The Power of Strategic Centering
In a dematerializing economy—where value has shifted from physical assets to intangibles such as data, software, and capabilities—traditional strategy frameworks no longer provide enough guidance. Organizations need a clear center: a single, coherent organizing principle that defines what they are really about. A strategic center guides resource allocation, opportunity selection, and organizational identity… choosing the dimension along which a company will pursue coherent opportunity sets as industries and old strategic anchors dissolve.
— Harvard Business Review summary (Rita McGrath, July–August 2026)
A Harvard Business Review feature by Rita McGrath (Columbia Business School) proposing strategic-centering — deliberately choosing one organizing principle to guide resource allocation, opportunity selection, and identity when the classical strategic anchors (defensible positions, stable industries, durable physical assets) are dissolving. It is the primary source for the new strategic-centering concept and a third modern-strategy lens alongside the strategy page’s existing anchors.
TL;DR
- The construct. Strategic centering = deliberately choosing an organizing principle that answers “What are we really about?” It is explicitly not purpose (too aspirational), not vision (a static destination), and not core competence (a prison when the technology shifts). It is closer to Levitt’s “what business are you really in?” but goes further: choosing the dimension along which you pursue coherent opportunity sets as industries dissolve.
- Why now — dematerialization. In 1975 ~83% of Fortune-500 assets were tangible; today ~90% of corporate value is intangible (software, data, brands, relationships, IP, capabilities). McGrath frames this via Carlota Perez’s technological-revolution model — we are at the turning point between installation and deployment of the information/telecom revolution. The classical frameworks — Porter’s five forces, the resource-based view, Blue Ocean — were forged in the “stuff economy” and no longer suffice.
- What a center does (three jobs): (1) bounds the opportunity set without closing it (a common logic, not a narrow product list); (2) resolves capital-allocation dilemmas (competing logics collapse into one); (3) enables “permissionless action” — shared understanding of the center lets people act without waiting for approval, raising speed and lowering the return on internal politics.
- The lead example — Novartis. Narasimhan centered on innovative medicines in specific therapy areas, which made the early/risky radioligand-therapy bet obvious rather than a gamble; consumer health divested, generics (Sandoz) and eye care (Alcon) spun off. The separated parts ended up worth roughly 2× the original conglomerate’s valuation.
- Five centers (each with a best-when and a characteristic risk) — see the table below.
- Centering and dematerialization interlock: mission centering lets you ride technology transitions (loyal to the problem, not the tech); customer centering keeps you relevant as behaviors dematerialize (owning→renting, buying→subscribing); technology centering finds new applications as old markets dematerialize; friction erasure is a dematerialization engine (digital is the ultimate friction remover).
The five centers
| Center | Core question | Best when | Risk | Exemplars |
|---|---|---|---|---|
| Mission | What problem keeps us up at night? | The problem is large/enduring; addressing technologies are in flux | Mission drift | Novartis, Shopify |
| Customer | Whose needs do we understand better than anyone? | Customers have complex, evolving, cross-industry needs | Conflict with other corporate goals | Amazon (“work backward”), Airbnb (Chesky “founder mode” recentering) |
| Technology | What capabilities are transferable across domains? | Capabilities are deep, on a long trajectory, multi-market | Technological narcissism | Fujifilm (vs Kodak), Nvidia, Shell vs BP |
| National ecosystem | What system are we essential to? | Scale/patience beyond private capital; geopolitics create value | Dependency / global uncompetitiveness | TSMC (“silicon shield”), Samsung |
| Friction erasure | What’s still absurdly hard in our space? | Legacy complexity, regulatory fragmentation, poor UX | Scope creep | Toss, DBS, the platform giants |
How this source touches the wiki (dynamic capabilities)
- digital-sensing/digital-scenario-planning — the whole argument is a sensing/scenario claim: reading dematerialization and Perez’s turning point to anticipate that classical strategic anchors will dissolve, and choosing a center that survives the transition.
- strategic-renewal/business-model — centering is a business-model-renewal move: Novartis re-centering on innovative medicines reshaped the entire portfolio (divest/spin-off/acquire) and identity; the five centers are five organizing principles for renewing what the firm is “about.”
- digital-transforming/redesigning-internal-structures — “permissionless action” and Toss’s directly responsible individuals / “tightly aligned, loosely coupled” no-hierarchy structure show centering reshaping internal structure, not just portfolio.
Linked entities and concepts
- Concepts: strategic-centering (primary source), strategy (a third modern lens), dynamic-capabilities (centering as a sensing→seizing→transforming output), strategic-foresight (the dematerialization/turning-point read).
- Org already in the wiki: Amazon (customer-centering exemplar).
- Dangling (single-source mention, deferred per author-entity rule): Rita McGrath (author), Carlota Perez (technological-revolution framing), Vas Narasimhan; exemplar firms (Novartis, Fujifilm, Kodak, TSMC, Samsung, Nvidia, Shell, BP, Toss, DBS, Shopify, Airbnb).
Source-to-source relationships
- Supports 2022-02-23-oberholzer-gee-hbr-what-is-strategy-value-stick — a complementary modern-strategy reframing. Centering chooses which dimension to organize coherent opportunity sets along; the value stick measures whether the resulting moves create value (WTP − WTS). Both explicitly reframe strategy away from the stable-industry positioning frameworks (Porter / RBV / Blue Ocean) that McGrath names as exhausted. Together with Martin (theory-of-winning) and Sinek (game frame), they populate the strategy page’s multi-lens stack.
- Other strategy-cluster neighbours considered — Martin, the strategy-finite-vs-infinite-game synthesis sources, theory-based-view — share the strategy concept but no direct source-to-source edge added: McGrath does not engage their specific claims (she names Porter / RBV / Blue Ocean as the foils, none of which are wiki source pages). Co-citation on the strategy concept is the link. (Not every co-occurrence is a relationship.)