There are two main themes in the research and writing of strategic management professor, Kathryn Rudie Harrigan. First is businesses in decline and how mature businesses can remain profitable in contracting markets. The second is around strategies for businesses joining together in more or less formal and complete ways from full mergers and acquisitions at one end of the scale through joint ventures, to strategic alliances. These two areas of interest offer much to learn from and, if your business interests lie in one of these directions, you can be assured of rigour and subtlety from her: in the past, she has lambasted quick-fix easy solution business books and models, describing her work as being for thoughtful managers.
Kathryn Harrigan was born in 1951 and grew up in Minnesota. Her initial training was in the theatre, taking a Bachelor’s degree in Theatre Arts at Macalester College and starting a master’s degree in Fine Arts. Early in her career, her entrepreneurial inclinations led her to create a theatre company. In 1976 she gained an MBA from the University of Texas (Austin) and went on to study at Harvard, with Michael Porter, for a DBA.
After a spell as a junior faculty member at the University of Texas (Dallas), she moved to Columbia University in New York, where she is now Henry R. Kravis Professor of Business Leadership.
Harrigan’s first research at Harvard was into declining businesses and led to her first book, Strategies for Declining Businesses, published in 1980. She returned to this topic in her 1988 book, Managing Maturing Businesses: Restructuring Declining Industries and Revitalizing Troubled Operations, and then again in her last book to date*, Declining Demand, Divestiture, and Corporate Strategy, published in 2003.
Her core thesis is that decline is inevitable if a business fails to constantly renew and refresh itself. Growth is nice to have, managers should not underestimate the challenge and rewards of properly managing a business in a mature or even diminishing market. In her 1988 book, Managing Maturing Businesses, she sets out four strategic options:
- Divest quickly and be the first player to exit a declining market, maximising the price you can get for any assets, intellectual property and good will you can sell off.
- Shrink your business selectively, divesting the weakest parts and focusing on the most lucrative areas of business, leaving your competitors to fight over the rest.
- Milk the business. Adopting the BCG metaphor of a ‘cash cow’, she offers the option of continuing to manage it as well as you can, as the market declines, to drain every last dollar of return from past investments.
- Be the ‘last iceman’ – serve the few customers who continue to want legacy products and make this a profitable premium niche.
In Harrigan’s other work, she has focused on the variety of alliances that companies can make, which to select, and how to do it well. Her books on this topic started with 1983’s Strategies for Vertical Integration, and continued with Strategies for Joint Ventures (1985), Strategic Flexibility: A Management Guide for Changing Times (1985), Managing for Joint Venture Success (1986), Vertical Integration, Outsourcing, and Corporate Strategy (2003), Joint Ventures, Allliances, and Corporate Strategy (2003), and looks set to continue with future work*.
Her earlier work emphasised the dangers that vertical integration of the value chain (supply and distribution) hold by limiting a company’s strategic flexibility to rapidly adapt to market changes. She saw co-operation in the form of joint ventures and strategic alliances as the key to success in future changing world markets.
This is despite the fact that the concept of joint ventures goes back to antiquity and the maritime trading of the Egyptians and Phoenicians, and continued through the great mercantile revolutions of 16th century Europe. Harrigan defines a joint venture as ‘separate entities with two or more actively involved firms as sponsors’.
It is my sense that her predictions of the 1980s are coming true: that constellations of firms working in alliance will compete with one another, rather than individual corporations. This is clearly visible in the consumer electronics industry, where systematic outsourcing creates strategic flexibility, commercial efficiency, and the capability to take on vast projects.
* I believe she is working on a new book, Strategies for Synergies.
This emphasises the intellectual debt she owes to Igor Ansoff.