When Strategy Walks Out the Door

It’s ironic that companies often spend significant resources on external strategy advice while ignoring one the most fruitful sources of strategic insights: their own employees. Unfortunately, employees whose ideas about strategy aren’t listened to may quit — and take their ideas with them.

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The most frequent question I get asked by executives is: “What should our strategy be?” I tell most questioners — to their surprise — that they shouldn’t be asking me. And, frankly, neither should they rely on answers from anyone outside their organization.

There certainly is no shortage of high-priced consultants willing to answer the big questions of strategy. And advice about the “best” strategy can also be found in any number of management books.

But managers should be skeptical consumers of external strategy advice. External strategy advice can be costly — and wrong. At worst, such advice can consist of little more than generic platitudes about “leveraging core competencies” or “synergies.”

Increasingly, the best sources of insight about strategy — specifically, strategy for your company — lie dormant within the company itself, in its employees. Ironically, companies often expend significant resources on external advice while employees with the best strategy ideas are ignored and thus may walk out the door.

Consider The Walt Disney Co. in the early 1980s. During this period, John Lasseter — a young animator working for Disney — was lobbying heavily for the company to take computer animation seriously. Historically, Disney’s advantage lay in producing animated movies and characters, which it then leveraged into its theme parks and product licensing. Lasseter felt that the new computer animation technology would be central to Disney’s future. But Lasseter’s pitches to top management about the importance of computer animation fell on deaf ears — and he was, in fact, fired.

Lasseter left and joined Lucasfilm’s computer graphics group — the company that later became Pixar. While Michael Eisner created tremendous value for Disney as CEO over a two-decade period, from the mid-1980s to the mid-2000s, it quickly became clear that the computer animation Lasseter had pushed for in fact was central to Disney’s future. Disney even tried to lure Lasseter back. But it was too late. Pixar quickly became the animation powerhouse that Disney once was — and should have become again. In 2006, some two decades later, Disney purchased Pixar for $7.4 billion, and Lasseter is now chief creative officer of Walt Disney and Pixar Animation Studios.

A similar pattern — of a company’s next strategy walking out the door — can be found in other settings. The disk drive industry — a context made famous by Clayton M.


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Comments (3)
James Hemsath
I'm reading this going this is exit, voice or loyalty and then, there it was.  The question is, as was pointed out, how do hear the voices and this article they talked about amplification - seems to be a push pull phenomenon - hearing vs louder voices.  The example of Valve is interesting, a follow on question would be is at what point does a company become too big to hear.   Research done many many years ago indicated that the probability of communicated was an inverse square law to the distance that someone had to "walk" to talk.  Effort to make that journey would impede someone making the trip.   I suspect there is something similar going on here.
Piyush Shah
It is easy to cite a few selective anecdotes and try to pass it off as a management principle. So let me ask you - If firms heed to all the suggestions from all the employees would they be a better place? I am sure it was a suggestion from some individual that led Kodak to disregard digital photography. The key is creating a system to decide which employees to listen to and whom to ignore. Your Value Corp example is one such system. And even in this it is possible that 10 years later another MIT Sloan article says that Mr. X at Value Corp could find two sponsors, left and then Value Corp had to buy him out for billions.
marco persi
An absolutely excellent article which concludes everything to the point.
I consider it to be rather interesting that companies as valve are still the exceptions, not the common sense. Where is innovation coming from? Customers & employees or  managers, partially far away from operational reality. No wonder - "Innovators dilemma" still rules. The good under the big organizations at least have recognized that they should use their financial power to buy the small, innovative companies. Usually then, the next trap waits - integrating the small innovative thing into the large, inflexible monster destroys one of them, guess which one?!