How Managers' Everday Decisions Create or Destroy Your Company's Strategy Essay

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The cumulative impact of the allocation of resources by managers at any level has more real-world effect on strategy than any plans developed at headquarters.

How Managers’ Everyday Decisions Create or Destroy Your Company’s

Strategy
by Joseph L. Bower and Clark G. Gilbert

O
72 Harvard Business Review
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about how strategy really gets made comes from a visit one of us – the lead author – made to a large company’s headquarters. The company controller was concerned and confused about a capital project proposal he’d recently received from one of the company’s most important divisions: a request for a large chimney. Just a chimney. Curious, the controller flew out to visit the division and discovered that division managers had built a whole plant (minus the chimney) using work orders that did not require corporate approval. The chimney was the only portion of the plant that could not be broken down into small enough chunks to escape corporate scrutiny. The division managers, it seemed, were eager to get on with building a new business and had despaired of getting corporate
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February 2007

hbr.org

Aude Van Ryn

How Managers’ Everyday Decisions Create – or Destroy –Your Company’s Strategy

approval within a reasonable time frame. Convinced that the new capacity was necessary, managers had found a way to build the plant but still needed the chimney. In the end, the division managers were proven right about the need for new capacity and also about the need for speed. The chimney was, ultimately, approved. But who (the controller wondered) was running the company? We’ve spent many years, between us, trying to answer that question. In this case, the divisional managers seemed to be calling the shots, at least for their own division. But in general, the answer is more complicated: Senior executives, divisional managers, and operational managers all play a role in deciding which opportunities a company will pursue and which it...

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