Saturday, September 3, 2011

The Enduring Principles of High-Tech Success

A review of Staying Power, by Michael A. Cusumano.

Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Uncertain World

By Michael A. Cusumano
Oxford University Press, 2010
In Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Uncertain World, Michael A. Cusumano, Sloan Management Review Distinguished Professor of Management at the Massachusetts Institute of Technology’s Sloan School of Management, reports the latest findings from his research into high-tech companies. The result is a book that offers fascinating insights into management trends and practices in the high-tech sector.
As the subtitle suggests, the book is organized into six “enduring” principles; but, as Cusumano points out, their exact meaning and their practical applications have not been fully determined. The principles represent organizational outcomes in successful firms. They can be thought of as effective resolutions to the tensions between what the author describes as a tight focus on competitive advantage at the product level and a broader way of thinking about agility and advantage in contexts where customers buy systems rather than just “boxes.” Thus, the author contends that successful firms adopt product platforms, not just products, and they add services to those platforms, creating rich ecosystems with positive network effects. Think of Apple’s iPhone and its swarm of apps. Such firms are founded on capabilities, not just strategies; they incorporate pull-style concepts, not just push; they look for economies of scope, not just scale; and they pursue flexibility, not just efficiency.
Cusumano devotes a chapter to each principle and illustrates the principles with a variety of interesting examples. He examines Microsoft’s agile development system and Toyota’s lean production system, for example, to show how continual learning is incorporated into both, allowing employees the freedom to explore and experiment within well-framed spaces. The result is short cycle times and standardized work with fast feedback.
It is difficult to argue with Cusumano when he writes, “Managers who grasp the principles described in this book — all of which have withstood the tests of time and geography, as well as rigorous academic scrutiny — should create firms that stay ahead of the competition most of the time and adapt quickly to unpredictable change as well as adversity.” But although the principles are unimpeachable, the managerial reader is left to figure out how to apply them in his or her own context. This leaves us with principles that are true but not very helpful, a pervasive problem in business books and perhaps in the giving and taking of advice in general.
Cusumano seems to acknowledge this tacitly in the book’s very interesting appendix. It is a refreshingly frank look at the problems and pitfalls of trying to extract best practices and principles from the analysis of corporate performance. He compares his principles with those enumerated by Tom Peters and Robert Waterman in In Search of Excellence: Lessons from America’s Best-Run Companies(Harper & Row, 1982) and Jim Collins in Good to Great: Why Some Companies Make the Leap — and Others Don’t (HarperBusiness, 2001). What quickly becomes clear is the difficulty of rigorous analysis and the ephemeral nature of corporate success. One is left with the suspicion that when it comes to divining the secrets of success, organizations are incommensurable with one another. This final qualification of the applicability of his findings suggests that Cusumano’s principles are better interpreted through a wide-angle learning lens than a tight focus on implementation.


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