The Essence of Corporate Strategy.

The Essence of Corporate Strategy by Jeremy Davis and Timothy Devinney, 1997 (Allen & Unwin, Sydney) A$45.00, pp. viii + 364.

`All management theories become conspiracies against good management and serve mainly to cover the manager's ass (T. George Harris). Although their opening quote is cynical of management theory, Davis and Devinney are selling established, empirically supported and academically accepted theories, in contrast to most books on management. Such books on management are typically found in the airport bookstore and flaunt the sexy, latest `best practice' that will drive your business into the 21st century. Davis and Devinney's book filters out these short-lived fads in management and provides a scientific, discipline-based approach that has more enduring value.

The Essence of Corporate Strategy is about strategy formulation (the models driving the choice about what strategy to pursue). It is not about implementation (how to best put the chosen strategy into effect), though there is a section on overcoming the constraints of culture and belief systems. The book explains established theories of strategy formulation and integrates them into a coherent whole. The unique value for the thinking manager is the depth of explanation, familiar examples (for both Australian and international readers), and the integrative framing of the many different parts. The economic, rationalist emphasis reflects its predominance in the field and the authors' backgrounds.

The book is suitable as either an MBA student textbook or a thinking practitioner's handbook. It is not suitable as an undergraduate textbook, since the concepts are too complex, and the associated cases, instructor's manual, and suggested exercises expected at the end of every chapter of an undergraduate textbook are absent. It is clearly aimed at people who want science with their management.

The book is structured similarly to other academically authored books on strategy. The basic design of these books is to introduce the reader to the concept of strategy, to give an overall framework to link the parts together, and then to go through the different types of sustained competitive advantage, broken into business-level strategies followed by corporate-level strategies. A final section typically qualifies the rationalist approach by recognising the cultural, political and psychological problems to be overcome in the implementation phase.

As well as the emphasis on well-supported, research-based theories mentioned earlier, the quantity and balance of Australian and international examples is outstanding. Very few management books have included this much fact-finding to support their ideas. The authors have worked hard to support all concepts with research results and concrete examples. These examples are diverse enough to be both entertaining and informative. The quality and depth of explanation of concepts reflects the authors' knowledge of the subject and the depth aimed for in the book.

These strengths mentioned must be traded off against the resulting weaknesses. The biggest weakness of the book, I feel, is the difficulty reading it. The flow of logic is complex and detailed. The flow also often diverts to related asides. This is partly as a result of the wealth of examples, but also reflects the immense depth the authors try to cover in order to support their points.

Another problem with the book is weak integration. In my opinion, the integrating theme should be more explicit and consistent in order to tie it all together better. I finished the book feeling as if I had read a lot of individual parts which were not all effectively tied together in a memorable way. The authors claim in chapter 1 that the `value propositions, resource base and business processes' decomposition of strategy integrates the disparate theories. But I did not find that this meaningfully integrated my thinking of how the different parts fitted together.

A few important elements of contemporary strategy theory either have been omitted or are underdeveloped. There is inadequate coverage of the role of goals and stakeholder management. They are briefly referred to in chapters 2 and 11, but the implications for strategy are not developed and they are more seen as constraints than as an additional possible opportunity for competitive advantage.

There is nothing on managing the evolution of the industry. Companies need to manage the current and upcoming stages of the industry life cycle. There is a large body of theory on managing each of the growth, mature and declining stages of the life cycle, which has been omitted.

I have trouble with the book's game-theory emphasis for understanding rivalry. The more classic method for understanding competitive reaction (the competitor analysis framework from Porter (1980)) was not even mentioned, despite the fact that it makes much more reasonable assumptions about firm behaviour than the more restrictive game-theory approach.

Quantitative strategy decision metrics (measures) such as discounted cash flow, Economic Value Added (EVA), and the Balanced Scorecard have been ignored. These should be compared with the more qualitative approaches presented in the book. Location-based advantages and international strategy are not considered, although the book is thick with international examples.

I see these omissions as deliberate choices in the interests of brevity and signals of value. Davis and Devinney have gone for depth in selective coverage rather than shallow but broad coverage. It is as much what they have omitted as what they have included that shows what they consider salient.

In summary, The Essence of Corporate Strategy is an in-depth integration of the most academically accepted yet boardroom-pragmatic frameworks for thinking about strategy formulation issues. The thinking manager won't find a fully comprehensive array of strategy tools, but, given most readers' desire for brevity balanced against a need for rigour, this may be an acceptable trade-off.

References

Porter, M.E. 1980, Competitive Strategy, The Free Press, Cambridge, MA.

Geoff Waring

Australian Graduate School of Management