamt up by directors locked up in the boardroom with a plate of club sarnies, but is something in which everyone is involved, says Petra Cook, head of public affairs at the Chartered Management Institute. She favours workshops or away days where everyone gets involved in developing strategy, which sounds like fun, especially if you get to go somewhere nice.

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STRATEGY is a word that has been hijacked by academics and profiteers. It sounds important and it promises to give us a leg up in corporate life, if only we knew what it meant. In this ten-week series Career is translating some of the gobbledegook into practical advice. Each week we cover an aspect of the basics — What is a strategy? How can you get one? And why bother?


This week we talked to Bain & Company (www.bain.com) and the Chartered Management Institute (www.managers.org.uk). We read Strategy: How to Shape the Future of the Business (Format Publishing, £8.99) and How Purcell Lost His Way, by Emily Thornton, published in BusinessWeek (July 11) (www.businessweek.com).

Next week: How to turn your strategy into reality.

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