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When the British editions of Why Firms
Succeed first appeared in the U.K., it commanded the
attention of the corporate world -- and drew widespread
praise. The Financial Times hailed it as "a
powerfully argued book, which casts a fresh light on a range
of practical business challenges." And Business
Age wrote, "you must read John Kay's new book...
Kay is currently the best management theorist in Britain,
bar none... He is a rare find."
Now John Kay has produced an American edition
of this landmark book. In this freshly revised volume, Kay
applies his groundbreaking theories to the U.S. experience,
illustrating them with examples of success and failure in
the American market. For too long, he writes, managers have
chased after the latest fad in business planning and strategy,
beguiled by military analogies and the demand for overarching
vision. Success, he believes, should not be measured by
organizational size or market share, but by the added value
-- the amount that output exceeds the input of raw materials,
payroll, and capital. Corporate strategy should be aimed
at this basic goal, beginning with the question, "How
can we be different?" Kay identifies four key ingredients:
innovation, reputation (especially in the form of brands),
strategic assets (government mandated monopolies or other
measures which restrict market access by competitors), and
architecture (the relationships between a company and its
employees, suppliers, and customers). Success comes not
when managers drive through a towering vision of the company's
destiny, but when they act on their organization's specific
capabilities and advantages -- especially in the key area
of architecture. Honda, he notes, captured a third of the
American motorcycle market within five years. No vision
was required for this success, he writes: Honda simply did
what it did best (making a simple, inexpensive product),
followed by careful attention to the architecture of its
business ties to distributors, customers, etc. He ranges
through industries from airlines to retail clothing, pointing
out the reasons for successes and failures. Kay also draws
on game theory to underscore the importance of stable, long-term
relationships.
Other writers have hit upon some of these
points, the Financial Times noted: "But none has explored
them as thoroughly as Kay, who succeeds in marrying an authoritative
grasp of economic, legal, and sociological theory with an
impressively detailed knowledge of contemporary business
practice." This volume transforms Kay's theoretical
and practical knowledge into a powerful tool for today's
American business manager.
John Kay is Professor of Economics at
the London Business School, where he has served as Director
of the Center for Business Strategy.
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