Rita McGrath

Expert on Business Strategy in Uncertain Environments; Acclaimed Thinkers50 Thought Leader and Author
Rita McGrath
  • Critically acclaimed author and Associate Professor at Columbia Business School
  • Named one of the “100 Must Follow” accounts on twitter by The Huffington post
  • Combines business and innovation strategies to craft a tailored, forward-thinking approach to sustainable growth for clients

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Rita McGrath is a globally-recognized management thinker and one of the world’s leading experts on strategy and growth in uncertain and volatile business environments.

The author of Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen, The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business and Discovery Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity, audiences value her rare ability to connect cutting edge research to practical business problems. She offers a bold new set of principles for succeeding in our rapidly changing world and presents a fresh strategy playbook. In presentations, she outlines this framework and shares diagnostic tools for organizations looking to identify their next effective strategy and create a fluid and dynamic business environment. McGrath also uses great visuals and interactive exercises during her presentations to illustrate her points.

McGrath is recognized the world over for her expertise. She is consistently ranked in the Top 10 of Thinkers50 business gurus and received the #1 Achievement Award in Strategy in 2013. She has been recognized as one of the top 10 business school professors to follow on Twitter, and The Huffington Post named her one of its 2014 “100 Must Follow” accounts. She was also cited as one of the nine most disruptive thinkers in business by CIOmagazine. McGrath appears regularly on television and is often cited in the press, including the Wall Street Journal, the New York Times, Financial Times, BusinessweekFast Company, and Inc, where she authors a regular column, “The Entrepreneurial Strategist.” She also regularly attends the World Economic Forum in Davos.

Acclaimed Business Author. Seeing Around Corners is a prescriptive guide to anticipating and capitalizing on disruptive inflection points shaping the marketplace. Every “overnight” shift is actually the final stage of a process that has been subtly building over time. Armed with the right strategies and tools, smart business leaders can learn to spot inflection points before they hit—and use them to gain a competitive advantage. In The End of Competitive Advantage, McGrath believes the new path to winning means capturing opportunities fast, exploiting them decisively, and then moving on quickly once they are exhausted. In 2013, The End of Competitive Advantage was recognized by Strategy+Business as the No. #1 business book of the year and was also named the No. #1 general business book by 800CEOREAD.

McGrath has also authored three other books. Discovery Driven Growth was heavily endorsed by business thought leaders and named one of Businessweek’s best design and innovation books. Her methodology for planning (originally published in a best-selling Harvard Business Review article) was cited as an antidote to “innovation killers.” Her other books are The Entrepreneurial Mindset and MarketBusters: 40 Strategic Moves that Drive Exceptional Business Growth, which was named one of the best business books of 2005 by Strategy+Business and featured at a Microsoft CEO Summit.

McGrath has been published in leading academic journals, such as the Harvard Business ReviewStrategic Management Journal, and Academy of Management Review. Her best-selling HBR article “Discovery Driven Planning” is recognized now as an early articulation of today’s “lean” startup movement.

History and Expertise. She is an associate professor of management at Columbia Business School and a fellow of the Strategic Management Society, an honor given to those who have had a significant impact on the field. Prior to academia, she was an IT director and founded two start-ups. She received her Ph.D. from the Wharton School, University of Pennsylvania and has degrees with honors from Barnard College and the Columbia School of International and Public Affairs.

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Rita McGrath: Seeing Around Corners Preview

Rita McGrath: Transient Advantage

Rita McGrath: Simple and Complex Systems

Rita McGrath: Competition and Opportunities

Innovation and Growth Strategies In Times of Uncertainty

Adapting to Change

Strategy Talks.

  1. The End of Competitive Advantage & The New Strategy Playbook.
  2. The End of Competitive Advantage & Entrepreneurial Opportunity.
  3. How The Growth Outliers Do It.
  4. How To Win in Business Model Competition: A New Dynamic For Strategy.
  5. How To Disengage From A Business Whose Position Is Eroding.
  6. How To Mount A Guerrilla Strategy: Speed, Stealth, & Selective Attack.
  7. Designing Multi-Market Competitive Strategies: Arena vs. Arena. 

Innovation Talks.

  1. Discovery Driven Planning.
  2. 5 Ways To Tell If Your Innovation Process Is Dysfunctional.
  3. Project Disengagement: When It’s Time To Constructively Exit.
  4. Creating An Opportunity Portfolio. 
  5. Creating An Entrepreneurial Mindset.
  6. How To Anticipate Disruptive Innovation & Its Effects On Category Evolution.
  7. How To Choose Between Competing Projects: Screening & Scoring.
  8. Managing The Internal Politics of Innovation.

Complexity & Uncertainty Talks.

  1. Learning To Live With Complexity.
  2. The Financial Discipline of High Uncertainty: Real Options Reasoning.
  3. Failing By Design: Making The Most of Intelligent Failures.

Opportunity Identification Talks.

  1. Market-Busting: Overview.
  2. Insightful Customer Segmentation. 
  3. Using The Consumption Chain To Create Customer Insight.
  4. Redesign Your Offer To Unlock Opportunities Using Attribute Mapping.
  5. Identifying & Capitalizing On New Business Models.
  6. Anticipating Industry Shifts.
  7. Finding Entirely New Opportunity Categories.

Organizational Leadership & Change Talks. 

  1. Leading Change & Dealing With Resistance.
  2. Assessing Organizational Alignment: The Kite Framework.
  3. Diagnosing & Motivating The Culture of Your Organization.


Strategy Talks.
 

The End of Competitive Advantage & The New Strategy Playbook. For years, the ultimate goal of strategy was presumed to be a ‘sustainable’ competitive advantage. Strategy when advantages are not sustainable, however, can be just as powerful. It does require completely different approaches to budgeting, resources, and talent management, as well as an increased emphasis on creating a pipeline of innovations. This talk describes some of the counter-intuitive aspects of dynamic strategies, for example that it may make sense to sub-optimize some processes in the interests of preserving flexibility. The core differences between conventional strategy and the new strategy playbook fall into the following categories:

  • Continuous Reconfiguration, rather than massive restructuring
  • Healthy Disengagement, rather than abrupt exits
  • Deft Resource Allocation, avoiding the resources-as-hostage trap
  • Innovation Proficiency, rather than innovation that is episodic
  • Discovery Driven Leadership mindset
  • Entrepreneurial Career Management

The End of Competitive Advantage & Entrepreneurial Opportunity. While the fast pace of competitive advantage puts many established firms, with their carefully built up sets of assets and capabilities at risk of being trapped, it opens up vast opportunities for entrepreneurs who aren’t wedded to the status quo. In this talk, aimed primarily at smaller firms, McGrath goes through the principles of both disruption and of sound business model development and illustrates how small firms can outrun larger ones, using the cautionary example of Groupon and the provocative ones of the music business as examples.

How The Growth Outliers Do It. Of 4,793 publicly listed companies as of the end of 2009, only 10 were able to consistently grow their net income by at least 5% a year for 10 years in a row. This talk explores how these remarkable firms – very different from one another in many ways—seem to do it. The major finding was that although they are very dynamic, experimental, and innovative, they maintain a core of stability in leadership, strategy, and values. In this engaging talk, lessons from these firms are described, and the difference between them and the typical organization is explored. The research was published in the Harvard Business Review in 2012.

How To Win In Business Model Competition: A New Dynamic For Strategy. Traditionally, people have thought of competition between firms within an industry. Increasingly, we are learning that the most significant competition can arise from companies from different industries or with different business models, as industries blur and competitive advantages shift. In this talk, the business model concept is described, the tell-tale signs of business model erosion are identified and ideas for discovering your next business model are discussed. This can be extremely hands-on, with a workshop component if that is desired, and include a diagnostic for the robustness of a business model. This talk was featured in a Harvard Business Review article published in January of 2011.

How To Disengage From A Business Whose Position Is Eroding. In a transient advantage context, shutting down businesses is as important as starting them, and disengagement is as important as innovation. And yet, few companies have put into place a systematic process to effectively disengage from a business and free up resources to invest in the next generation innovation. This talk uses the following framework to anchor a discussion about how disengagement might be more effectively managed.
 

 

Capability core to the future of the business

Capability has value, but not for us

Capability is in decline

Relatively little time pressure

Orderly migration

 

Transition aspects of the business from today’s configuration to tomorrow’s

Garage Sale

 

Get reasonable prices for assets we are no longer interested in

Run off

 

Be well paid to maintain support for customer while decreasing investment

Intense time pressure

Hail Mary

 

 rly core capabilities and find a solution to migrate to the new core fast

Fire sale

 

Sell non-core assets we are no longer in a position to exploit

Last Man Standing

 

Spark consolidation or otherwise try for a profitable end game solution


How To Mount A Guerrilla Strategy: Speed, Stealth, & Selective Attack. In many markets, innovators don’t have the luxury of competing with a great deal of resources. This session outlines the principles of so-called ‘guerrilla’ approaches to entering new markets, involving very selectively targeting precise client groups and serving them in such a way that other organizations can’t or don’t want to compete for them. Also called “judo” strategies, these reflect ways in which entrepreneurial companies can use competitors’ strengths against them.

Designing Multi-Market Competitive Strategies: Arena vs. Arena. Strategy takes on a different form when you meet your competition in multiple markets—what McGrath calls arenas. The fundamental issue here is that a move made in one arena can affect a company’s activities in another area. The key learning is that if you are not aware of multi-market dynamics, your competitors can force you to spend resources in ways that do not benefit you. This can be combined with a workshop exercise to plot competitive moves.
 

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Innovation Talks.

Discovery Driven Planning. Discovery Driven Planning is a planning and learning process that helps executives systematically convert assumptions to knowledge so that they can access significant opportunities while containing risk. The core premise of the method is that when there isn’t enough information to develop a conventional business plan, the thrust of planning must instead be on learning, while at the same time reducing cost and risk. Conventional planning tends to lock an organization in, too early, to a specific operational trajectory. Discovery driven planning comprises five interdependent practices:

  1. Define success and drive the plan from this definition
  2. Benchmark against key external variables
  3. Think through operational specifications
  4. Document assumptions
  5. Re-assess assumptions and goals at key checkpoints

It imposes strict discipline on new projects, but discipline that is appropriate to their uncertain nature. Examples might include an entrepreneurial business, SAP contemplating entry into SaaS, and a chemical company evaluating a new product introduction. With a bit of preparation, an example can also include an in-company project. The talk is based on the best-selling article in the Harvard Business Review, where it is consistently named as one of the most important management innovations. It has been cited by Clayton Christensen as the antidote to “innovation killers.” This work has also been recognized as a foundational input to the “lean startup” movement which is currently so popular.

5 Ways To Tell if Your Innovation Process Is Dysfunctional. Even with the best of intentions, it is very easy for firms to mismanage their innovation process, often because they apply the disciplines from the core business to this fragile, uncertain, different process. This leads to the following symptoms of a broken innovation capability:

  1. Episodic innovation
  2. Resources held hostage
  3. Innovations squeezed into the existing organizational structure
  4. Decision-makers isolated from customers’ experiences; with too little diversity of thought
  5. Treating assumptions like knowledge

In this talk, McGrath describes each issue and offers examples both of firms that have fallen victim to these problems and some that have overcome them. If desired, a detailed personal case study of what went wrong at Nokia can be incorporated.

Project Disengagement: When It’s Time To Constructively Exit. Most companies have poor processes for constructively shutting down projects and capturing whatever value and learning might have been generated within them. This seminar covers the topics of first, recognizing when you may be escalating commitment to a project that is failing; next, developing a disengagement plan if you have concluded that stopping it is the best thing to do; and finally, coming up with a way of capturing as much value as possible from the experience of having done the project. Depending on the interest of the group, the example of Hewlett Packard’s “Kittyhawk” venture may be used as an exercise.

Creating An Opportunity Portfolio. While it should be obvious that companies need to use different practices for new ventures that are highly uncertain than they do for their established businesses, all too often this is not what happens in practice. Further, growth strategies often flounder because an organization lacks an effective process for creating a solid growth portfolio. What you want instead is the right mix of initiatives to support the core business, create opportunities in adjacent spaces and invest in options for the future. It’s essential to figure out how to best align your growth strategy with the projects and people necessary to make it happen. This session helps participants understand their existing portfolio of projects within a given portion of the company and discuss processes to bring portfolio elements into better alignment. The financial logic that makes sense for each component of the portfolio will also be addressed.

Creating An Entrepreneurial Mindset: Leadership Roles Essential For Innovation & Growth. Three critical leadership roles are needed in any company that seeks to develop an organic growth program. The first is the framing and establishing the commitment to growth at the most senior level – if this isn’t done correctly, the organization simply churns in trying to find its way. The second is the internal entrepreneurs who manage specific ventures. And most importantly, and most invisibly, is the difficult job of the manager in the middle, who has to navigate the political and resource dilemmas of fitting together the growth mandate with individual business opportunities. For this session, real examples of companies who do this well (such as Procter & Gamble and United Parcel Service) are contrasted with companies who have struggled (such as Sony and Motorola).

How To Anticipate Disruptive Innovation & Its Effects On Category Evolution. Clayton Christensen famously introduced the concept of ‘disruptive’ innovations some years ago. In this session, we’ll review those ideas – that the most powerful sources for growth can be non-users, that often the biggest threats come from places which incumbent players do not find attractive, and that low-end markets can be highly disruptive to one’s business model. Disruptive innovations in this talk are placed within the context of category evolution as a way of identifying which types of firms will be at an advantage and which will be disadvantaged as categories evolve.

How To Choose Between Competing Projects: Screening & Scoring. Most companies have far more promising projects than they could ever fund and develop themselves. There is therefore a need to develop some way of screening and scoring opportunities to make sure that they are consistent with the firm’s strategy and that sufficient resource commitment is made to allow those that are ‘screened in’ to be successful. This talk covers the basics of what makes a screening system useful, how it works, and how past projects might have been scored (to help validate the screens). This set of ideas can be immediately applied in practice.

Managing The Internal Politics of Innovation. Any innovative project, by its nature, will tend to threaten the status quo within an organization. Being able to navigate the political environment is essential, therefore, if an innovation is going to be successful within the internal context of the firm. In this seminar, the basics of how one might prepare a political game plan are covered. Then, specific moves for influencing key stakeholders and handling resistance is discussed. Participants will be asked to think through a political analysis for an innovation or change effort they are currently involved in.
 

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Complexity & Uncertainty Talks.

Learning To Live With Complexity. Business has always been unpredictable and surprising, and the systems in business have always been complex. But due to the IT revolution, complexity affects everything—products, supply chains, organizations. This makes managers’ jobs far more difficult. It is harder to make sense of what is going on, make predictions about the future, and place bets. Complex systems go beyond the merely complicated because you can’t predict what is going to happen just from knowing the initial conditions. Our analytical tools have not kept up. The secret is making fundamental changes in how managers approach tasks such as:

  • Forecasting: Drop certain analytical tools. Embedded in many are assumptions that don’t hold true for complex systems. Focusing on a few types of predictive information can do the job.
  • Mitigating Risks: Reduce the need for accurate predictions. In an unpredictable environment, the best investments may be those that minimize the importance of predictions.
  • Making Trade-offs: Take a real-options approach. Small investments can give you the right, but not the obligation, to invest more later on.
  • Ensuring Diversity of Thought: Diverse thinkers better equip companies to deal with the unforeseen changes that are inevitable in complex systems.

The Financial Discipline of High Uncertainty: Real Options Reasoning. We are all familiar with the logic of using tools such as net present value to estimate the attractiveness of making corporate investments. But net present value calculations, which project cash flows in to the future and discount them back, are basically meaningless under two conditions that are highly prevalent in today’s environment:

  1. When you can’t really anticipate the probability of cash flows
  2. When rapidly changing environments can de-stabilize the boundary conditions under which your projections were made

Instead, you can learn from organizations that are highly successful, even though they struggle with considerable amounts of disappointment. The financial logic they use is far closer to ‘real options’ reasoning, in which you make small investments today to create the right, but not the obligation to make more investments in the future. This approach allows you to limit risk and learn as you go. A possible example is the failed “Iridium” project to illustrate how using the wrong kind of financial discipline can end up resulting in substantial disappointment. There are of course no shortage of other cases that can be used, including some that have to do with acquisitions.

Failing By Design: Making The Most of Intelligent Failures. Most of us suffer from a pervasive anti-failure bias, in which things that go wrong instantly become undiscussable and the potential benefits of failure are lost. Here’s the problem: In fundamentally unpredictable environments, failure is unavoidable. Moreover, it is essential if your organization is to take the risks and engage in the innovations crucial to effective competition. Failures are critical to competitive advantages because they facilitate trying more; attract resources and attention; help you learn what doesn’t work; create leadership variety; and help you build skill and intuition. To gain these benefits, follow these six principles:

  1. Plan to convert assumptions to knowledge
  2. Be quick about it
  3. Contain the downside risk
  4. Uncertainty is genuine, but not overwhelming
  5. Intelligent failures are celebrated
  6. Learning is codified and transferred

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Opportunity Identification Talks.

Market-Busting: Overview. What do coin-changing machines, smart aircraft brake shoes, cement delivered within a delivery window, and new ways to package materials for the internet all have in common? They are examples of “market-busters”—strategic moves companies made that allowed them to capitalize on significant strategic growth opportunities. A talk on market busting can cover one or more of five “lenses” that companies can use to identify opportunities for breakthrough growth. Each lens comes with a strategic framework or tool and the opportunity for application. The examples and application can be tailored to the needs of the audience.

Insightful Customer Segmentation. All too often, companies show surprisingly little imagination in the way that they conceive of and serve their customers. Demographic segmentation not only reveals very little about what drives customer behavior, but is often based on data that is readily available to all competitors, making it impossible to derive an advantage from this segmentation scheme. Instead, in this talk, McGrath explores the potential in behaviorally segmenting customer based on their perceived and actual needs. Participants develop a hierarchy of needs for different customer segments, which can create insight into those offers that the varying segments might be prepared to pay for. This is often a far better point of departure for a new strategy than typical segmentation.

Using The Consumption Chain To Create Customer Insight. Sad, but true: Most companies have potentially disastrous blind spots with regard to truly understanding their customers’ experiences with their products and services. This session introduces a simple, intuitive tool—the customer consumption chain—to help companies visualize the activities customers go through to address their own needs, some of which might involve making a purchase. When the chain breaks down or it is unsatisfying or less convenient than that offered by a competitor, a company can be at a competitive disadvantage. Choice of customer segment based on behavioral differences is key. The goal is to improve the customers’ total experience, thus improving margins, revenue opportunity, and loyalty. Examples might include Amazon.com, Coinstar, and the Kone Corporation.

Redesign Your Offer To Unlock Opportunities Using Attribute Mapping. For any given customer segment, every product and service has some attributes (or features) that that segments regards as positive, some they regard as neutral, and some they don’t care about at all. By understanding the trade-offs customers are willing to make, companies can better tailor their offerings to the needs of specific segments, often adding positive elements and reducing cost in the process.

This session introduces a simple tool, the attribute map, to help companies gain a better understanding of the reaction of specific customers to the attributes of an offer and potentially redesign the offer. Examples could include business-focused hotels, diabetes treatment, and car rentals. If desired, the tool can also be used to speculate on current product competitions, such as that for e-readers.

Identifying & Capitalizing On New Business Models. In many industries, competition is not so much between different industry participants as it is between different business models. With the advent of online music, for instance, the CD-based business model is losing share to the by-the-song- online business model. In this session, participants will be provoked to consider whether it is time to explore a new business model. The issue focuses on two interrelated questions: Can the unit of business be changed (what you sell) or can the operational activities that deliver a unit of business be altered? Changes in unit of business might involve selling products as services or subscriptions rather than by the unit, while changes in key metrics might involve reconfiguring (sometimes drastically) how operations take place to generate efficiencies or customer differentiation.

Anticipating Industry Shifts. Industries go through different types of changes that can, to some extent, be anticipated. Step changes are sudden and irreversible. Cyclical changes are those that appear and then reverse themselves. Trends are slower, but significant. Value chain shifts result in changing power relationships among buyers and suppliers in an industry. This workshop will ask participants to identify key shifts that they can foresee in their industries, and then to consider one of three possible responses: anticipating and preparing for the change; benefiting from second-order effects, or even provoking a change themselves.

Finding Entirely New Opportunity Categories. Slow shifts in underlying social, technological, and other forces can sometimes create the opportunity to explore entirely new markets. In this session, McGrath explores some of the ways in which new categories, capabilities, and needs emerge to create a fruitful ground for opportunity. The practice of developing early warnings of a new category evolving can be used.
 

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Organizational Leadership & Change Talks.

Leading Change & Dealing With Resistance. If change is the only constant in business life, why do companies still struggle so hard to cope with it? One reason is that there are not many clear, agreed-upon ways to constructively motivate change, inspire those affected, and break through the obstacles that stand in the way of moving forward. In this talk, McGrath walks through an approach to dealing with change that addresses these issues and takes on the substantive and symbolic challenges of dealing with resistance. The workshop can be accompanied by a diagnostic tool which change leaders can use to determine where they can usefully place their emphasis.

Assessing Organizational Alignment: The Kite Framework. The “kite” metaphor is meant to symbolize the interrelated processes of strategic execution, many of which are not amenable to formal control or dictates. If any element of a kite’s structure is not coherent, a kite will not fly. Similarly, one can’t force a kite to fly—it needs to be built correctly, launched into a suitable windy environment, and guided appropriately by its string. As with a kite, if the elements comprising an organization’s core systems do not align and support each other, the organization will not deliver high performance. This talk is accompanied by a diagnostic that participants can use to self-assess their degree of organizational alignment and make appropriate changes.

Diagnosing & Motivating the Culture of Your Organization. The major dilemma with changing the culture of an organization is that it refers to the invisible, often taken for granted beliefs that underlie behavior. One goal of the session is to make these invisible beliefs tangible, so that people can start to discuss them and act on changing them. Building on a foundational cultural framework, in this lively and hands-on session, participants “live” a real culture contrast situation in a simulation. They then use the experience to design a culture change workshop.
 

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