1 Built to Become Corporate Longevity and Strategic

1
Built to Become:
Corporate Longevity and Strategic Leadership*
© Robert A. Burgelman
Stanford University
Working Paper Series #3115
(Revised March 2015)
*This paper forms the conceptual foundation for the
introductory chapter of a book
manuscript titled: Built to Become, co-authored with Philip E.
Meza and H. Webb

McKinney. I thank Philip and Webb for checking facts and
helpful edits on early
versions.
2
A Thought Experiment
Suppose Bill Hewlett and Dave Packard came back from the
Elysian fields today and
visited the corporation that bears their names. Would they
recognize it? Would they be
happy about how HP has evolved and what it has become since
their departures? Why
does it matter how they would react? Such is the level of
respect for Packard’s and
Hewlett’s leadership and accomplishments in Silicon Valley and
the wider world that the
two men’s legacies are still reflexively invoked to measure any
change at HP.
Chances are that the founderswould hardly recognize the
company today. For one thing,
gone are the original core Test and Measurement (T&M)
businesses - the direct

descendants of the products the two engineer-entrepreneurs
developed and manufactured
in that famed garage. Those assets were taken by a public
company called Agilent that
spun off from HP in 1999, and some were to be spun off again
in 2014 (in particular, the
core Test and Measurement business that the founders started in
the garage so that
Agilent can focus on Life Sciences). Remembering GE’s old
“Jack Welch rule” of
keeping in the corporate portfolio businesses that are #1 or #2
in their industry segments,
Hewlett and Packard might ask why HP’s corporate management
did not continue to
capitalize on these leading-edge technology-based T&M
businesses that dominated their
segments and ended up generating far greater return on
investment than most of HP’s
other businesses.1 The founders likely would not be impressed
by HP’s gigantic size
today and they would almost certainly be disappointed to find
that the company HP is
now positioned in mostly commodity-type businesses.

3
Poignantly, it is easy to imagine the founders one more time
attempting to get a feel for
the culture of the current HP “by walking around,” as they did
regularly at HP plants and
offices all over the world. They would probably be sorely
disappointed at finding that
transaction-oriented values, imported from acquisitions and
leaders from outside of HP,
have largely replaced the relationship and innovation-oriented
values of the old HP Way,
and that the old culture of solidarity-and-meritocracy they built
over decades has too
often given way to opportunism-and-careerism. Hewlett and
Packard would surely
wonder what they could have done differently to preserve more
of their values at the
company they created. Flipping through HP’s annual reports
and news clippings, they
might think about the kind of boards of directors they
assembled and the impact these had
on the company and its culture after they had gone; and the two

men would wonder about
the impact that going outside the company for CEO leadership
four times in a row had on
the legacy they probably believed they had cemented into the
foundation at HP.
And yet, hard-headed businessmen and solid engineers that they
were, they also would be
impressed that HP is still around as an independent company.
Moreover, they would be
gratified that while HP—like many very large companies—is
struggling to get back to
growth, it is profitable; that it still attracts excellent people;
that it still has a bedrock of
very strong technological competence and human capital and
that it still evokes in many
in Silicon Valley the feeling that HP has the potential to
continue to be a great company.
The founders would probably admit to themselves and to each
other that it does not really
matter what they think and feel about the company that was
once theirs. What really
matters is that HP’s longevity be preserved so that it can
continue to offer employees

4
highly-valued jobs and be a source of innovation and
contribution that makes the country
and the world a better place. Rooted in science and engineering
as their thinking always
had been, they would probably return to the Elysian fields with
fresh questions about the
forces that drive the evolution of long-lived companies, shape
them in ways not
anticipatable by their founders, and about new ways to think
about what makes such
companies great.
Inspired by the idea of Hewlett and Packard returning to visit
their beloved HP, this book
addresses several questions that they probably would take back
with them: Why do some
companies survive over long periods of time while others do
not? What makes some
long-living companies great, and what does “great” actually
mean? What is the role of
strategy and culture in helping a company live for many decades
over the tenures of

multiple CEOs? How do long-lived companies balance their
strategic resource allocation
between exploiting existing business opportunities and creating
new ones? What is the
role of the board of directors in helping top management secure
the future of the
company? These are questions for which executives (and
business school professors) are
always looking for better answers.
Corporate Longevity and Greatness
Few companies survive as independent entities for very long
periods of time. Of the top
100 US-based industrial companies listed in Fortune magazine
in 1983, the year HP first
cracked into that elite group, only 21of those companies
remained in the top 100 in 2013,
5
the rest having been acquired, dropping in relative size or going
out of business. But not
HP, it continued to rise. This is shown in Figure 1.1.

_______________
Figure 1.1 About Here
_______________
The rapid turnover in the Fortune 100 list shows the highly
dynamic external
environments that most large corporations face. It is a tough
world out there, especially
for tech companies. This dynamism results from industry
players, sometimes incumbents
but more often upstart new entrants, changing the rules of the
game. Whether implicit or
explicit, these rules of the game usually remain unchallenged
for extended periods of
time, giving leading companies enough room to get comfortable
and set in their strategies
until their worlds are turned upside down2
The rapid turnover in the Fortune 100 shows how short life can
be for even very large
companies. Contrast this with religious, political and
educational institutions, which often
are imbued with time-transcending values, and sustained by the
faithful efforts of

successive generations of members who want them to continue
to exist, for rational and
emotional reasons, beyond their stewards’ own lifespans. This
is also true in many
family-owned companies.3 Corporate longevity for its own
sake, however, can feel out of
step in publicly-owned companies that exclusively focus on
maximizing share price,
particularly in our time of global competitive dynamics,
transient corporate relationships
and purely transaction-motivated interactions between
employers and employees that
leave no place for loyalty.4
6
If longevity is hard to achieve; what about enduring corporate
greatness? The best-selling
book, “Good to Great”5 defined “great” companies as those 11
that for a period of 15
years after a major transition were able to achieve average
cumulative stock returns at
least 3 times those of the overall stock market. The book

concluded that such enduring
greatness depends on a certain type of leadership style. Alas,
corporate greatness appears
to be even more fleeting than corporate longevity. By 2007,
only 3 of the 11 great
companies profiled in “Good to Great” remained “great”, with
the 8 others either no
longer existing as independent institutions or now performing at
levels below greatness.6
This seems consistent with the fact that some companies get
lucky for an extended period
of time.7 But even companies that are identifiable as great
through the statistical analysis
of sustained superior performance 8 still face the question
whether their success is based
on superior capabilities or on benefiting from a process of
cumulative advantage (e.g.,
increasing returns to adoption, or network effects, that create
non-linear winner-take-all
strategic dynamics).9
Of course, all of this raises the question of what “greatness”
really means. In the end,
greatness is unavoidably subjective since the objective measures

used to demonstrate it
are a matter of choice. Corporate greatness should perhaps
always be considered in terms
of performance measured against the best relevant competitors
along multiple
dimensions, such as stock performance, market share,
profitability, customer and
employee satisfaction and the like. A company only lives long
enough to become great if
it continues to be able to satisfy its customers to generate the
resources necessary for
7
staying afloat, and can only remain independent if the majority
of its shareholders want it
that way.
Also, company greatness is somewhat similar to company size;
that is, it is basically a
static measure that is determined at a particular moment in time
and is ephemeral because
in the next moment, as the data suggests, any given company
can (and usually will) fall

from greatness. It may therefore be more useful to view
company greatness, like
company size, as the by-product of a dynamic process.
Company size, for instance, can
be viewed as the by-product at any moment in time of the
company’s growth process.10
Similarly, corporate greatness can be viewed as the by-product
of a company’s continued
strategic efforts to remain - in the words of Microsoft’s CEO
Satya Nadella - relevant11
— to customers, investors and others. Remaining relevant is a
necessary condition for
corporate longevity. With this in mind, greatness, admittedly
subjectively, is re-defined
in this book as a company’s capacity to transform itself
significantly throughout its
lifetime so as to remain relevant to its shareholders and thereby
maintain its
independence.
A Typology of Company Founding
Company-building efforts can be characterized in terms of two
dimensions. The first
dimension concerns the founders’ purpose: whether the

venture’s purpose is short-term
instrumental (primarily serving the financial objectives of the
founders and early
employees) or long-term institutional (primarily geared toward
building a long-living
company). The second dimension concerns adaptive capability:
whether the venture
8
relatively quickly succumbs to the pressures of the external
environment or is able to stay
ahead of these pressures (stays relevant!) and survives for the
long term. This is shown
in Figure 1.2.
________________
Figure 1.2 About here
________________
Figure 1.2 shows four generic types of company building
efforts. Failing companies are
ventures that serve an instrumental purpose but have low
adaptive capability. The vast
majority of start-up companies, unfortunately, fall into this
category. Short-lived

companies are built-for-exit ventures that serve an instrumental
purpose but have
sufficiently high adaptive capability that they can survive long
enough to secure a
successful exit for the founders and investors. A fairly recent
example is Instagram, a
start-up company with 13 employees, that was sold to Facebook
in 2011 for $1 billion.12
Live-to-be-acquired companies originate with an institution-
building purpose but over
time lose the adaptive capability necessary to sustain their
independence in the long run
and eventually get acquired (or fail and disband). HP’s
acquisition of Compaq in 2002
remains a major example. Long-lived companies originate from
an institution-building
purpose and are able to continue to develop the adaptive
capability necessary to sustain
themselves as independent economic institutions for the long
term, sometimes hundreds
of years.13 These long-lived companies are able to transform
themselves multiple times
to weather the turbulence of environmental change and often

absorb some of the built-
for-exit ventures and live-to-be-acquired companies, which add
diversity and growth
9
opportunities and increase their ability to survive. They are the
companies that are
characterized further down in this chapter as “built-to-
become.”14
This book focuses on HP as a built-to-become company; one
that was able to acquire
other major companies such as Compaq and EDS. Compaq itself
had been able
previously to absorb live-to-be-acquired companies such as
Tandem Computers and
DEC. It also views HP as a “great” company because it has so
far been able to transform
at least five times (some say six times15) in the course of its
75-year history and is
currently working through a sixth major transformation. The
chapters that follow will
examine how HP and its successive CEOs have been able to
sustain the company’s

longevity and greatness.
Context Dynamics and Corporate Becoming
Looking at a company’s history involves understanding the
continuities, contingencies,
and changes in context - the context dynamics - that the
company faces over time.
Continuities are patterns that extend for a long time; by
contrast, contingencies are
events that do not form a pattern.16 External continuities (e.g.,
technological forces;
regulatory laws) as well as internal ones (e.g., the imprint of
founders’ values and
approaches beyond their own tenures; the unresolved issues and
challenges left to a
successor CEO by his or her predecessor) extend beyond the
tenure of any CEO in the
evolution of the firm. Contingencies - unexpected good luck or
bad luck events -
unavoidably confront CEOs during their tenures.

10
Context is formed by the set of changing external and internal
forces within which
strategic leadership must operate. Context does not cause events
but determines its
consequences; for instance, slipping on a path in a flat field
may result in a strained ankle
or broken leg, but slipping on a path along a hundred-foot cliff
may result in death.17 As
the statesman and historian Henry Kissinger has insightfully
observed:
Leaders cannot create the context in which they operate. Their
distinctive
contribution consists in operating at the limit of what the given
situation permits.
If they exceed these limits, they crash; if they fall short of what
is necessary, their
policies stagnate. If they build soundly, they may create a new
set of relationships
that sustains itself over a historical period because all parties
consider it in their
own interest.18
Kissinger’s view about context could be interpreted to imply
that leaders must always
take the context as unalterably given, but this would of course
be too limited an

interpretation.19 Also, leaders must be able to simultaneously
take into account and deal
with both the internal and external dimensions of context. Once
a leader takes strategic
actions that change the context, however, the consequences, as
is widely understood,
usually cannot be fully anticipated.20
One important implication of the importance of context is that
strategic leadership must
be able to operate in unstructured, or at best ill-structured,
situations.21 The corporate
environment is messy: key executives often undertake strategic
actions that may not be
well aligned; a company’s most threatening competitor may not
be apparent in advance;
the players in any industry can make a multitude of strategic
moves; and the results of
competitive interaction between industry competitors are not
always predictable. The
11
functioning of the strategic leadership in large, complex
organizations is therefore likely

to be relatively untidy, and difficult to capture in relatively
simple analytical models.
Changes in internal and external context make useful milestones
for studying the
role of strategic leadership in the evolution of a company over
time. The changes
can be subtle and hard to perceive as they occur or they can be
clankingly
obvious. They are usually caused by changes to the “rules of the
game” that
govern the context in which firms operate. There are several
different types of
rules that shape the context dynamics over time.
Normative rules are based on law, cultural norms, ethics, and
administrative
principles. For instance, consider the rule of “fair use” that
governed the way in
which consumers could copy and share their copyrighted
material such as music.
Technological rules are based on the available technical
solutions at a particular
moment in time. Consider here how, because of the Internet and

the availability of
broadband, the Internet startup company Napster made it
possible to share music
files electronically and thereby induced many consumers to
violate the “fair use”
normative rule. Economic rules form the foundation for the
business models
adopted by industry players. For instance consider how
software as a service
(SaaS) is changing the business model of enterprise software
companies such as
SAP AG and Oracle. Economic rules usually also reflect the
relative bargaining
power of different industry players (often apparent in
contracts). Cognitive rules
are judgments about critical success factors that are widely
shared among senior
12
executives of incumbent companies in an industry. For instance,
think about how
senior executives in major American automotive companies
during the 1950s

through the early 1960s thought about key success factors until
the entry of
Toyota with its completely different, innovative manufacturing
and supplier
relation strategies. 22 Innovation, a major force in the evolving
contextual
dynamics, involves changes in some or all of the rules, and has
a big impact
(positively or negatively) on the strategic position and
distinctive competencies of
different industry players.
Changes in context create strategic challenges for CEOs during
their tenures: positive
ones in the form of opportunities that beckon to be pursued, and
negative ones in the
form of threats to be neutralized. To see the impact of past
shifts in the context, it is
helpful for researchers to trace events back in time to where the
context significantly
changed, and to look for changes in rules that caused the shift.
To try to forecast how
prospective shifts will impact a company’s external and internal
contexts, researchers can

use “critical event horizons”- the informed estimate of the time
that it will normally take
for a particular event to be completed and its impact felt (for
instance, the time it takes to
develop and bring to market a new product or service) - to
estimate how long to look,
real-time, for the expected change.23
This book combines the historical perspective gained from years
of research, experience
and interviews with more than 60 former and current key HP
executives (including all of
HP’s living CEOs) with “grounded theorizing:” an inductive
method that uses the rich
13
field research data in combination with relevant existing and
novel theoretical concepts
and frameworks to generate deeper insights into why and how
HP has survived and most
of the time thrived in the face of major context changes, well
beyond most of its
competitors. [See APPENDIX 1]

The book’s novel and distinct focus is on the strategic
leadership efforts of successive
CEOs to stay on top of context dynamics and to guide HP to
continued survival and
economic performance through turbulent times. The capacity to
stay on top of external
and internal context dynamics, and to stay relevant to its
shareholders, determines a
company’s capacity for “becoming:” An open-ended
evolutionary process for which
there is no ex ante teleological vision and which unfolds
through a series of epochs and
transformations in the course of the company’s history.
Studying this process of
corporate becoming involves examining how strategic
leadership of corporate
transformations makes it possible to morph earlier epochs into
later ones, including how
it handles conflict between early and later epochs as the
company evolves.24
Corporate Becoming and Strategic Leadership
This book intends to show that sustaining HP’s process of
becoming has depended on the

effectiveness of the company’s strategic leadership throughout
its history. Effective
strategic leadership results in the company remaining in control
of its destiny;25 that is,
able to maintain a level of performance that consistently meets
the expectations of the
majority of its shareholders to keep the company independent in
the long run.
14
Strategic Leadership Involves Executives throughout the
Organization
While this book focuses on the contribution of HP’s founders
and successive CEOs to its
process of becoming, strategic leadership in large, established
organizations, such as HP,
involves key executives throughout the company.26 House and
Price in their
comprehensive narrative of HP’s history until early 2009, for
instance, list several
hundred names of HP senior executives that made a strategic
contribution during the

company’s evolution.27
Carlos Brito, the CEO of AB-Inbev, the largest brewing
company in the world, points out
that companies need to be able to maintain a core membership,
around 65 percent of the
employees at any given time, that views itself as the “torch
bearers” sustaining the
company’s continued existence, and that these are held together
by around 15 percent of
the employees that form a company’s “critical leadership” that
helps the company stay
relevant in its changing environment.28 Also, the desire and
drive to maintain a
company’s relevance, longevity and greatness are enhanced if,
as luxury goods company
LVMH’s Managing Director Antonio Belloni put it, the critical
leadership thinks of itself
as the guardian of some timeless brands: “We are guardians of
the temple for a relatively
small or short period in the life of these brands.”29 Substitute
“HP”for brand, and a
similar desire and drive to sustain the company’s relevance,
longevity and greatness may

be observed in the study of HP’s critical leadership.30
Strategic Leadership Exploits Existing Opportunities and
Creates New Ones
As the study of HP’s history of becoming will show, to be
effective in the long term a
company’s strategic leadership must be able to exploit existing
business opportunities in
15
its familiar environment. To do so, top management creates a
top-down strategy process
that aligns strategic actions by the critical leadership deeper in
the organization (who
significantly commit key resources of the company) with the
company’s strategy in the
pursuit of clearly defined growth opportunities. This is called
here the induced strategy
process, which aligns strategic action with corporate strategy in
the pursuit of a major
growth opportunity. Another way to put it is that strategic
leadership in the induced
process seeks to achieve tight “fit” with the company’s familiar
product-market

environment. Intel’s Andy Grove has called this strategic
leadership task “vectoring” the
organization. Strategy vectors, however, tend to create lock-in
with the familiar
environment.31 In a way, the company chains itself to the
specific environment it selects,
especially if the company is extraordinarily successful in that
environment, as has been
the case with Intel in the PC industry. And, major growth
opportunities in familiar
environments usually eventually diminish or may even vanish.
As the study of HP’s history of becoming will also show,
companies fortunately usually
have a reservoir of entrepreneurial employees who try to create
new business
opportunities in newly emerging environments, in a mostly
bottom-up process. This is
called here the autonomous strategy process.32 Through the
autonomous strategy process
the company pursues new opportunities that are outside of the
scope of the existing
corporate strategy, relate to new environmental segments, and
often emerge through

unanticipated novel applications or extensions of the company’s
distinctive competencies
by entrepreneurial employees. Another way to put it is that
strategic leadership through
the autonomous process seeks to maintain the company’s
capacity to “evolve.”
16
Autonomous strategic initiatives can be complements to the
company’s existing
businesses or provide early signals of the emergence of
potential substitutes; e.g.,
“disruptive technologies,”33 showing the importance of keeping
the autonomous strategy
process alive and well and developing the capability to
capitalize on it.
Autonomous strategic initiatives, however, pose different
strategic leadership challenges
than induced strategic initiatives. Often such initiatives take on
the form of projects that
are dispersed in several parts of the organization and need to be
brought together to create

a new, sufficiently large business thrust that is relevant from
the corporate point of view
(we describe three important HP examples below). This
agglomeration and scaling effort
needs to be performed by a company’s senior executives who
are able to formulate a
strategy for a new business area that is convincing enough to
get peers to surrender
control of autonomous projects that may be “orphans” in their
part of the operations. In
addition, these senior executives also need to be influential
enough to secure top
management support to make complementary or supplementary
acquisitions, if needed, to
further scale the new business.34
Senior executives championing autonomous strategic initiatives
need to work hard to
convince top management to amend the corporate strategy,
thereby integrating the
autonomous initiatives into the induced process going forward.
A powerful example is
provided by former IBM CEO Lou Gerstner’s recall of how
Dennie Welsh, the senior

executive in charge of IBM’s Integrated Systems Services
Corporation (ISSC) which was
17
at the time only a sub-unit of the sales force, convinced him
that global services was a
tremendous new growth opportunity for IBM. In Gerstner’s
words:
My mind was afire. Not only was he describing something I’d
wanted
when I was a customer (for example, I had tried unsuccessfully
to
outsource the running of RJR Nabisco’s data centers), here was
a man
who understood what customers were willing to spend money
on, and he
knew what that meant – not just the business potential for IBM,
but the
coming restructuring of the industry around solutions rather
than piece
parts.35
Another powerful example concerns the development of “multi -
touch” for the iPad in the
extremely tightly top-down run Apple. Whereas Steve Jobs
reportedly told his biographer
that he asked his team to come up with a multi-touch screen,
Jonathan Ive, the team

leader, had a different memory of the development:
He said his design team had already been working on a multi-
touch input that was
developed for the trackpads of Apple’s MacBook Pro, and they
were
experimenting with ways to transfer that capability to a
computer screen. They
used a projector to show on a wall what it would look like.
“This is going to
change everything,” Ive told his team. But he was careful not to
show it to Jobs
right away, especially since his people were working on it in
their spare time and
he didn’t want to squash their enthusiasm. “Because Steve is so
quick to give an
opinion, I don’t show his stuff in front of other people,” Ive
recalled. “He might
say, ‘This is shit,’ and snuff the idea. (…)”36
Capitalizing on autonomous strategic initiative depends
critically on the “strategic
recognition” capacity of the company’s senior leadership.
Strategic recognition means
that some senior executives (at first usually only one or a few)
are able to see the strategic
implications for the company of pregnant actions and events
that have started to happen
inside or outside the company and signal emerging opportunities
or threats. These

executives are willing and able to bring those insights into
conversations with other
senior executives and top management before everybody agrees
about them, which
18
broadens support for action to deal with the changes.37 A
simple and powerful example
of strategic recognition at HP was provided by one scientist
from HP Labs when he said
“Dick Hackborn played a critical role in Inkjet: ‘He said this
was the kind of thing that
suits HP.’” Three examples of new business development
briefly reported below (see
balancing strategic resource allocation to fit and evolvability)
highlight how senior
executives such as Richard (“Dick”) Hackborn, Joel Birnbaum,
Willem (“Wim”)
Roelandts, and John Brennan, among many others, performed
these critical leadership
activities over multiple decades at HP.
Companies with strong strategic leadership, like HP, are aware

of the important role of
both induced and autonomous processes in strategy-making,
tolerate a sufficient level of
uncommitted resources and looseness in control to continue to
maintain a portfolio of
autonomous initiatives, and are able to select at the right time
(when the viability of an
autonomous initiative has been demonstrated) to integrate those
initiatives into the
induced process in order to exploit the changing environmental
dynamics. Because many
autonomous initiatives are likely to fail, it is important to
develop the appropriate
strategic leadership discipline that helps leaders decide which
ones to stop, and when.
Without the discipline of stopping autonomous strategic
initiatives that do not work, the
company dissipates its resources and ruins the careers of its
entrepreneurial employees.
“Strategic context determination” is the part of the autonomous
strategy-making process
through which these disciplining strategic leadership activities
are performed. Strategic
context determination helps resolve the tension that exists

between newly emerging
autonomous strategic initiatives and the corporate strategy in
force at that time. 38
19
[APPPENDIX 2 shows a schematic of the induced/autonomous
strategy processes
framework. It also discusses how the induced/autonomous
strategy processes can be
related to the idea of becoming in complexity theory.]
Strategic Leadership: The Key Role of the CEO
As noted above, a company’s critical leadership involves
executives throughout the
organization. In contrast to more pluralistic organizations,
however, where power is often
widely diffused and objectives can widely diverge,39 business
organizations usually have
a “peers-plus-one” mechanism in place to force change on the
organization.40 The “one”
is the CEO. With the help of the “Strategy Diamond”
framework, this book focuses on
the key strategic leadership role of HP’s successive CEO in

sustaining the company’s
process of becoming. The strategy diamond framework views
strategic leadership in
terms of mastering the alignment of five dynamic forces that
drive a company’s
evolution: (1) the company’s strategy; (2) its chosen product-
market position; (3) its
distinctive competencies; (4) its strategic actions; and (5) its
internal selection
environment.41 This integrative theoretical framework
simultaneously considers the links
between product-market position and distinctive competence,
and between strategy
(formulation) and strategic action (execution). The effectiveness
of a company’s strategic
leadership is determined by the CEO’s ability to use these five
forces to keep the
company viable in the face of highly dynamic external and
internal contexts. [See
APPENDIX 3 for a schematic representation of the strategy
diamond framework.]

20
Key Tasks of the CEO’s Strategic Leadership
This book’s chapters focused on the contribution of successive
CEOs to HP’s process of
becoming will document how they discharged the key tasks of
strategic leadership. This
will involve examining how clear each CEO was about the
company’s strategy; that is,
clear about the business(es) the company wanted to be a winner
in, what winning means,
and what competitive advantage the company would rely on to
be a winner during their
tenure. Clarity about strategy is important because it helps
guide positioning the company
in its product-market environment and gives it a roadmap to
navigate the non-market and
capital market environments as well. To get this strategic
clarity, successive HP CEOs
had to truly understand what it takes to win (the basis of
competitive advantage) in their
desired product-market position. Clarity about the strategy also
provides the basis for
identifying what the company’s distinctive competencies are;

that is, what the company
has got that allows it to occupy the desired product-market
position, defend it and
leverage it. Through formulating the corporate strategy and the
implied product-market
position and distinctive competence, successive HP CEOs stated
their intent about how to
shape the company’s future.
Successive CEOs’ strategies, however, become reality as
opposed to mere rhetoric when
taking strategic action (or not taking action). Strategic actions
are consequential; that is,
they commit the company to a particular position in its
environment and deploy and
develop competence in support of that position. These actions
(or their absence when the
changing environment requires them) are difficult to reverse.
Through getting the
company’s executives to execute the strategy, successive CEOs
actually determined HP’s
21

future which then became the past with associated path
dependencies for their successors.
The chapters that follow will examine to what extent the
strategic actions that anew CEO
had to take were constrained by the strategic actions of his or
her predecessor(s).
The CEO’s Role in Developing the Company’s Strategic
Leadership Capability
The strategy diamond framework defines the role of the internal
selection environment in
terms of helping top management discharge the key tasks of
strategic leadership in the
face of external and internal context dynamics: (1) defining and
redefining the businesses
the company wants to be a winner in and the required corporate
strategy, (2) aligning and
re-aligning strategic positioning with distinctive competence,
and (3) aligning and re-
aligning strategic action with corporate strategy (see
APPENDIX 3). In the remainder of
this book the internal selection environment is cast in terms of
the company’s “strategic
leadership capability,” and its development viewed as an
important CEO responsibility.

The chapters that follow will examine how HP’s founders and
successive CEOs
developed the four key elements of the company’s strategic
leadership capability: (1)
developing the strategic leadership regime (integrating top-
down and bottom-up strategic
leadership), (2) managing dynamic interplays between corporate
strategy and corporate
culture, (3) balancing strategic resource allocation for fit
(exploiting existing product-
market opportunities) and evolvability (developing new
product-market opportunities),
and (4) managing dynamic interactions with the board of
directors. These four elements
are further discussed below.
22
Developing a Strategic Leadership Regime
Integrating Top-Down and Bottom-up Strategy Processes
A company’s strategic leadership regime can be characterized in

terms of the strength of
top-down and bottom-up strategic leadership processes, which
suggests four distinct
types. Bottom-up strategic leadership can only be strong, of
course, if the CEO
consistently encourages and supports it. Also, companies will
seldom, if ever, show an
exact fit with any one of these four pure types. However, gi ven
the external and internal
context dynamics, the typology can serve as a diagnostic tool to
help the CEO better
assess the direction in which the strategic leadership regime is
evolving (if left
unattended) and so be better able to make sure it continues to
integrate bottom-up with
top-down strategic leadership to maintain the effectiveness of
the strategy-making
process. The four types are shown in Figure 1.3.
_________________
_________________
If top-down and bottom-up leadership are both weak, the
company has a strategic

leadership regime characterized by “Brownian motion:” it is one
where employees, like
particles suspended in a liquid, go through motions following a
random path. Here, the
induced strategy process lacks direction, and the autonomous
strategy process pursues
new ideas haphazardly and without the ability to scale potential
winners and stop losers.
It is difficult to see how this regime could effectively sustain
the process of corporate
becoming.
23
If top-down leadership (and the induced strategy process) is
weak and bottom-up
leadership (and the autonomous strategy process) is strong, the
company has a strategic
leadership regime characterized by “drifting.” Here, the
company will possibly face
increasing complexity because of unchecked proliferation of
businesses and business
models that cannot all be sustained; or radical innovation may

in fact become stifled
because strong-headed business-level leaders focus almost
exclusively on the short-term
and compete vigorously among each other for the company’s
resources. In either case,
the company is likely to progress more or less in a zigzag
fashion without clear corporate
strategic direction. Here too it is difficult to see how this
regime could effectively sustain
the process of corporate becoming.
Where top-down leadership is strong and bottom-up leadership
weak, the company has a
strategic leadership regime characterized by “lock-step.” Here,
the top-down induced
strategy process imposes a clear direction but the bottom-up
autonomous strategy process
receives no consistent corporate support and is likely to atrophy
over time. Conflict
remains latent or is suppressed, and everybody is expected to
march full speed in the
same strategic direction, so the direction better be the right one.
This regime is closely
related to the “Great Leader” theory of strategic leadership. (In

recent times Steve Jobs
immediately comes to mind as the exemplar of this model.)
Charismatic leaders are very
closely associated with the periods of extraordinary success in a
company’s history that
they oversee. Sometimes, the company’s board of directors will
try to “routinize the
charisma” of such a CEO by attempting to codify the leader’s
strategic leadership
intuition and idiosyncratic approaches such that it becomes
institutionalized and
24
presumably helps successors to continue to benefit from the
great leader’s extraordinary
talent.42
Strong top-down leadership combined with strong bottom-up
leadership creates a
strategic leadership regime characterized by “constructive
confrontation.” Here, the CEO
encourages lower level leaders to use the expert knowledge and
information that they

obtain from being exposed to signals coming from internal and
external environmental
change to challenge upward to be able to get clarity about the
strategic situation facing
the company at critical times in its evolution. This regime
presumably enables the
company to deal quicker and better with external and internal
context dynamics. In
particular, with this regime the top-down induced strategy
process provides clear
direction for the core business(es), but it also provides room for
the bottom-up
autonomous strategy process to make the case for initiatives
that are able to scale to
become integrated in the corporate strategy going forward.
“Constructive confrontation” is a term adopted from the Intel
Corporation where it took
root as a result of the founding triumvirate (Robert Noyce,
Gordon Moore, and Andy
Grove) insisting that “position power” (read more senior,
usually older executives)
should not shut up “knowledge power” (read less senior, usually
younger executives).43

The terminology used is, of course, less important than the
strategic leadership regime
that it intends to describe, and different organizations might
wish to use their own
terminology for characterizing a regime that tries to capitalize
on the best information
about the strategic situation facing the company that is available
in the organization.44
25
Furthermore, given the diversity of national and regional social
cultures in the global
corporate context, strategic leaders adopting constructive
confrontation must be able to
translate the ways in which it is applied to those cultures. In
Japan, for instance, the very
sound of constructive confrontation will come across as
incompatible with the Japanese
culture, and strategic leaders will have to find other
terminology to communicate the
model while making sure that its purpose - which is to get to the
unvarnished truth of the
strategic situation facing the company at a particular moment in
time - will not get diluted

or adulterated.
Maintaining constructive confrontation as the organization
evolves and successive CEOs,
all with their distinctly different personalities and approaches,
take charge of the
company’s strategic leadership, is extremely difficult. Over
time, there is the danger that
a new CEO will send powerful signals that debating strategic
decisions is no longer
particularly valued, and strategic leadership moves in the
direction of lock-step.
Alternatively, a new CEO’s indecisiveness allows debates to go
on too long and without
resolution (e.g., the same issues come up time and again; or
criteria of functional
excellence that are no longer externally relevant keep fueling
endless debates), which
drives strategic leadership regime in the direction of drifting or
even Brownian motion.
Context Dynamics and Strategic Leadership Regimes
Context dynamics create strategic inflection points that are
usually signaled by strategic

dissonance: senior executives no longer have a shared
understanding of the strategic
situation facing the firm and disagree about the fundamental
actions to take. Strategic
26
dissonance must be resolved before the company can transform
itself as it tries to find a
viable path while traversing the “valley of death” associated
with a strategic inflection
point, but it is usually not clear in advance what the ultimate
shape of that transformation
will be.45
A strategic leadership regime based on constructive
confrontation (or equivalent
culturally acceptable terminology) is best able to deal with
strategic dissonance because it
values dissent and genuinely encourages open debate. It makes
it possible to capitalize on
top and senior executives’ strategic recognition capacity; that
is, their ability to quickly
recognize important changes in the external context, to

determine how much time there is
take strategic action, and to persuade others to help them adjust
to exploit the changes.
This, in turn, helps bring the debate to a conclusion by reaching
general agreement on a
new strategic direction necessary to re-align action with
strategy.
Managing Dynamic Interplays between Strategy and Culture
A company’s process of becoming also depends critically on
how well the company’s
strategy and culture continue to support each other throughout
the company’s evolution.
While some management experts caricature strategy and culture
as alternative sources of
corporate success, often belittling the importance of strategy
(“culture eats strategy for
breakfast”),46 a more enlightened view is that strategy and
culture complement each
other. As Burgelman points out in his lectures on strategic
leadership at Stanford
Business School, “strategy without culture is powerless; but
culture without strategy is
aimless.” In the happy days of a company’s history, culture and

strategy are mutually
27
supportive. Happy days, however, are not forever, so it is useful
to consider various
dynamic interplays between strategy and culture in light of
changing context dynamics.
Corporate Strategy
A recent treatise on “good” versus “bad” strategy47 posits that
the kernel of a good
strategy contains three elements: (1) a diagnosis that simplifies
the complexity of a
situation and identifies critical aspects that define the challenge
facing the CEO; (2) a
guiding policy for dealing with the challenge that helps
overcome the obstacles to
meeting the challenge; and (3) a set of coherent actions to
execute the guiding policy.
These three elements are highly valuable for helping to ex ante
ascertain the potential
effectiveness of a corporate strategy, one of the five forces in
our strategy diamond

framework (discussed earlier).
However, to get enacted by a sufficiently large proportion of the
company’s senior
executives; i.e., the critical leadership, the strategy must also
engage these leaders both
rationally and emotionally. They must feel compelled to execute
it. This fourth element is
crucially important. This is powerfully illustrated by a
recollection former Intel CEO
Andy Grove shared with Burgelman after Intel top management
had decided to transform
the company from a semiconductor memory maker to a
microprocessor-for-PCs
company. Grove said:
The “Grove leadership approach” consisted of trying to
persuade and sell the new
strategic approach to the management team. (…) After some
period of time, the
new strategy had traction with some managers and did not have
traction with
some others. The people who did not get traction - they may
have provided lip
service to the new strategy, but their actions were not
supportive - the approach
was to remove these people from positions were they could
choke progress. (…)

28
As a top manager you have to have a high level of
understanding and then let
people do the implementation. They do or they don’t. (…) It
was not that some
didn’t understand the strategy, or even that they disagreed with
it; it was more like
they didn’t get excited about it. 48
A critically important condition for Grove’s successful
intervention was of course that the
new strategy was clear in his own mind. In other words, if the
strategy is not clear and/or
is not clearly communicated to the critical leadership, it is not
possible for the CEO to
judge whether it is being implemented or not.
In light of this, the corporate strategy at a particular moment in
the company’s evolution
can be considered compelling if it is clearly articulated and
communicated by top
management (meets the three core elements of strategy) and
acted upon by the critical
leadership because they accept it both rationally and
emotionally as necessary to deal

with strategic change, or as non-compelling if many senior
executives are unclear about
what it really means and why they should care about acting
upon it.
Corporate Culture
The research of HP’s process of becoming suggests that to
better understand the dynamic
interplays between corporate culture and corporate strategy it is
useful to distinguish the
hard part of corporate culture, which is called here the
“operating model” (employees’
beliefs about “how we execute strategy in this company”) from
the soft part, which is
called here the “core values” (employees’ beliefs about how
people ought to be treated
and treat each other while we execute strategy in this company).
This research also
discovered that there are latent potential conflicts between the
operating model and the
29
core values, which sometimes becomes apparent when external

context dynamics
necessitate a change of the corporate strategy.49
In light of these insights, corporate culture during a particular
CEO’s tenure can be
compatible with his or her corporate strategy; that is, is viewed
by the critical leadership
as generally consistent with the existing operating model and
with the existing core
values; or incompatible; that is, many senior executives are no
longer sure about how the
strategy should be executed with the existing operating model;
further, they might
experience significant conflict with the company’s existing core
values.50
Managing Dynamic Interplays
These two dimensions define four different types of dynamic
interplays between culture
and strategy potentially that a CEO may face when dealing with
changing context
dynamics. Managing these interplays is the second key element
of strategic leadership
capability associated with corporate becoming. This is shown in

Figure 1.4.
_________________
_____________
The combination of a compelling corporate strategy with a
compatible corporate culture
is likely to produce commitment. Here, the CEO faces little
difficulty in getting
employees to forcefully try to execute the strategy. This type of
interplay is most
congruent with “constructive confrontation” based on strong
top-down and strong
bottom-up leadership (Figure 1.3). A compelling corporate
strategy combined with an
incompatible corporate culture, on the other hand, is likely to
produce conflict. Here the
30
CEO is likely to face starkly different views among key
employees, probably some old-
timers who are steeped in the culture that worked well in the
past and some new-comers

who advocate new ways of doing things, about what the best
way is to execute on the
strategy. This situation can be viewed as most congruent with
“lock-step” based on
strong top-down leadership to impose the new strategic
direction and keeping conflict
suppressed, but with weak bottom-up leadership (Figure 1.3).
The combination of a non-compelling corporate strategy with a
compatible corporate
culture is likely to produce contention. Here the CEO is likely
to be faced with competing
factions each supporting a different strategic direction, while
claiming that their preferred
strategic direction is (more) consistent with the corporate
culture. This type of interplay is
most congruent with “drifting” based on weak top-down and
strong bottom-up leadership
(Figure 1.3). A non-compelling corporate strategy combined
with a non-compatible
corporate culture, on the other hand, is likely to create
confusion. Here the CEO is likely
to be at a loss about what to do and how to do it, and change
events may simply take

over. This interplay can be viewed as most congruent w ith
“Brownian motion” based on
weak top-down and weak bottom-up leadership (Figure 1.3).
Balancing Strategic Resource Allocation for Fit and
Evolvability
Fit and Evolvability in the Internal Ecology of Strategy-Making
Large companies like HP can be viewed as ecological systems
within which strategic
initiatives emerge and compete for the company’s resources
through the induced and
autonomous strategy processes.51 As noted above, the
company’s strategic leadership
31
orchestrates the overall strategy-making process by (1)
providing guidance for the
induced process (usually through the regular strategic planning
process) to improve fit
with the existing product-market environment; and (2)
activating strategic context
determination processes to decide which autonomous
(unplanned) initiatives to continue

to support in new environmental segments to maintain
evolvability (see APPENDIX 2).
The internal ecology of strategy-making plays a crucial role in
the process of corporate
becoming because it serves to define and protect but also to
redefine the company’s
identity in relation to its external ecosystem. This is so for two
related reasons. First, the
induced and autonomous strategy processes involve competing
claims by senior
executives about the allocation of the company’s resources,
which directly affects their
interests and therefore concentrates their efforts to influence top
management’s strategic
decisions about how the company should define itself (e.g., HP
as an instruments
company or a computer company). Second, initiatives emerging
in the autonomous
strategy process challenge the concept of strategy that drives
the induced strategy
process. Either the CEO ultimately refers to the existing
concept of strategy to maintain
the focus on fit and rejects the autonomous initiative and
thereby also re-affirms the

current identity of the company in its external ecosystem; or the
CEO integrates the
autonomous initiative to pursue evolvability into the corporate
strategy going forward
and thereby redefines the company’s identity. In this way,
induced and autonomous
strategy processes “mutually specify each other “so that they
constitute the company as
“a self-perpetuating entity” in relation to its evolving
ecosystem.52
32
While it is difficult to predict how a company will evolve over
long periods of time with
this type of strategy-making process, it also offers it the best
chance to remain adaptive in
the face of external context dynamics, which is the very
meaning of built-to-become.
Three HP Examples of Evolvability
Sidebars 1-3, briefly report three previously mentioned new
business development
initiatives within HP that emerged through the autonomous

strategy process and shaped
the company’s process of becoming. They highlight the
importance of “strategic
recognition” on the part of senior executives; as well as of
“strategic integration:” their
ability to bring together various autonomous strategic initiatives
that are dispersed
throughout the company but need to be brought together to
focus and scale a new
business development effort for the company.
Sidebar 1: Emergence and Development of Computers at HP
During the 1960s, HP‘s initial focus in computers was on
instrumentation control and
scientific calculation. (Dave Packard preferred to call them
Instrument Controllers to
avoid antagonizing IBM, a large HP customer at that time).
HP’s work in computers had
been dispersed across regions and divisions in the highly
decentralized company
designed for the instrumentation business. In fact, there were
three major lines of 16 bit
mini-computers, all with different architectures, operating
systems and purposes

(technical oriented or business oriented). These computer
systems all had homegrown,
proprietary architectures for hardware, software and
networking, and the company had
not brought in many experienced computer scientists. As it
became clear that computers
33
were moving toward 32-bit architectures, CEO John Young
realized that HP could not
afford to convert all of its lines of computers to their own 32-bit
architecture, so he
decided to poach Joel Birnbaum, head of experimental systems
at IBM, to lead a drive
toward a unified 32-bit computer architecture in HP labs.
Birnbaum and his team pursued
a reduced instruction set computing (RISC)-based architecture
that was referred to by the
internal code name “Spectrum.”
Interestingly, one of HP’s three computer systems was already
developing its own 32-bit
architecture it called “Vision.” As this group comprised HP

veterans that Young was
familiar with and trusted, he initially put his money on the
Vision project.. At the same
time, however, he encouraged Birnbaum to continue full-speed
with the development of
Spectrum. In the words of Birnbaum, who had foreseen that
Vision would have fatal
problems (strategic recognition in action) long before others at
HP, “Vision died of its
own weight. A decision was made to kill Vision, but it was at
least a year later than
needed. It wasn’t really a decision. They had no choice.”53
The actual functioning of the Spectrum technology, now named
HP-PA (for Precision
Architecture), however, was still troubled. As another senior
executive said:
“There was a lot of work left to do to get these systems to
market across the multiple
computer product lines.” HP still faced the problem of strategic
integration with
Spectrum. It ultimately took almost 10 years and several senior
executives, including top
scientist Joel Birnbaum and hard-charging senior executive

Wim Roelandts, to
34
successfully oversee the completion and integration of Spectrum
across HP’s computer
product lines.
Sidebar 2: Emergence and Development of HP’s Inkjet Printers
Both dispersed autonomous strategic initiatives and strategic
integration were also
important in the great success story of HP’s Inkjet business.
According to one senior
scientist in the HP Labs:
There is this stress between opportunism and strategy. I think a
lot of what
happened when HP got into Inkjet printing was opportunistic
more than strategy.
Nobody was asking us to produce an Inkjet printer.” (…) It just
so happened that
John Vought came up with a great idea and wanted to work on
it; but the
opportunistic thing is that Frank Cluture had been working on
liquid crystal
displays in Corvallis – he had a lab there and got a lot of
equipment and a lot of
people – and was trying to compete with the Japanese on
building liquid crystal

displays. But he could get the finished displays from Japan
cheaper than it cost
him to buy the components in the U.S. That killed his project,
but he found
himself with people and a lab that could do thin films on glass
and other things.
When Vought heard about HP’s early work in thermal Inkjet, he
knew he found a
viable home for his people and their work, He could put thin
films on glass, which
is the way we first started out. He got very excited that he had
something he
could do with his organization and resources. That was the point
in time, long
ago, when a general manager could be an entrepreneur.
This scientist also observed the dispersion of entrepreneurial
initiatives (through the
autonomous strategy process) within HP:
We were ultimately involved in 4-5 different HP divisions; each
was coming at
inkjet printing from a different direction, including Boise,
Vancouver, San Diego,
Corvallis and Fort Collins. It was like the history of computing
at HP, with
different divisions coming at it from different directions. HP
Labs struggled trying
to support these different businesses with different objectives in
their printers:
some of them wanted low-cost throw-away print heads; Boise
wanted a page-
wide print head to replace the Laser Printer; everybody wanted

something
different and everybody had a slightly different technology they
were basing their
Inkjet on. Basically, (it was) our technology (but) with different
materials and
different architectures.
35
Finally, highlighting again the importance of the strategic
recognition as well as strategic
integration capacity of senior executives, this scientist also
said:
It wasn’t until Hackborn formed the Peripherals Group and
converged all of that
that we could deal with one technology that everyone could end
up using.
Sidebar 3: Emergence and Development of HP’s Networking
Business
One HP group working early in networking was in Grenoble,
France. That group made
industrial terminals. It was a business that started to bore a
young Belgian engineering
manager named Wim Roelandts (the same one we met earlier,
associated with HP-PA

development) who started “digging around looking for
something else to do.” One of the
ideas he came up with was for expanding in networking.
Roelandts said:
: You came up with an idea and you tried to convince your boss
to let you pursue it.
You sold it to your division manager. He would then talk to the
group manager. If
there was an interest, you could then talk to the group manager
and get your idea
funded. They would give you a little bit of money to kind of
work on your idea.
So, that was kind of how it started, at least in Grenoble.54
Until the early 1980s, HP’s three major computer divisions each
developed its own
networking technologies and protocols. In 1985, the Information
Networking Group was
formed, and led by Roelandts, to consolidate the independent
networking businesses. HP
had to be able to connect their computer systems to those of
IBM and DEC, and this
created a problem. According to Roelandts, “I had fewer
resources than IBM and DEC
but I had to create protocols to interact with their systems and
HP’s systems. That’s why

we started playing with TCP/IP, because it was an open single
standard.”55
HP’s success with open standards, created its own momentum.
Roelandts’s successor was
quite bullish on HP’s opportunity in networking. As early as
1988, he thought it could be
36
a $1 billion for HP. This, however, led to further internal
tensions and the successor lost
the argument and left the company. In 1988, HP disbanded the
networking group,
sending most of its component parts to various systems groups.
Networking had been
briefly put under Hackborn, who ran the highly successful
printer business, and then was
assigned to the PC business. There it developed a larger
complement of networking
equipment, including routers and bridges and began to compete
more directly, albeit on a
smaller scale, with Cisco and 3Com. This caused internal
friction with the computing
centers whose enterprise sales force was selling Cisco products

together with their own
big UNIX servers.
By the mid-1990s, HP executive John McHugh was asked to
run. Through a combination
of lower prices with an imaginative lifetime warranty policy and
rebranding itself as HP
ProCurve, McHugh began to grow the business more profitably.
This increased the
internal friction with those at HP who benefitted from a smooth
relationship with Cisco.
When Carly Fiorina became HP’s new CEO in 1999, she wanted
to sell the networking
business to protect the partnership with Cisco, on whose board
of directors she served,
and tasked senior executive John Brennan to do so. Brennan,
showing a high degree of
strategic recognition, had higher hopes for ProCurve than
selling it off. He convinced
Fiorina to let networking have its own sales force and almost all
of its own infrastructure
- a very unusual exception at HP - and relocated the business
under the aegis of HP’s
Chief Strategy Officer, still under the pretext that this was

necessary to increase its
chances to get sold. There the business thrived for several
years. After Fiorina was fired,
new CEO Mark Hurd became impressed with the growth and
profitability of ProCurve
37
and decided to keep the business and to in fact augment it with
the acquisition of 3Com.
It is now a multi-billion dollar business for HP.
The stories of the development of the computer, inkjet printers
and networking
businesses summarized in the sidebars provide compelling
examples of how the
autonomous strategy process of HP’s internal ecology of
strategy-making helped the
company evolve from an electronic instrument company to a
computer and (later) also a
networking company.
Strategic Leadership Skills for Evolvability
As these stories also show, pursuing evolvability in the internal

ecology of strategy-
making highlights the messiness of the process of corporate
becoming and depends
critically on sophisticated strategic leadership. In particular,
they underscore the
importance of strategic recognition and strategic integration on
the part of senior
executives in the strategic context determination process to set
the stage for resolving the
indeterminacy between autonomously started new business
developments and the
existing corporate strategy going forward; that is, for resolving
whether top management
should go ahead and embrace this new strategic direction.
Indeed, while the autonomous new business opportunities
originated from interrelated
distinctive competencies developed by entrepreneurial
employees in bottom-up fashion
rather than through top-down strategic direction setting,
ultimately HP’s top management
had to legitimize the new strategic direction by fully embracing
it and further strengthen

38
it through major resource allocation commitments (computers,
printing), sometimes also
involving major acquisitions (networking), and driving
necessary changes in the
corporate culture (computers, networking).56
All of this also indicates that the CEO’s ability to balance fit
and evolvability in the
internal ecology of strategy-making depends on creating a
strategic leadership regime
that effectively integrates top-down and bottom-up strategic
leadership and on securing
continued commitment by managing the dynamic culture-
strategy interplays unavoidably
triggered by initiatives related to evolvability.
Patterns of Balancing Strategic Resource Allocation for Fit and
Evolvability
Previous research has identified the strategic leadership
challenges associated with
balancing strategic resource allocation to fit and evolvability:
(1) exploitation of existing

opportunities to the fullest (through pursuing fit), (2) the
generation of entirely new
opportunities (through pursuing evolvability), and (3) the
balancing of exploitation and
generation over time (because resources are limited).57
Strategic leadership resource allocation
The reality that the company’s reservoir of strategic leadership
resources (skills and
efforts) is limited at any given time58 determines the
possibilities frontier for the CEO to
optimally pursue different possible combinations of fit and
evolvability. The possibilities
frontier is shown in Figure 1.5.
_________________
__________________
39
The horizontal axis in Figure 1.5 represents the percentage of
total available strategic
leadership resources allocated to fit (with current product-
markets - maximum 100

percent); the vertical axis the percentage allocated to
evolvability (seeking out new
product-markets – again, maximum 100 percent). On the
possibilities frontier, the
tradeoffs between allocating strategic leadership resources to fit
and evolvability are
binding. In other words, if the CEO decides to allocate a certain
percentage of the
company’s strategic leadership resources to fit, for instance
point A on the possibilities
frontier, this also determines the remaining percentage of the
resources available for
evolvability, and conversely.59
Interestingly, the “perceived” availability of strategic
leadership resources at a particular
time may be below the actual one, for instance points B and C
in Figure 1.5. At point B,
the strategic leadership resource allocation to evolvability is
less than would be possible
if the company were operating at point A on its possibilities
frontier (as a result, total
allocation of actually available strategic leadership resources is
less than 100 percent). At

point C, the strategic leadership resource allocation to fit is less
than would be possible if
the company were operating at point A (total allocation again
less than 100 percent).
Such gaps indicate under-utilization of the company’s actual
potential of strategic
leadership resources, which may be due to ineffective
integration of bottom-up and top-
down strategic leadership and/or poorly managed interplays
between strategy and culture.
It is the responsibility of the CEO, if necessary sometimes
nudged by the board of
directors, to show the senior leadership team the existence of
these sorts of gaps (skill or
40
efforts, or both) between the perceived and actual availability of
resources and how they can be bridged.
Financial resource allocation
In practice, balancing fit and evolvability also depends on the
availability of financial

resources for innovation. The key financial resources are
associated with corporate R&D
and concern two aspects: (1) the ratio of R&D expenditures to
yearly total revenues,
which determines the absolute amount of available resources
(often 10 percent or more of
total revenues in leading high-technology companies), and (2)
how that amount is
allocated for fit (innovation in the core businesses) and
evolvability (new business
development). As financial resources are limited in relation to
claims for their use the
allocation process can be characterized in terms of the relative
amounts absorbed by fit-
related (induced strategy process) and evolvability-related
(autonomous strategy process)
initiatives.
The way the company’s available financial resources for R&D
are allocated between fit
and evolvability at any given time can be reasonably assumed to
be correlated with the
allocation of the strategic leadership resources on the
possibilities frontier (Figure 1.5).

Any point on this frontier may then also be viewed to roughly
correspond to the
percentage of R&D resources allocated to fit (associated with
the induced strategy
process) and evolvability (associated with the autonomous
strategy process) that the CEO
considers optimal.60
41
At some times, the CEO’s rhetoric about the importance of
evolvability may not be
reflected in the pattern of financial resource allocation (point B
again in Figure 1.5) or
about fit (point C again in Figure 1.5). Also, during any CEO’s
tenure, the relative
allocations to fit and evolvability may be adjusted, usually in
incremental ways as a
function of external and internal context dynamics.
Furthermore, successive CEOs may
adopt quite different allocation patterns.
Positive discontinuous changes in absolute amounts of R&D

resources may become
available as a result of highly successful radical innovation
(think Apple since 2007).
Negative discontinuous changes resulting from falling behind
(think Nokia and
Blackberry since 2007) may have the opposite effect. These
types of radical changes in
the CEO’s ability to balance strategic resource allocation to fit
and evolvability materially
affect the prospects of the company’s process of becoming.
Managing Dynamic Interactions with the Board of Directors
The Key Tasks of the Board
The board is responsible for the hiring and firing of the CEO
and the creation of a long-
term CEO succession plan. Effective boards are able to select
the type of CEO who fits
the challenges and opportunities associated with the context
dynamics that a company
faces or is likely to face at particular times in its evolution, and
it is crucial that the
selected CEO can assume that he or she has the board’s
confidence.

42
In light of this, the board must provide support for how the CEO
intends to discharge
him/herself of the key tasks of strategic leadership, and for the
capability that he or she develops during their tenure. In
particular, the board must
encourage the balancing of top-down and bottom-up strategic
leadership, and can do so
by familiarizing itself with levels of strategic leadership below
the CEO and the rest of
top management. The board also must review and then support
changes in the corporate
strategy proposed by the CEO and the difficult cultural
adjustments that it may imply.
Furthermore, the board can play a very important role in making
sure that strategic
resource allocation balances fit and evolvability. Research has
shown that pursuing a
narrow business strategy makes it possible for the CEO to
credibly commit to aligning

incentives for employees to pursue that strategy.61 But this
favors fit and the induced
(top-down) strategy process. Evolvability, however, requires the
development and
support of new business initiatives through the autonomous
(bottom-up) strategy process
that broaden the scope of the corporate strategy. Further
research has shown that the
board can play a critical role in helping the CEO support such
new business initiatives.62
Ultimately, the board must evaluate the CEO’s performance and
decide on his or her
commensurate compensation. But the board is also responsible
for making sure that its
members have the right skills for evaluating the company’s
evolving strategic leadership
capability, and for its own effective functioning and
management of the interactions with
the CEO.
43

Dynamic Interactions
These interactions will depend on the extent to which the CEO
is able to develop a good
and compelling corporate strategy and, on the other hand, on the
extent to which the
working of the board of directors is more or less functional.
These two dimensions
generate another simple diagnostic tool for assessing the CEO-
BoD interactions. This is
shown in Figure 1.6.
_________________
_________________
As shown in Figure 1.6, the best situation is where the CEO has
a compelling corporate
strategy and works with a highly functional board. This creates
constructive dynamic
relations that further the prospects of the company’s becoming.
A CEO’s non-compelling
corporate strategy combined with a well-functioning board may
lead to corrective
dynamic relations in which either the CEO is encouraged to
strengthen the corporate

strategy or he or she is replaced.
In case the CEO’s corporate strategy is compelling but he or she
is faced with a
dysfunctional board, the relations are likely to become
disruptive. This is a difficult and
probably time-consuming situation for the CEO that may
impede his or her efforts to
sustain the company’s becoming. Finally, the combination of a
non-compelling corporate
strategy and a dysfunctional board is likely to produce
destructive relations that
materially put in jeopardy the company’s continued becoming.
44
Successive CEOs’ Strategic Leadership Performance
Shapes the Process of Corporate Becoming
How Evaluate CEO Performance?
Both HP founders were always unequivocally clear that the
performance of public

companies is ultimately measured in terms of financial results;
that is, profitable growth,
not just growth for growth’s sake! They also were deeply
convinced that the company’s
financial results depend critically on the effectiveness of its
strategic leadership. This
book proposes that the effectiveness of HP’s strategic
leadership can be examined in light
of how its successive CEOs have taken advantage of the
company’s internal ecology of
strategy-making by discharging the key tasks of strategic
leadership and developing the
company’s strategic leadership capability to sustain the
company’s process of becoming.
However, this still leaves open the question by what criteria the
contributions of each of HP’s successive CEOs to that process
need to be evaluated.
Late in his professional life, Dave Packard provided important
insights to answer this
question. He did so, in one of his final company speeches, by
distilling HP’s ability to
achieve continued success into “three principles” that he
admonished the current and

future HP critical leadership to continue to adhere to. In
addition, and far more
surprisingly, in his last speech he also admonished HP’s critical
leadership to help the
company avoid the fate of “the wonderfully constructed one-
hoss shay,” which was
constructed to perfection but unable to evolve. Carly Fiorina,
reflecting on her experience
as HP’s first externally recruited HP CEO, provides an
additional insight that helps
complete a reasonable answer to the question.
45
Dave Packard’s Three Principles
In August 1990, in one of his last speeches to company
personnel, Dave Packard
highlighted what he called the “three principles” that had
guided HP over the years:
First, that the company had always worked on fundamental
contributions rather
than “me-too” products; second, that the company had always
worked as a team

focused on its competitors rather than fighting about internal
issues; and finally,
that the company had been lucky to choose electronics as a field
of endeavor
because years ago there was a lot of room for contribution and
it wasn’t so hard to
make a mark.”63
Packard’s guiding principles are remarkable in their simplicity
and power. What they
basically imply is that the foundation of built-to-become
companies - ones that can
continue to transform themselves over time in the face of
contextual change - resides in
their being able to continue to make fundamental contributions
that are valued by their
evolving customer base and that, in turn, help generate
sufficient value for their
shareholders so that they want to indefinitely support the
continued independence of
the company.
In order to continue to make such fundamental contributions,
however, a company must
be ready to sell or drop businesses in which it can no longer
make fundamental

contributions, as well as to buy or build different ones where it
can make new types of
fundamental contributions.64 Carefully picking target markets
was actually one of the
“Objectives” in the official “HP Objectives” document that was
a key part of the HP
Way. It defined the area of new markets as "Fields of Interest"
and described how HP
leaders should approach the entering such new fields of interest.
These sorts of internal
selection processes, associated with the internal ecology of
strategy-making, are required
46
to meet Packard’s third principle, and they make it possible for
a company to reduce its
dependency on the vagaries of the external context dynamics.65
Multi-business Corporate Strategy Considerations
Strategic leadership in the internal ecology of strategy-making,
however, is different
depending on where a company is situated on the continuum
between highly focused

ones (e.g., Intel) and conglomerate ones (e.g., GE). HP,
especially during the tenure of
Lew Platt, was a highly diversified company but with strong
operational and strategic
linkages between the different businesses in its portfolio:
Focused companies HP (under L. Platt)
Conglomerate companies
(e.g., Intel Corporation)
(e.g., GE)
-----------------------------------------------------------------------
----------------------------
In a focused company, the CEO determines the content of the
(single) business-level
strategy, what the contribution is that the company intends to
make, and the main task of
the critical leadership is to effectively execute this strategy
(Andy Grove’s statement
about removing managers from position where they could choke
the strategic change he
was trying to instill mentioned above is an example). In a
conglomerate company, the
CEO cannot determine the content of the strategy for the
different business in the
portfolio. Instead, the CEO must select and develop strategic
leaders for each of the

businesses who will determine that business’s strategy. (Jack
Welch at GE is an
outstanding example of a successful conglomerate CEO.)
In a multi-business company with more tightly linked
businesses like HP, the CEO must
formulate a corporate-level strategy that determines the
contribution that the company
47
will be able to make by having these different businesses in its
portfolio over and above
the contribution that each business can make on its own. This
depends on the extent to
which the adaptive requirements of the different businesses
remain commensurate with
each other (and therefore not too difficult to manage within the
same organization) and
on the ability of the company to take advantage of relatively
unique cross-boundary
business opportunities (a strong form of strategic integration).
Chapter 2 will revisit these
conditions in light of the “antifragility” of the corporate

strategy; that is, whether the
potential performance upsides associated with positive external
context dynamics are
higher than the potential performance downsides associated
with negative environmental
dynamics.66 Correctly ascertaining all of this requires a high-
level of strategic acumen
that few CEOs have demonstrated.
Capital Market Considerations
The stock market values company growth together with
profitability. As companies get
very large, however, high growth rates are hard to sustain. For
instance, a company like
HP with almost $120 billion in revenues that wants to grow at a
yearly rate of 10 percent
needs to grow revenue by almost 12 billion dollars, and the
number keeps growing as
company size increases. This makes it difficult for the stock
market to value very large
companies.67 Nevertheless, it is a key role of each successive
CEO in the company’s
process of becoming to satisfy the stock market; that is, to be
able to maintain the belief

among the majority of shareholders that the value-creating
potential of the company as an
independent institution for the foreseeable future is higher than
if it would be acquired by
another one. This may sometimes require reducing the size of
the company. CEO Lew
48
Platt’s decision to spin off HP’s Test & Measurement
businesses (chapter 5) and current
CEO Meg Whitman’s decision to break the company in two in
2015 (chapter 9) are
dramatic instances of this necessity to sustain HP’s process of
becoming.68
Avoiding the One-Hoss-Shay Trap
Besides articulating the three principles, Packard also gave one
last speech to all of the
HP general managers, roughly one year before he died, in which
he recited (to the
consternation among some of the attendees) a long poem by
Oliver Wendell Holmes, Sr.
called “The Deacon’s Masterpiece: Or The Wonderful One-

Hoss-Shay.”69 Holmes’s
poem recounts the efforts of a fictional deacon to craft a horse -
drawn carriage (“one-hoss
shay”) “in such a logical way” that it could endure for exactly
one hundred years. On its
one-hundredth anniversary the shay collapses all at once as
planned. 70
This story is not what Packard had in mind for HP! The
metaphor of the one-hoss shay
that is built to last for one hundred years is the opposite of what
in this book is called
built-to-become. In a poignant way, Packard was warning his
general managers that a
company must continue to change in order to be able to remain
relevant and viable. From
the perspective of this book, without of course using its
terminology, he is admonishing
his general managers one final time that they must think of HP
as built-to-become.
Keeping that drive alive in the organization, Packard was
basically saying, is the ultimate
challenge and responsibility of each of the company’s
successive CEOs’ strategic

leadership.
49
Carly Fiorina’s Maxim
Dave Packard’ three principles and his warning about the “One-
Hoss-Shay” trap are
powerful criteria for evaluating whether the strategic actions of
the critical leadership of a
built-to-become company will enable it, in the face of
significant internal and external
context dynamics, to continue the process of corporate
becoming. Carly Fiorina, HP’s
fifth CEO and the first externally recruited one, articulated a
maxim that succinctly
captures what this requires on the part of successive CEOs:
A leader who respects the people and the institution he or she is
privileged to lead
strives for sustainable performance that will continue long after
the leader is
gone.71
But how? This book proposes that deep understanding of how to
discharge the key tasks

of strategic leadership and develop the company’s key elements
of strategic capability
helps successive CEOs stay ahead of internal and external
context dynamics. This, in
turn, may help successive CEOs deal more confidently with the
reality that strategic
leadership that was effective for dealing with a particular set of
contextual conditions
almost certainly will not ensure the company’s success in the
long run, when the context
will be different in unpredictable ways. This implies that the
process of becoming will
involve metamorphosis: transformative changes that alter
extensively the company’s
general form and life (think GE at the time of Edison and GE in
2014). 72 Corporate
transformation, however, is not governed by deterministic
physical laws or biological
constraints. The process of becoming remains open ended, with
no ex ante teleological
vision determining what its future will be.

50
Conclusion, Implications and the Road Ahead
Packard’s three principles and his warning to avoid the “one-
hoss-shay” trap, together
with Fiorina’s maxim, provide helpful performance criteria for
guiding the strategic
leadership of successive CEOs of a built-to-become company
like HP. Given these
performance criteria, this chapter has developed a conceptual
framework encompassing
the key tasks of strategic leadership and key elements of the
company’s strategic
leadership capability in support of discharging the key tasks of
strategic leadership to
examine and evaluate in the chapters that follow the
contributions of HP’s successive
CEOs to HP’s process of becoming.
The key tasks of strategic leadership encompass: (1)
formulating the corporate strategy in
terms of what the game is the company wants to be a winner in
(and what wining means),

(2) aligning product-market position with distinctive
competence to achieve competitive
advantage, and (3) aligning strategic action with corporate
strategy, all in the face of
external and internal context dynamics. Each successive HP
CEO faced the challenge of
meeting Packard’s three principles by discharging the key tasks
of strategic leadership; in
first instance by formulating and executing a “good” and
“compelling” corporate
strategy..
The four key elements of the company’s strategic leadership
capability are:
(1) Adopting a strategic leadership regime that integrates top-
down and bottom-up
strategy processes;
51
(2) Managing the interplays between a changing corporate
strategy and the existing
corporate culture;
(3) Balancing strategic resource allocation between fit and

evolvability in the internal
ecology of strategy-making;
(4) Maintaining constructive relationships between the CEO and
the board of
directors.
These four elements of the company’s strategic leadership
capability help the CEO to
effectively discharge the strategic leadership tasks to meet
Packard’s three principles,
avoid the one-hoss-shay trap and apply Fiorina’s maxim. This is
so, first, because
integrating top-down and bottom-up strategic leadership helps
maximize the relevant
information about context dynamics that informs the CEO’s
strategic decision-making
and the company’s ability to continue to make significant
contributions to its customers
(Packard’s first principle).
Second, managing the potentially intense tensions between the
existing corporate culture
(especially the operating model) and corporate strategic change
will speed up the difficult

adjustments necessary to effectively execute it, importantly by
keeping the company’s
leadership focused on the external competition rather than on
internal competition
(Packard’s second principle).
Third, balancing fit and evolvability involves the willingness of
the CEO to allocate
resources to new business initiatives in the autonomous strategy
process that are beyond
the scope of the current corporate strategy and whose financial
results may be achieved
52
beyond his or her own tenure, which will invariably require
tradeoffs with allocating
resources to improve fit for mainstream businesses in the
induced strategy process. Doing
so, however, helps the company find new fields of technologies
and markets where it can
make new significant contributions (Packard’s third principle,
avoiding the one-hoss-shay
trap, and Fiorina’s maxim).

Fourth, maintaining constructive interactions with the board of
directors is likely to
reinforce the CEO’s ability to continue developing the other
three key elements of the
company’s strategic leadership capability; for instance, in
gaining support of the board
for materially increasing R&D spending to support evolvability.
Finally, it seems reasonable to propose that to the extent that
these four key elements
mutually support each other, the company’s strategic leadership
capability will be better
able to support the CEO’s efforts to sustain its process of
becoming.
The Key Role of the CEO: A Caveat
While the importance of the strategic leadership role of the
CEO for the company’s
process of becoming is examined and extolled in Built to
Become, it is good to keep in
mind Nobel Laureate Daniel Kahneman’s observation that the
correlation between the
success of the firm and the quality of its CEO might be only as
high as .30, which implies

“… that you would find the stronger CEO leading the stronger
firm in about 60% of the
[generally similar firms], an improveme nt of a mere 10
percentage points over random
guessing…”73 Nevertheless, to the extent that a company could
select successive
53
generations of superior CEOs, the compounded effect of these
relatively small
differences (for any CEO’s tenure) throughout the firm’s history
would be potentially
highly significant. In other words, the potentially small
differences in corporate
performance generated by superior CEOs compared to good
enough CEOs, and their
contributions to strategic leadership capability, add up over
time.
An Empathic Account
The research for and writing of Built to Become is based on the
reasonable assumption
that boards of directors always intend to appoint CEOs that are

smart and well
intentioned. It therefore also seems reasonable to start with the
belief that each of HP’s
CEOs were indeed smart and wanted the best for the company
according to their points
of view. Consistent with this belief, the chapters that follow
intend to provide an
empathic account of each of HP’ CEO’s efforts to maintain the
relevance and greatness
of the company.
Keeping Henry Kissinger’s insight in mind, Built to Become
intends to objectively
describe the changing external and internal contexts within
which each of HP’s CEOs
had to act in order to shape the company’s process of becoming
during their tenures.
Each CEO at the beginning of their tenure was dealt a hand,
sometimes a favorable one
but at other times one less so that they had to play. Each CEO
subjectively defined and
discharged the key strategic leadership tasks in light of the
forces that shaped the external
and internal context dynamics during their time running the

company. Each CEO’s
54
perception of these forces influenced the type of strategic
leadership capability that he or
she chose to develop to sustain the company’s process of
becoming.
Built to Become’s reconstruction of the stories of strategic
leadership of HP’s successive
CEOs provides a deeper appreciation of the challenges that all
of them faced in coming to
grips with the limits of their power, as well deeper insight into
the occasions when they
were able to take advantage of the opportunities offered by
various contextual changes
while at the same time sidestepping potential pitfalls. This,
hopefully, will also instill a
sense of empathy on the part of the readers for the different
protagonists that they are
about to encounter.
Chance or Necessity? A Second Caveat

Built to Become intends to highlight the important role of
strategic leadership in HP’s
process of becoming. The analysis, however, must also keep in
mind two important
questions raised earlier in this paper. First, is HP’s 76-year
existence as an independent
company the result of a strategic leadership process of
becoming or simply the
manifestation of a random process? Second, even if HP has
survived so far as the result
of the process of becoming, to what extent can this be attributed
to superior strategic
leadership capabilities or has the company simply been
benefiting from a process of
cumulative advantage? The data and analysis provided in Built
to Become will provide
the foundation for offering a reasoned answer to these
questions.
55
HP’s History of Becoming – 1939-2015: An Integral Process
Overview

The research paper by this title (available from this author)
forms the basis for Chapter 2
of Built to Become. It provides an overarching picture of the
external and internal
contextual dynamics that the company has faced in its 75-year
history and that have
shaped the workings of its internal ecology of strategy-making.
It conceptualizes the
outcomes of HP’s internal ecology of strategy-making in terms
of seven epochs in the
company’s history of becoming, and it highlights the role of
HP’s successive CEOs in
strategically leading the corporate transformations that connect
the different epochs. The
paper also examines the extent to which the performance of
HP’s successive CEOs can
be usefully evaluated in terms of the company’s stock price
movements during their
tenure. It further identifies the paradox of corporate becoming,
elucidates the
antifragility74 of the adaptive capacity of HP’s strategy-making
process in its history of
becoming, and highlights the existential situation faced by HP’s
successive CEOs in

contributing to the company’s process of becoming.
Built to Become: Why Strategic Leadership Matters
The research paper by this title (also available from this author)
forms the basis for the
final chapter (Chapter 10) of Built to Become. It first revisits
the paradox of built-to-
become to identify three conditions that govern it, and the
existential situation facing the
CEO, to alleviate concerns about over-determination and
tautology that could be raised in
relation to the proposition that strategic leadership really
matters for corporate becoming.
With the methodological issues addressed, the paper continues
with reiterating the crucial
role of the CEO and his or her ability to harness the company’s
past while also driving its
56
future, and with briefly recapitulating how each successive CEO
sustained HP’s process
of becoming by discharging the key tasks of strategic leadership
and by developing the

four key elements of the company’s strategic leadership
capability. One key insight is
that to sustain the process of corporate becoming top
management must make sure that
the company continues to have a not too specialized distinctive
competence base and
product-market positions in which it is not too dominant, so as
to reduce the likelihood of
falling into the competence trap and/or position trap (and
suffering from co-evolutionary
lock-in) while maintaining strong motivation to both sharpen its
competitive abilities (in
existing product-markets) and seek out new product-markets
through innovation. Another
key insight is that successive CEOs need to understand the
company’s past to be able to
manage path dependencies as well as drive its future.
Building on the insights gained from the study of HP’s history
of becoming, the paper
also suggests how the frameworks used to conceptualize the
tasks of strategic leadership
and the development of strategic leadership capability can serve
as steps toward a

dynamic theory of strategic leadership that animates an
evolutionary framework of
corporate becoming. This framework builds on and significantly
extends the academic
writings of the lead author. It will be helpful for further theory
development about the
role of strategic leadership in built-to-become companies. It
also offers practical tools for
founders of new companies and CEOs and boards of directors of
existing companies who
intend to create, run or oversee companies built for continued
relevance, longevity and
greatness. The paper’s conclusion summarizes Built to
Become’s distinct empirical and
conceptual contributions and their implications for practice.
57
APPENDIX 1: RESEARCH METHOD
In studying the role of strategic leadership and strategic
leadership capability in HP’s
process of becoming, the research for Built to Become involved
historical tracing of HP’s

evolution between 1938 and 1999 and real-time longitudinal
tracking of the company’s
evolution since 1999 in combination with “grounded
theorizing.”75
The longitudinal qualitative research combined grounded
theorizing and insights from
modern historical methods to generate novel conceptual
frameworks that establish
theoretical bridges between historical narratives and
reductionist quantitative models.
This methodology can be successfully situated on a spectrum of
theory development
between the historian’s “particular generalization” and the
reductionist’s “general
particularization”. Particular generaliza tion is what historians
do; they “…generalize for
particular purposes.” On the other hand, general
particularization is what most social
scientists typically do: “… embedding narratives within
generalizations. 76 The theory
development spectrum is shown in Figure 1.
Figure 1: The Bridging Role of Longitudinal Qualitative
Research in Theory

Development
REDUCTIONISM: GENERAL
GENERALIZATION QUALITATIVE RESEARCH
PARTICULARIZATION
- Particular - Specific - General
- Concrete - Substantive - Abstract
- Experiential - Suggestive - Non-experiential
- Narratives - Conceptual frameworks -
Statistical and
(boxes-and arrow
charts) mathematical models
58
At the history end of the spectrum of theory development,
particular generalization
involves carrying out case studies of particular, concrete and
experiential social
phenomena characterized by complex, nonlinear causation.
Mostly natural language is
used to construct a coherent and complete representative and
explanatory narrative. At
the reductionist end of the spectrum of theory development,
general particularization

involves statistically-based models or axiom-based
mathematical models. These types of
theories are general, abstract and non-experiential.
In between the historian and the reductionist types of theory
development, longitudinal
qualitative research of complex social systems, with the help of
substantive and formal
grounded theorizing, seeks to go beyond particular
generalizations by creating conceptual
frameworks: boxes-and-arrow charts that show how the complex
system hangs together
and its operative logic. Such conceptual frameworks are specific
(representative of a class
of phenomena), substantive (capturing the essential/material
part underlying the
phenomenon), and suggestive (evoking the phenomenon
indirectly). They provide deeper
and more general insight into phenomena than is possible with
the natural language of
narratives.
Applied to Built to Become’s research about HP, this
longitudinal qualitative research

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