The formulas, tricks and trade secrets of Private Equity

Adhocracy Corporate Strategy

Sample Chapter

Over time, there have been many distinct management ideas that have shaped the thinking of corporations and their incumbent management (adhocracy maybe?). Corporate strategy, as one of these ideas, has existed for almost 50 years and formed the basis of many subsequent ideas. But, has the idea of corporate strategy become something other than what was originally intended? Have strategic consultants over-bureaucratised business with their own overly regimented version of corporate strategy? Are companies even benefiting from all of this centralised instruction?

The father of strategic Management, Igor Anhoff, said that strategy is a “rule for making decisions”. Michael Porter told an American business school that strategy “has to do with what will make you unique”. However, Richard Koch, Mr 80/20, believes that despite these clear and concise definitions, corporate strategy has done more harm than good because “the Centre” typically enforces it. That is, people without real-world experience and by people detached from the coalface usually run it. Welcome the concept of adhocracy.

In light of my experience with what I see as new-age corporate strategy, I am feeling a pull towards the management idea of adhocracy, especially for small, medium and fast-growing enterprises. While some define adhocracy as the opposite of bureaucracy, I like to think it’s a more responsive structure borne by decentralised strategy. It puts strategy in the hands of business units, which arguably, best understand what works and what doesn’t work. More importantly, what it doesn’t do is put strategy in the hands of external consultants, fresh out of business school, without a minute’s worth of coalface experience.

Unlike what critics may espouse, adhocracy doesn’t have to be unfocussed. It doesn’t have to mean the engineering unit only strives to be bleeding edge, that the marketing unit only works to build the biggest brand, or that the finance unit only tries to cut costs. An adhocracy should always work towards the greater good (which is usually market positioning, customer satisfaction and all of those staid ideas), but by recognising the benefits of decentralised thinking. Anyway, after the nonsense I’ve seen lately (mostly coming from strategic consultants), I really think adhocracy is worth a second thought.

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