March 1, 2004
John F. Kennedy School of Government, Harvard University

Over the past twenty years, scholars from both the Kennedy School of Government and Harvard Business School have worked with public sector executives to develop a concept of "strategy in the public sector". The symbol of this idea became a "strategic triangle", the purpose of which was to focus the attention of government managers on three complex issues they had to consider before committing themselves and their organizations to a particular course of action:

1) What was the important "public value" the organization sought to produce?

2) What "sources of legitimacy and support" would be relied upon to authorize the organization to take action and provide the resources necessary to sustain the effort to create that value?

3) What "operational capabilities" (including new investments, innovations and alliances) would the organization rely on (or have to develop) to deliver the desired results?

In the following paper, the authors apply this "strategic triangle" to corporate strategy, focusing on the question, "what would it mean for our conceptions of corporate strategy if we started thinking that corporations, too, had to be more systematically concerned about their wider 'legitimacy and support'? In recent years there has been a sharp escalation in the social roles corporations are expected to play. Companies are facing new demands to be accountable not only to shareholders, but also to other stakeholders such as customers, employees, suppliers, local communities and policy makers. As a result of this changing business environment, the authors argue that the concept of organizational strategy developed for government agencies may work as well or even better than traditional business models when applied to business organizations. At a minimum, this is probably true for private sector organizations that operate in intensely politicized environments, or that depend on maintaining a certain kind of social credibility and legitimacy in order to be successful in consumer and investor markets.