Five Charts that Changed Business

Once in a while, a chart so deftly captures an important strategic insight that it becomes an iconic part of management thinking and a tool that shows up in MBA classrooms and corporate boardrooms for years to come. As HBR prepares for its 90th anniversary, in 2012, our editors have combed the magazine archives and other sources to select five charts that changed the shape of strategy. What did we miss? Nominate more charts in the comments.

The Experience Curve

Created by the Boston Consulting Group in 1966, this diagram may look simple, but it captured the notion that companies develop competitive advantage through economies of scale: Over time, they learn to lower costs, gain efficiencies, and improve products by redesigning and utilizing better technology. Source: Walter Kiechel, The Lords of Strategy (Harvard Business Press, 2010)

The Growth Share Matrix

This grid, devised at Boston Consulting Group in 1968, crystallized the relationship between market growth and market share to help determine the overall prospects for various business units. It is used to teach managers to milk cash cows, divest dogs, invest in stars, and weigh the risks and rewards of question marks. Source: Walter Kiechel, The Lords of Strategy(Harvard Business Press, 2010)

The Five Forces
Prior to Michael Porter's breakthrough 1979 HBR article, "competition" referred to rivalry between companies. Few people considered whether or why some industries were inherently more or less profitable than others or how persistent their profits were over time. Porter's diagram changed that—and students, strategists, consultants, and entrepreneurs now assess a company's competitive position according to the strength of the five forces. Source: "How Competitive Forces Shape Strategy," HBR March–April 1979

Disruptive Innovation

When Clayton M. Christensen and Joseph L. Bower introduced this idea, in a 1995 HBR article, their simple chart illustrated a key insight: Established players can be threatened by lower-quality offerings that fulfill the needs of "overserved" customers—and those offerings tend to improve over time. Source: "Disruptive Technologies: Catching The Wave," HBR January–February 1995

The Market Pyramid
Today managers take for granted that the biggest growth opportunities lie in emerging markets—and that viable businesses can be built to serve people near "the bottom of the pyramid." That can be traced to this chart, introduced by C.K. Prahalad and Kenneth Lieberthal in HBR in 1998. People living on $5,000 to $10,000 a year may not sound like lucrative consumers, but they constitute a demographic of immense purchasing power for companies selling food, housing, or energy. Source: "The End Of Corporate Imperialism," HBR July–August 1998

Source: HBR

Posted in: Business Management