DANIEL QUINN MILLS
The "inventor" of Arrays and Lattices,
a new way of understanding clusters
His message: Give Priority to the Organisation.
Strategy comes next
It may seem a paradox, but the old paradigm of "strategy
first and then the rest" was challenged again.
After Tom Peters heresy ten years ago, now was the time
of one of the voices of Harvard Business School.
Jorge Nascimento Rodrigues
In times of emergence of a new economic tissue, as
the present ones continues to be, the rule has to be
inverted. The old commitment of strategy first, has
to be put once again upside down. The crucial point
is to design a flexible structure that allows catching
opportunities. Strategic formulation and core competencies
come next. The same warning had been made by Tom Peters
in the start of the 90s, guessing the emergence of something
new in the economy, what made him be crucified by the
guardians of the temple of strategy.
Daniel Quinn Mills, one of the gurus of Harvard Business
School, explains how to give priority again to structure,
in this interview about his more recent (2001) book
e-Leadership: Guiding your Business to success in the
New Economy. In this book he introduces new concepts
of analysis of emerging economic tissue, as the concept
of "array" (a network of companies that concentrate
around a same structuring objective of creation of value,
what is different from the clusters geographically and
sectorially defined with some rigidity by Michael Porter),
and of company structuring as the one of global lattice
(a new type of net with networking of independent companies
that co-operate in a specific area). Both require a
new type of thinking on the part of entrepreneurs and
managers: a global atitude, metanational, without borders.
Quinn Mills reclaims a new corporate culture. But thinking
globally does not mean ignoring the local context. To
be cosmopolitan is not loosing foot on the local field
one walks on.
The author went to Harvard in 1976 having come from
the Sloan School of Management of the MIT, of the other
side of the river that separates Boston from Cambridge.
He is preparing for 2002 a new book titled: eFuture:
The World in Disorder.
He teaches management at Harvard Business School. Previous
books by him include Internet University of 1999, Broken
Promises: An Unconventional View of What Happened at
IBM of 1996 and The GEM Principle of 1995. Previous
books were about the labour relations and economy, like
Labour-Management Relations and Rebirth of the Corporation
(out of print).
One of the unexpected conclusions of your book "e-Leadership"
is that the structure nowadays is the main issue. The
old commandment that strategy precedes all the rest
is being inverted. Why?
DANIEL QUINN MILLS - For a simple reason, in
a emerging period, as the present one continues to be,
you need an organisational structure that is flexible
enough for people to take advantage and understand the
Internet adequately. A company cannot and is not able
to do what is essential nowadays: to discover and evaluate
the opportunities of business. The idea that strategy
should determine structure is the logic proposition.
To follow that rigorously would take a company to ruin.
It is preferable to put the formula upside down, and
start by reorganising and then work the strategy.
Michael Porter, also from Harvard Business School,
recently in Harvard Business Review (March 2001 edition)
criticised the lack of strategy priority as being one
of the capital sins of the New Economy wave. In the
end of 1992, the same critic was made to Tom Peters
when he came to say that the structure counted more
than strategy in times of revolution of nano seconds,
as he explained in the book Liberation Management. Aren't
you making the same capital mistake pointed by your
D.Q.M. - The strategy can only be in the first place
when it can be defined efficiently. The reason why I
called attention to the question of structure, is because
it is necessary to have an appropriate organisational
base so that a good strategy may be developed.
But for a good positioning in an array, as you recommend,
is not necessary strategic thinking and even intelligence
about the competitive context?
D.Q.M. - The positioning in the arrays that I talk
about has been defined as a co-operative strategy, or
in co-opetition (I don't know if you have already created
this term in your language for a fusion between competitive
and co-operative), and not a competitive strategy. This
question is particularly important nowadays, when a
substantial technological change is being explored.
For a start up or a small company, it is generally not
possible to attack frontally a well established company
or a brand. What the small can do is either develop
under the wing of a big company already established
or join other companies to try to create critical mass
capable of challenging the incumbents. But for that,
you have to look at the question of structure.
What is the main difference between your concept of
an array and the concept of "cluster" of Professor
Michael Porter? For example, Silicon Valley is a group
of arrays of the kind you talk about?
D.Q.M. - Silicon Valley is a good example. The arrays
are not geographically limited, as Mike's clusters.
The importance of an array is not geographical but it
is a good example, it is evaluated in terms of client's
technologies and generated markets.
We are assisting to the surging of new arrays, around
the electronic commerce or distributed computing or
D.Q.M. - Absolutely. As happened before around the
personal computer and the explosion of the Internet.
Another organisational concept you talk about is the
"lattice". What is the difference with the
networked organisation? For example, looking at the
case of Cisco Systems, the so much talked about ciscoism
in terms of organisation of the chain of value and its
leadership, what is the difference?
D.Q.M. - The ciscoism of Cisco is exactly an example
of my "lattice" model at a global scale. But
there are a lot of other varieties of that form of organisational
structure I talk about. The Cisco network is very well
organised, it is not vague and loose, as many other
But many analysts started thinking the Cisco went to
far, exaggerated in the outsourcing, and talk about
correcting a little. What do you think?
D.Q.M. - I agree with them.
Arie de Geus, for example, talks about an extreme example
- and very successful - of a model of co-operation,
or co-opetition, very well intertwined in an organisation,
quoting Visa's case. Do you agree?
D.Q.M. - Yes, VISA is an excellent example.
In the arrays you talk about, what is essential is
co-operation. But, as Porter argued in the already mentioned
article in HBR, doesn't that kill the competitive advantage?
D.Q.M. - I think that in the long run it does. But
the companies must go by stages. I think that Mike is
always imagining a big and well established company,
while I worry about the start ups and small companies
that try to make a name in the market, particularly
in the periods of emergence of the new.
One of the main arguments in your book may lead us
to conclude that a company should be managed like a
temporary portfolio of businesses. We buy, get fatter
and stronger, and after sell businesses, is that the
secret of business longevity?
D.Q.M. - My dear, General Electric, a company with
longevity, has done this with success, particularly
in the two last decades, with "Jack" Welch
Globalisation is not where but the way you do business,
thinking globally, with no frontiers. Looking for opportunities
at a world basis. It is not geographic dispersion that
sometimes cannot have a valid justification.
Another of your central arguments is that it is necessary
to have a global posture from the start...
D.Q.M. - Nowadays, in the present turbulence and the
market globalisation, a company looses opportunities
if it does not have a really global perspective, that
is, it has to take into account in its decisions the
whole globe. If it does not do so, it becomes vulnerable
to the concurrence, which may come from anywhere. But
it has to do it in a balanced manner, avoiding two deviations
- a company that only looks at the space around it,
that is parochial, looses many opportunities of crossing
of markets, and another that runs after universal visions,
may loose small opportunities that are right beside
it. The global posture that I talk about is glocal -
both global and local.
The famous federalist structure of ABB is a good example
of a global company that is glocalised?
D.Q.M. - I do not think so. It is reasonably centralised
nowadays, or at least it was under Barnevik's leadership.
But what are the fundamental rules for a good glocalisation
D.Q.M. - The geographic flexibility that is necessary
to take into account the local markets and the different
marketing situation, and at the same time enough centralisation
to obtain cost advantages in various markets.
The global firm is home everywhere. There is no such
separation between the mother house and subsidiaries
abroad. It does not export its national culture. It
tries to create a global culture.
But is it worth having a multinational strategy, or
the multinationals are a mistake at the origin?
D.Q.M. - In the first place: it is true that I underline
that the multinational live in many places, but they
do not act as if it were their home. They tend to clone
the domestic way of being. Today it is anachronic to
talk about country of origin and operations abroad.
The geographic dispersion is not the same as globalisation.
Sometimes it is done without a valid justification.
For me, globalisation is not where, but how you do business.
SOME ANSWERS AGAINST THE MAINSTREAM
The old Greek philosopher Aristoteles was wrong?
D.Q.M. - I think so. What came from his philosophical
attitude was an archaic separation between strategy
and execution, planning and implementation. I reclaim
a unified view of the problem.
The strategic planning was not buried with the book
of his main "father", Mintzberg, when he wrote
The rise and fall of strategic planning?
D.Q.M. - No, not at all. The strategic planning
is extremely important nowadays. To plan is to transform
potential in reality.
What are the limitations of the concept of "core
competencies" defined by Hamel and Prahalad?
D.Q.M. - They look at the past. What is more
important nowadays is to look at the opportunities that
can be grabbed through new competencies. It is the contrary
of being stuck to the existing ones. My point of departure
is that it is more important to put emphasis on the
company's potential. There are so many opportunities
that what really maters are the potential competencies
that the company does not still have.