Table Of ContentSTAYING POWER
The Clarendon Lectures in Management Studies are jointly organized by Oxford University Press and the Sa¨ıd
Business School. Every year a leading international academic is invited to give a series of lectures on a topic
related to management education and research, broadly defined. The lectures form the basis of a book
subsequently published by Oxford University Press.
Clarendon Lectures in Management Studies:
The Modern Firm
Organizational Design for Performance and Growth
John Roberts
Managing Intellectual Capital
Organizational, Strategic, and Policy Dimensions
David Teece
The Political Determinants of Corporate Governance
Political Context, Corporate Impact
Mark Roe
The Internet Galaxy
Reflections on the Internet, Business, and Society
Manuel Castells
Brokerage and Closure
An Introduction to Social Capital
Ron Burt
Reassembling the Social
An Introduction to Actor-Network-Theory
Bruno Latour
Gatekeepers
The Role of the Professions in Corporate Governance
John C. Coffee
Science, Innovation, and Economic Growth (forthcoming)
Walter W. Powell
The Logic of Position, The Measure of Leadership
Position and Information in the Market (forthcoming)
Joel Podolny
Global Companies in the 20th Century (forthcoming)
Leslie Hannah
Material Markets
How Economic Agents are Constructed
Donald MacKenzie
Corporations in Evolving Diversity
Cognition, Governance, and Institutions
Masahiko Aoki
In Search of Best Practice
Enduring Ideas in Strategy, Innovation, and Technology Management
Michael A. Cusumano
STAYING POWER
Six Enduring Principles for Managing
Strategy and Innovation in an
Uncertain World
(Lessons from Microsoft, Apple, Intel,
Google, Toyota, and More)
MICHAEL A. CUSUMANO
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For my students, colleagues, and mentors
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PREFACE
In many ways, this book began when I first stepped into a college
classroom in 1972. The university presented an opportunity to learn
about how the world around me—our Western approaches to politics,
economics, and society, as well as science and technology—had come
about. I sampled a variety of courses and would eventually take my
senior year departmental exams in a field called the ‘‘History of Ideas.’’
In my junior year, at the suggestion of my advisor, Professor William
Jordan, I took advantage of my Spanish language skills and wrote an
undergraduate thesis on why the eighteenth-century European Enlight-
enment had failed to take hold in Spain. This thesis convinced me to
study in the future not a nation that had declined and needed ‘‘apolo-
gists,’’ but a society on the rise that needed people to explain what was
happening there and why.
Before graduating in 1976, I was lucky to receive a fellowship from the
Princeton-in-Asia Foundation to go to Japan to teach English for two
years and study the Japanese language. I had never been outside the
United States before. While in Japan, I did what I had done regarding
Europe. I read as much as I could about the country’s history, literature,
economy, and society. It then occurred to me to go on to graduate school
and compare Japan’s own successful ‘‘enlightenment’’ in the nineteenth
century and subsequent modernization and Westernization to the ex-
perience of Western countries—and try to understand why Japan suc-
ceeded whereas a country such as Spain had languished. I was fortunate
to gain admission to an interdisciplinary doctoral program in East Asian
studies.
In my second year of graduate school, at the prodding of my next
advisor, Professor Albert Craig, I decided to specialize in Japanese
management and business history. I then spent more than three years
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based at the University of Tokyo and completed a Ph.D. thesis for
Harvard University on the development of the Japanese automobile
industry, focusing on technology strategy and management at Nissan
and Toyota. Japan in 1980 had just passed the United States to become
the world’s largest auto-producing nation, but there was little written
on how the leading companies had cultivated their world-class manu-
facturing skills. In what became my first book, The Japanese Automobile
Industry (1985), I explored this story and included comparisons to
General Motors, Ford, and Chrysler. The American giants had already
fallen behind the Japanese, especially Toyota, in productivity and qual-
ity, as well as the management of people, suppliers, sales, and probably
everything else. At this point, I was much more in the field of oper-
ations strategy and innovation management than Japanese studies.
Consequently, after completing my degree, I was fortunate again to
spend two years as a postdoctoral fellow in production and operations
management at the Harvard Business School. Then I joined the MIT
Sloan School of Management in 1986 as a member of what is today the
Technological Innovation, Entrepreneurship, and Strategic Manage-
ment (TIES) Group.
Back in 1985, I decided to shift the bulk of my new research to the
computer software business and the evolution of software development
practices. The reason was that I considered software the next great
challenge for Japan to master and a technology that, I was sure,
would change the world if only we could make programming less of
an art and more like science and engineering. I had been exposed to
computers in college (where I learned to use an IBM 370 mainframe to
do word processing on punched cards) and in graduate school (where I
took short courses on computing systems and applications in order to
use another IBM mainframe to write my Ph.D. thesis). While at Har-
vard Business School, I worked mainly with Richard Rosenbloom on
VCR (video cassette recorder) development. I also started a detailed
study of software factories as my individual project and finished my
second book, Japan’s Software Factories (1991), after joining MIT Sloan.
How I got from Toyota, Nissan, and Japanese software factories to
Microsoft, Netscape, Intel, Apple, Google, and the like is what makes
life interesting! Moreover, these firms, combined with my under-
standing of Japan, have shaped my observations on what makes
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companies successful—and not so successful—over long periods of
time, especially in fast-paced and often unpredictable markets. I had
carefully analyzed how big Japanese firms had cultivated world-class
capabilities for automobile manufacturing and software engineering.
But later I realized that the Japanese too often did not create new
technologies or global platforms. They trailed the United States and
Europe in understanding how to use personal computers and then the
Internet, though the Japanese would emerge as leaders in using mo-
bile phones. Back in 1992, however, I decided to ‘‘follow the money,’’
so to speak, and visit Microsoft. It was clear that the real power in
information technology had shifted from the mainframe computer
makers to the PC hardware and software firms, and that Microsoft was
at the heart of the new industry, along with Intel. Fortunately, people
at Microsoft knew of my work because of the company’s growing
interest in software engineering best practices and Japanese quality
control. They welcomed a visit, which I did with a master’s thesis
student sent to MIT from IBM, Stan Smith.
I was immediately impressed with Microsoft’s approach to product
development and proposed to do another book. This became Microsoft
Secrets (1995), done with Richard Selby, a colleague in computer sci-
ence, and then at the University of California, Irvine. The World Wide
Web exploded on the scene in 1995, along with Netscape and Windows
95. These events prompted me to launch another study on the rise of
Netscape, the challenge the Internet posed to Microsoft, and how
‘‘Internet time’’ was affecting strategy, planning, and product develop-
ment. The result was Competing on Internet Time (1998), done with
David Yoffie, a colleague at the Harvard Business School. At this time I
also published a book on leading-edge practices in product develop-
ment in the automobile industry, Thinking Beyond Lean (1998), with
Kentaro Nobeoka. He is one of my former MBA and doctoral students
who had worked as a product engineer at Mazda and is now at
Hitotsubashi University. The rising importance of Windows and
other platforms in information technology, also apparent by the late
1990s, inspired me and another doctoral student, Annabelle Gawer, to
write Platform Leadership (2002). She is now at Imperial College Busi-
ness School in London. The collapse of the Internet bubble, high-
technology commoditization, and the shift of value from products to
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