Insights from Rita McGrath at the World Business Forum

Rita McGrath shares what she’s learned at the World Business Forum.


In her latest book, The End of Competitive Thinking, Columbia Business School Professor Rita McGrath suggests a new playbook for strategy. It consists of six key factors.

1. Continuous reconfiguration

Companies excelling in the current environment are in constant motion. They change a lot of things, not big things all the time, but smaller things steadily. Once you get used to operating this way, it gets easier, says McGrath, but it has to be counterbalanced by enough stability so people don’t go flying off the rails. “That’s typically around your culture, your values, your big picture strategy; those things should stay relatively stable so people have something to hang on to,” she says. “But change up your resource investments, your placement of people, the way you think about collaborating. Those things can be changed quite frequently.”

2. Healthy disengagement

This is about giving some forethought into how your company gets out of things that are no longer working. Although we know we need a disengagement strategy, people tend to dread it, she says. This means that when disengagement happens it tends to cause maximum pain and can be very damaging to certain people’s careers. “Properly managed, disengagement can be just another business process we have to deal with,” she says. “Looked at dispassionately it takes a lot of the politics down a couple of notches.” She suggests Apple as a company that is good at this – think of the iPod, which was discontinued despite having a loyal customer base.

3. Deft resource allocation

This is about getting resources away from powerful people in your company so they can be repurposed to do the most good. “In most organisations with this sustainable competitive advantage mindset, the people that are powerful control where the resources generated by the company go.” She says the research shows this is a good predictor of future poor performance as the resources get trapped. She suggests Lego as a company that is good at managing this process, allocating additional funds generated by greater efficiencies as a team effort.

4. Innovation Proficiency

Innovation in a lot of organisations is episodic. She says the way it typically works is some very important person says, ‘we need more innovation so go off and innovate’. “This is no way to run a mission-critical function,” she says. “What we need to do is increasingly build innovation proficiency. You can’t leave it to chance, you can’t leave it to some important person taking an interest, and you can’t leave it to a small band of hearty warriors who are true believers in the middle of the company. If it’s really important to the future of your organisation it needs to be managed.”

5. A discovery driven leadership mindset

Who’s a great leader in an organisation? Historically, it’s somebody who makes their numbers reliably, sticks to the plan, is authoritative, gives strong guidance and direction, but we are moving away from that model, according to McGrath. “We’re moving to a leadership model that is more discovery-orientated, welcoming of new information, open to the idea that things could really be changing, bringing different voices into the conversation,” she says. “There’s a lot of mounting evidence that diverse teams come up with much better solutions than teams that are homogenous. Leadership is much more about discovering what’s really going on. This has huge implications for how we select and promote leaders and the skills we teach them.”

6. Entrepreneurial career management

What does this all mean for individuals and their careers? Increasingly, this means that many jobs will be what’s been dubbed “tour of duty jobs”. This is when you sign on for an activity, you work with that and then at the end you re-negotiate for the next opportunity. This is similar to how people come together to make movies. “This means you need to convince the people around you that you have rare skills, valuable networks, it’s something you have deep knowledge about. It’s something that makes you someone they want to welcome onto their team,” says McGrath.  This applies in particular to the millennials, who are already keenly aware of this and believe they need to be responsible for their own career and skill development.