Strategy Summit 2026: Inventive Strategy and the ‘Unbossed’ Organization

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0:54I'm Adi Ignatius, and this is the HBR IdeaCast.

1:05Harvard Business Review recently hosted the HBR Strategy Summit 2026, a day filled with expert advice and guidance from executives and academics alike. We're sharing the highlights of this event in this special IdeaCast series. Today, we have another masterclass, this time from Rita McGrath, professor at Columbia Business School. She sees a major shift in the economy underway that affects strategy and organizational structure. Our economy is moving from one based on physical assets, mass production and hierarchy, to intangible assets, services and innovation. This shift means companies can no longer depend on long-term competitive advantage.

1:46Instead, she'll explain how in an AI world, companies need to choose a center around which to build capacity and allocate resources. She'll share examples from the business world, talk about what it means to have unbossed structures, and take audience questions, all with the help from HBR Editor-in-Chief Amy Bernstein. Here is that masterclass.

2:10so this is actually some work i'm doing for a new article and eventually we hope a book which has been one of the hardest things i've ever had to write and the reason is that we are in this turning point between a regime based on cheap energy physical goods mass production the assembly line and that has major implications for how we think about strategy because the regime we are moving into is increasingly based on intangible goods, on digital products, on services rather than things. And it requires a really different way of thinking about strategy. So if I go back to strategy texts 101, it was all about physical things, right?

2:52Physical barriers to entry, things that kept your competitive advantages sustainable for a long time. And that world is just evaporating right before our eyes. But we don't yet know what the contours of the new one are. But what I do think we know is that dematerialization is going to wreak big implications for what strategy needs to be. So I think there's a new concept we need, and it really has to do with how do you center a company in a world which is dematerializing around you. And I thought I'd take an example. So imagine that you're a diversified firm, You've got an eye care business, a consumer products business, a business that does off patent drugs, et cetera, et cetera.

3:38And you happen to have a pharma business, too. And you're in a capital committee decision-making body. And you've got to decide. There are two proposals on the table. One is let's build a plant to make something like Excedrin, right? It's a product we know. It's very predictable. The returns are almost certain to be guaranteed. or let's invest in this brand new therapy area called radioligans, which is nuclear-based therapy, which can attach a nuclear particle to a cell and take it directly to a cancer site. So it's very precise targeting of the disease profile. Which do you do? And in a normal company, which is diversified and has a lot of different activities, it's a really hard decision and everybody comes in with their logic and it's very political and it eventually comes down to whatever your decision rubric is.

4:26But in a centered company, the decision almost makes itself. And by centered, what I mean is you choose your center of gravity, as it were. And in the case of Novartis, which is what this story is really about, Vasan Arsimhan, when he came into the company as CEO in 2018, he said, you know, it doesn't make any sense to me that we don't just pursue our mission of inventive medicines, you know, new medicines that are going to really treat disease areas. And so he got rid of the eye care business. He divested the consumer products business. He divested the generic pharmaceuticals business and really slimmed the company down.

5:03They went from about 104 ,000 people to about 76 ,000 and spun off all that. Now, here's where it gets really interesting to me as a strategist. When he took over, they had pharma, eye care, consumer products, generics, all that stuff. And the total market cap of that company was about 120 to 130 billion, depending on what timeframe you look at. Today, I just looked this up the other day, all those companies, if you add them all up, the combined market value is$510 billion. So look at the delta in what they've done simply by allowing each of those individual pieces to focus on what they do best.

5:41And the culture that Nara Simhan also had that comes together with this is something that he calls inspired. So motivated by their mission, curious, so constantly looking to do new things, and unbossed. So what that means is not you get to do whatever you want, what it means is smart people with a passion for their mission get to take the initiative. And I think a beautiful example of this, It took place in last year's Super Bowl when they sponsored an ad. And the ad was called, Your Attention, Please. And the ad shows basically video of women's breasts right, left, and center in every context you can imagine.

6:19And then it shuts down. The screen goes blank. And the message is so much attention. But six million women watching this program, which is the Super Bowl, could be diagnosed with breast cancer this year. And then Wanda Sykes comes on and gives a pitch about how early detection really helped her navigate this. Could you imagine a staid pharma company ever coming up with something like that? It was just a breakthrough, and I was mesmerized just watching this. But they had the courage to say, it's in the service of our mission to catch people's attention when they're paying attention and in a way that isn't sort of stuffy and pharma-like.

6:56and so the evidence for the increasing intangibility of our economy is quite profound. If you took sort of a slice of the top companies in the world in 1970 or so, the bulk of what constituted their value would have been the typical things we think of, plant, property, equipment, tangible assets. If you took the same snapshot today, the bulk of what companies are valued at is intangible. It's patents, it's software, it's technology. It's not tangible anymore. And that fundamentally changes the boundary conditions under which strategy needs to be performed. So I think this critical challenge of the strategist, before you even get to things like what moves, what market, where do I go?

7:38It's really figuring out what the center of your company is going to be. And in the case of Novartis, it was really centered around this mission, delivering invented medicines that are going to really fundamentally cure issues in several very defined disease areas. Now, what does this do for you? It creates a bounded opportunity set. So it makes it clear what we're going after, but also what we're not. And you know, strategy is fundamentally about making choices. It resolves these kinds of capital allocation dilemmas. It becomes absolutely clear. Of course, you're going to go for radioligants if that's what your company centered on.

8:12And it enables this permissionless, unbossed approach to managing your organization. So if you think about the typical bureaucracy, right, typical hierarchical bureaucracy, it was built to deliver mass production at mass scale. And it was very effective at doing that. But we're not in that world anymore. As Bayer CEO Bill Anderson, who's two years into real transformation at that company, said, you know, there was a time for hierarchical command and control organizations, the 19th century to be precise. So we're looking at something very different now. And I think the contours are beginning to become clear.

8:48And we do see some examples of companies that are actually doing this. So here's some questions to think about as you think about how might we design a permissionless organizational structure, which can do the kind of innovative things that Novartis is doing. And there's some questions to think about. So the first question I would ask is, have we made things as simple as possible? And this is a picture of Sharon Price John, one of my strategy heroes. She's the CEO of Build a Bear Workshop. Here's a fun fact. If you had bought shares of Build a Bear Workshop in 2020 and held them till today, you would be doing better than if you'd bought the same amount of shares in NVIDIA today.

9:29So she's really turned that company around. But she has a mantra. She says, you know, that she calls SDSS times two. Stop doing stupid stuff is where you start. So look around your organization. What are the practices that are no longer fit for purpose? What are the procedures that were put in place because somebody did something really bad 27 years ago? And what could you safely stop? And then once you've cleared some space by stop doing the stupid stuff, then you can do the second SDSS, which is start doing smart stuff. And I think it's just a really simple way of thinking about how do we get some of the complexity, the organizational drag out of what we're doing.

10:07Second question is, are we truly leveraging loosely coupled small teams? And this, of course, was made famous by Jeff Bezos and the two pizza rule. But if you think about the coordination cost of navigating in a hierarchy, if you have to go to 15 different departments to get something approved, right, your communication overhead is just really massive. But if you can keep it to three people, six people, 12 people, that's sort of the sweet spot. And what we're seeing is loosely coupled, but mission aligned, small teams really outperforming large organizations. And we're even beginning to see now the unit of value creation is right at the level of small teams or even individuals.

10:49We've got our very first single person unicorns now to think about. So think about how much overhead you're putting on these teams and does it really make sense? are we really taking a stewardship position? And this is this idea of being centered on the long-term vitality of your company. And I'll take Fujifilm as an example. They had the same challenge Kovac had, which was their major profit-making business was becoming obsolete by the advance of technology. And they saw it coming. And they said, you know, we're centered on our technology. We will use that technology in any market where it makes sense.

11:23And so they took a group of people that were dedicated to figuring this out. And what you saw was they went from cameras and film into medical imaging, into cosmetics, into anywhere the technology makes sense because they're a technology-centered firm. So they don't really care what markets they're serving. What they care about is the long-term well-being of the company. Then I think there's a question about operationalizing for diversity. Do we have people who don't all think the same? And this is a real challenge because there's a tendency in companies to hire the same kind of people to look for the same kind of background.

11:53So be thinking about do we have different backgrounds, different experiences, different socioeconomic levels weighing in on our decisions. And that's what I call healthy diversity. Have we built in trial and error learning? In a high uncertainty situation, the only thing you can count on is that you don't know what you don't know. So what you have to do is experiment. And I love this example. This is from Netflix, and they actually have a program called Chaos Monkey that goes through their code. And you can only imagine how much technology a company like Netflix runs. And then they let this thing loose on their code, and it systematically breaks pieces of it in order to test how durable it is.

12:33Well, what that has the side effect of accomplishing is this trial and error learning that you're going to get more and more learning as the code kind of figures out where the weak spots are. I think this is fascinating. And then lastly, are we making space for emergence and for innovation right at the edges of the organization where everything really, where the knowledge that we need to do things really lives? This is an example from Adobe. This is what they call their kickbox program. And it starts with a red box with a thousand dollar gift card in it that any employee can request and do an experiment with.

13:08It's such a simple idea. And yet when I talk to people in large organizations and say, hey, if somebody on a loading dock had an idea, what would they do with it? And usually I get back a black stare. There's no process. There's no mechanism. And yet that person is right at the coalface with your customers and your suppliers and what's going on in your world. So I think it's just massively important that you figure out how to get those ingenious people that are working in your organization the ability to do new things. So let me wrap up and then we'll have time for questions. I think the turning point is here.

13:39You know, we're past question whether our economy is transitioning towards something that's, you know, much more permissionless. Choosing your strategic center to me is the most significant decision that you're going to make. You want clarity about who we are and who we're not. I do think centering can unlock enormous value, as we saw with the Novartis example. And I think organizational design is increasingly becoming enmeshed with strategy, right? It used to be treated as two separate things. And I don't think that's the case anymore. What you're building is what's going to be effective in the marketplace.

14:14And this unbossed structures can really release human potential.

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15:30Let's go to some of the questions that have been coming in from our audience. Mark, who leads AI strategy for his organization, asks, how might the power of the unbossed apply to AI strategy? Oh, I think it's central to it. But, you know, I think the way that a lot of companies are looking at AI is just kind of backwards. So back in the day, right, would you have said, what's my electricity strategy? Of course not. What you would have done, though, is you would have given people the tools to experiment to figure out what this new possibility opened up for you. And I think AI is like that, right?

16:07So in an unbossed organization, people will feel free to run experiments, to share what they're learning with other people, to connect with other teams. So I think it's encouraging this recline of experimentation that's going to allow people to really use AI in an unbossed way. Yeah, no doubt. Richard, who's the CEO of Eastside People, asks, I'm here from the not-for-profit sector. What insights can be borrowed from corporate strategy to the social sector? Oh, that's a great question and I think a very important one. I think what happens to a lot of not-for-profits is they get dragged into mission creep.

16:45You know, a big donor says, well, I'll give you the money, but only if you do, you know, teenage pregnancy. And then somebody else says, well, I want you to do whatever. So I would take a page out of the Harlem Children's Zone's playbook. And what their CEO basically said was, you know, I'm going to really define my mission incredibly clearly. And his mission was so that children growing up in places like Harlem could have the same opportunities in life that children growing up in a middle suburb would have. And what that means is there's a lot of stuff he's not going to do, right? He says, would it be better, you know, if parents were married?

17:18Sure. You know, would it be better if they had jobs where they could make good money? Sure. But that's not my mission. My mission is just focusing on these kids and what we can do for them. So I think the centering idea is absolutely important. The second thing that's different for not-for-profits is that are you doing something that a market is not going to do? So are you filling a need, closing a gap, doing something where there's not an economic driver for it? Because why else would you be there? And then I think the third thing that is really relevant is how can you guarantee a flow of resources in support of your mission, which may involve doing things that generate revenue?

18:24Thank you. you're making here? I think the simpler it is, the better. And, you know, Vas Narasimhan at Novartis has been remarkable at how clearly he has spelled out for people what the company is all about, what they're going to do and what they're not going to do. And he's also very visible and very articulate. He does videos all the time. He's really carrying that mission to a very personal level to every single person in the company. They really take advantage of multiple, multiple communication channels. But the message itself is simple. Curious, inspired, unbossed. You can remember that, right?

19:02And I think that's what we want to encourage companies to do. Because once it gets paragraph length, it starts to lose people's ability to remember. It stops being able to drive behavior. Curious, inspired, unbossed. It's gone in my notes. Okay. Shonda from Austin asks, how do you best balance giving autonomy to the teams to leave way for innovation while ensuring that the team is also working toward the same goals as an organization or team? How do you ensure that we're moving in the same direction? I have that question too, Rita. Absolutely. And I think this is where the centering idea is so important.

19:40So let me give another example. There's a South Korean fintech firm called Toss. So in America, we Google things in South Korea, they Toss things. They serve something like 25 % of all of the South Korean population. And they were founded by a dentist, a guy named S.G. Lee. Toss's mission is to remove frictions in financial services. That's their center, right? So anything that removes a friction, they're good about. And what they do organizationally is they have what they call the directly responsible individual. So if someone is taking on a task or taking on a project, uh there's there's one person who's dri and then they have a team around them uh their promotions are not vertical they don't even talk about senior versus junior it's like an irrelevant concept to them and your scope of responsibility determines how you get paid how you advance what you do in that company and so as an example of the kind of thing this empowers um they had a youtube youtube channel and the youtube channel does what a fintech youtube channel would do right?

20:37How much do you need for retirement? And where should you put your excess pay? And then one of their teams said, well, wait a minute, there's other ways money shows up in people's lives and started a second YouTube channel, which is all about money and sort of culture. So how does money fit into sports teams? And how did the Kardashians spend their money? And, you know, how does money resolve? Now, in a typical large hierarchy, right, there would have been a YouTube czar. And the YouTube czar would have made all the decisions about what programming goes on that channel. And that would have been that, right?

21:08With this very mission-driven, but what he calls loosely coupled system, this second YouTube channel could emerge and nobody has to ask permission to do that. And, you know, by the way, if it hadn't worked out, they would have just taken it down. You know, it's a no regrets move, but it frees up the organization to experiment like that. And today they've got these thriving two channels. And the second channel is introducing TOTS to people who couldn't care less about pensions, right? And so it's a win-win on all dimensions. And so what Mr. Lee will talk about is he said, very, very tightly aligned on mission, which I would describe as centering, very loosely coupled.

21:49Great. So Vivian asked a question that a lot of people have an interest in, which is, how do you concretely organize an unbossed company? What should leaders go back and start doing tomorrow? Well, I think the first thing that people will talk about is you need to get real clarity about where decisions live. And Voss at Morvartis will tell you there's three kinds of decisions, right? There's decisions that are pretty clear and obvious, and those should be pushed as far to the edges as they possibly can be. and let the people with the most information there make those decisions. Then there are kind of complicated decisions where what you want to do is you want to assemble as much expertise as you can.

22:34So a company like Novartis has experts in all kinds of things. So you assemble those and you kind of work your way through what your options are and you arrive at some kind of decision. And then there are the complex decisions where you really don't have the information you'd like to have and that's where you really need judgment, need a judgment call. and you need to be comfortable as a leader with making those decisions knowing that you might not be right and with what perhaps 60 to 70 percent of the information that you want and what they'll tell you is the thing that kills momentum in companies is not making a decision and that's a lot of times that's people's default so I think step one is figuring out what your decision structure is going to be then I think step two is making people understand what's in bounds and what's not.

23:20So, you know, we always talk about, oh, freedom and accountability, right? And everybody loves the freedom part. Nobody wants to deal with the accountability part. So I think you have to really be thoughtful about how you design your incentives, what you're teaching people is the right thing to do. And then you really want to make clear what the mission is. So when Nara Simhan came into Novartis, it was a very different company. It was a pretty traditional hierarchy. And so to really implement this unbossed idea, he worked very closely with his head of HR at the time. And they did multiple, multiple layers of management training, instructing leaders to model the behaviors, specifically what does it look like?

24:01How does it feel? How does it make you act? Very, very specific guidance on what they should be doing. And some leaders loved it and really engaged and some really didn't and either exited or were shown the door. So I think there's a lot of training that's involved. There's a lot of preparation. So a couple of things to watch out for. Don't just say, congratulations, you're empowered and lead. And you know, if I've been in a hierarchy my whole life, I don't know how to do things like resolve conflicts. I don't know how to do things like have difficult conversations. I'm used to the boss settling things when there's a dispute, you know, so you need to train people and you need to give people the tools to self manage.