Months to Prepare an Executive

The Danaher described in Strategy That Works is frugal in conspicuous ways: modest office furniture, no corporate image advertising, no major sports sponsorships. Yet preparing an incoming executive can take several months. New leaders learn the Danaher Business System, its approach to management and continuous improvement, and spend time in different businesses before taking charge of their own.

That requires money and time. Paul Leinwand and Cesare Mainardi, writing with Art Kleiner, give a concrete reason for the investment: Danaher acquires companies and improves how they operate, so it needs leaders who can apply a shared management system. Within that model, an extended introduction matters more than an expensive office.

The example puts a useful question to a budget: what must the company be able to do to deliver its promise to the customer, and which expenses support that ability?

Inside a Single Budget Line

In chapter 5, the authors examine the familiar heading “learning and development.” It can contain both training executives in the Danaher Business System and teaching support staff to use enterprise resource planning software. The accounting label is the same. The business decisions are different.

The first develops an ability through which the company seeks to distinguish itself. The second supports necessary day-to-day work. That does not make software training dispensable: the required standard still has to be met. But finding a less expensive way to teach a program and reducing the preparation of future business leaders are not equivalent choices.

Headings such as marketing, IT and human resources are similarly uninformative about what deserves protection within them. A single organisational capability may depend on people, equipment and information spread across several departments. If every manager defends only their own allocation, the work that connects them can lack an owner.

Four Jobs an Expense Can Do

Leinwand and Mainardi propose a metaphorical parking lot. Move all expenses outside, then allow each back in only after explaining why it belongs. The units being sorted are activities, not whole departments declared useful or redundant.

The exercise has four categories. The first supports the distinctive promise the company makes to its customers. These activities should receive the investment they need, even when they appear expensive beside competitors’ spending. The second consists of industry necessities: things a company must do competently to compete, but which do not distinguish it. The third keeps the business operating at a basic level. For these two categories, the task is to achieve the required standard economically. The fourth contains spending without sufficient justification, including obsolete approval processes or projects funded largely through habit.

An activity does not belong to one category forever. The authors explicitly note that regulatory relationships can acquire strategic importance when a telecommunications company enters a new line of business. Even a museum of old designs may be worth keeping: the book describes Adidas drawing on an archive of experiments as it reconnects with its product heritage. Understanding the work comes before deleting the line.

Decisions about the money released belong to a central steering group. Working teams propose changes and explain their risks; senior management considers the proposals across the enterprise. Otherwise, each department might save money successfully while damaging something another department needs.

What the Cases Can Establish

The usefulness of the exercise deserves to be separated from the strength of the book’s wider promises. Appendix B explains that the authors selected fourteen large, mature companies already known for their capabilities and performance. Alignment with their strategic approach was itself a selection criterion. They conducted in-depth executive interviews at five of the companies.

This material helps explain how particular organisations made decisions. It does not establish that the proposed approach caused their success, or guarantee the same outcome elsewhere. The Danaher account belongs to the 2016 book; it is not a check on the company’s present condition.

For a small Ukrainian business, the transferable element is the question put to a specific expense. If a retailer promises fast, accurate order fulfilment, warehouse training and reliable stock information need to be considered together. That is a hypothetical application, not a Ukrainian case reported in the book. Under unstable operating conditions, backup capacity may also be necessary to keep the promise, even if it appears unused on an ordinary day. Safety and mandatory requirements cannot be discarded merely because they offer no visible point of differentiation.

Here, strategy becomes a decision about resources. Before changing the figure beside learning and development, someone needs to know what people must learn and which work that learning will enable.