Rita Gunther McGrath’s Required Reading

by Theodore Kinni

strategy+business, December 9, 2015

When Rita Gunther McGrath studied the 4,793 publicly traded companies with market capitalizations of US$1 billion or more, she could find only 10 that had achieved at least 5 percent annual growth in net income from 2000 to 2009. What distinguished this handful of companies whose performance had weathered the biggest bust since the Great Depression? They acted as if, as McGrath told me in a 2014 strategy+businessinterview, “whatever they were doing today wasn’t going to drive their future growth.”

This finding dovetailed nicely with the Columbia Business School professor’s conviction that competitive advantage in many sectors was becoming increasingly transient — and that companies planning to capture such an advantage and ride it into the sunset were in for a jarring trip. McGrath made a compelling argument for this thesis in The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business (Harvard Business Review Press, 2013), which Walter Kiechel chose as the best strategy book of that year.

McGrath was delving into the challenges of attaining competitive advantage long before the study. In collaboration with Ian C. MacMillan of Wharton’s Sol C. Snider Entrepreneurial Research Center, she also wrote The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty (Harvard Business School Press, 2000),MarketBusters: 40 Strategic Moves That Drive Exceptional Business Growth(Harvard Business School Press, 2005), and Discovery-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity (Harvard Business Press, 2009). 

I asked McGrath, who is ranked among the top 10 global gurus on theThinkers50 list, what books — aside from her own — she recommends to executives determined to cope with the fleeting nature of competitive advantage. Here’s her reading list.

The Little Black Book of Innovation: How It Works, How To Do It, by Scott D. Anthony (Harvard Business Review Press, 2011). Too often, companies invest in the trappings of innovation — boot camps, workshops, the occasional visit to Silicon Valley, skunkworks — instead of the actual work of innovation. In this readable, practical book, Anthony draws on years of consulting experience to explain how to make innovation actually happen. Chockablock full of real stories of successes and failures, red flags and remedies, the book is a great primer for anyone tasked with creating new products, services, and platforms in their organizations.

American Icon: Alan Mulally and the Fight to Save Ford Motor Company, by Bryce G. Hoffman (Crown, 2012). Hoffman’s riveting reportage describes how Mulally, an auto-industry outsider (he was a longtime Boeing executive) successfully transformed Ford’s toxic culture and losing product strategy in the late 2000s. Mulally’s financial wizardry erased billions in debt and his attention to both the hard stuff (eliminating brands, streamlining structures, moving resources to where they were needed) and the soft stuff (changing the culture, creating a One Ford leadership team, honing the values, making hard HR choices) set the company up to exit the Great Recession in fine form. Ford was the only member of the Big Three that didn’t need a bailout. Every page of the book has valuable lessons for any leader seeking to create a stellar organization and culture in today’s transient advantage economy. 

Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers, by Alexander Osterwalder and Yves Pigneur (Wiley, 2010);The Four Steps to the Epiphany: Successful Strategies for Products That Win,by Steve Blank (K&S Ranch Press, 2005). I suggest reading these two books together because they have taken the planning and design of new ventures to a higher level. They provide a set of bedrock concepts and a methodology for lean entrepreneurship. Their authors will help open your mind to the possibilities of different business models, to new ways of sequencing investment, and to nurturing entrepreneurship within large, established companies. No senior executive responsible for growth should be without this two-piece toolkit. 

The Hard Thing about Hard Things: Building a Business When There Are No Easy Answers, by Ben Horowitz (HarperBusiness, 2014). Every chapter of Horowitz’s no-holds-barred book offers hard-won lessons for the CEOs of startups and rapid-growth tech companies. Unlike the pablum that many business book authors deliver, this entrepreneur and VC (Horowitz is a co-founder of Silicon Valley firm Andreessen Horowitz) refuses to sanitize the story: for instance, he admits that CEOs often don’t have great choices and, instead, must find the least-worst option to take their companies forward. Most endearing is Horowitz’s inclusion of details from his personal life in the book. This is as close to the whole story as you can get.