A New Way To Think

How often have you found yourself applying the same business model with more rigor, only to get the same disappointing results? In A New Way to Think, Roger L. Martin, one of the world's most influential management thinkers, asks this very question and offers an elegant, radical answer: success doesn’t come from doing traditional management better—it comes from thinking differently about what management actually is.

Martin argues that leaders have become prisoners of their own models—frameworks so deeply ingrained in business education and practice that they rarely question them. These models, whether about competition, strategy, innovation, or talent, once worked but now often fail because the world they were designed for has changed. His core contention is simple yet profound: when your model fails, don’t double down—create a better model. In other words, you don’t need new tools or more effort; you need a new way to think.

Why Models Shape Everything We Do

From school onward, Martin explains, we are conditioned to use pre-existing models—how to write, how to multiply, or how to structure business decisions. Over time, these frameworks become second nature, even sacred. Business schools amplify this tendency with models like Porter’s Five Forces, CAPM, GAAP, or WACC. Managers are taught to trust and apply them rigorously. And when results disappoint, instead of rethinking the model itself, they assume they must not be using it correctly. The irony? Their diligence only entrenches failure.

Martin recounts countless examples from his decades as a strategy adviser, such as a firm whose R&D productivity stalled despite applying increasingly rigorous screening. The company's model favored projects that could prove success through existing data—but breakthrough innovations rarely have data to prove their worth. Its process, therefore, filtered out exactly what could make it extraordinary. The fix wasn’t better execution—it was rethinking the model: testing ideas based on logic and learning from experiments rather than demanding data that didn’t exist. That’s the heart of Martin’s philosophy—each failure is a clue that your model may be wrong, not that you didn’t try hard enough.

The Book’s Four-Part Structure: Reimagining Management

Martin organizes the book’s fourteen chapters into four parts that mirror a holistic organization: Context, Choices, Structure, and Key Activities. In each, he contrasts a dominant management model with a superior alternative. The focus is never to replace one framework with another permanently, but to show how learning to rethink models makes you more effective and adaptive.

• Part One – On Context: Competition, Stakeholders, and Customers. Martin reveals how businesses misread where value is created—at the front line, for customers, not in boardrooms or shareholder reports.
• Part Two – Making Choices: Strategy and Data. He shows how real strategy-making rests on asking, “What would have to be true?” rather than “What is true?”—and why imagination, not just data, drives great choices.
• Part Three – Structuring Work: Culture, Knowledge Work, and Corporate Functions. You’ll learn how organizations transform only when they change how people work with one another, not when they mandate cultural shifts from above.
• Part Four – Key Activities: Planning, Execution, Talent, Innovation, Capital, and M&A. These chapters dive into everyday management activities and reveal how rethinking their models turns them from mechanical tasks into engines of creativity and growth.

From Models to Mindset: The Pragmatic Shift

Martin’s inspiration draws from pragmatist philosopher Charles Sanders Peirce and the falsificationist school of Karl Popper: no model is ever right forever; some are simply “less wrong.” What matters is not the certainty of a framework but its alignment with human experience and performance. He emphasizes that business doesn’t need better models—it needs better thinking models that center on human value, not institutional ego.

“If your model fails, don’t blame yourself for executing it badly—blame the model.”

Martin urges leaders to treat management not as a science of certainty but as an exploration of possibilities. Every system that fails is an invitation to invent a better world by rethinking the model behind it.

Why This Matters for You

In an era where many leaders are trained to “play it safe,” Martin’s work is a manifesto for courage and curiosity. He teaches that models should serve you—not own you. A manager’s effectiveness depends on recognizing when it’s time to abandon convention and build anew. Whether you’re deciding strategy, managing culture, or tackling innovation, the key is not to mimic others but to ask: “What would have to be true for this to work better?”

By reframing management practice as a living, evolving process rather than a checklist of doctrines, Martin frees leaders from the tyranny of orthodoxy. You don’t need to be Einstein, he says, but you do need Einstein’s courage—to admit that Newton’s model, while mostly right, isn’t completely right. Business progress depends on such acts of thoughtful rebellion.

Ultimately, A New Way to Think asks you to stop trying to perfect outdated ideas and start cultivating a habit of intelligent doubt. Once you do, you’ll see management not as a set of answers, but as the art of asking the right questions—and from that, superior effectiveness naturally follows.

Martin begins his first section—“On Context”—by reimagining what competition really means. While many CEOs think in terms of grand corporate battles—Toyota versus Volkswagen, Coke versus Pepsi—Martin insists that competition happens where customers make choices, not where executives draft strategies. You don’t compete with rival companies per se; your products and services compete at the customer’s point of decision.

The Front Line Is Where Value Lives

From Boeing’s planes to Pantene shampoo on a shelf, customers don’t care which corporation made them—they care if those products meet their everyday needs. A macroscopic “war of companies” ignores the micro reality of individual customer judgments. If your front-line service underperforms, no corporate brand prestige will save you. Microsoft learned this when users loved Word but refused to switch from Mac to Windows—it’s always what happens in front of the customer that matters.

Why Hierarchies Fail This Reality

Traditional corporate hierarchies assume that wisdom flows top-down: the CEO thinks, mid-levels interpret, and the front line executes. But Martin shows that when competition lives at the front line, this pyramid often hinders responsiveness. Leaders far removed from customers make decisions based on abstractions. The people closest to customers—the real experts in what matters—become voiceless executors.

He argues for flipping this mindset. The front line isn’t subordinate; it’s the customer of every level above it. Each layer should add so much value to the level below that it outweighs its coordination and administrative costs. If it doesn’t, it’s harming competitiveness. When Procter & Gamble’s Hair Care division helps Pantene win by adding expertise or brand insights, that layer earns its existence. If it doesn’t, it should be redesigned or even eliminated. That’s Martin’s acid test for organizational value.

Organizing from the Customer Backward

Martin illustrates this through P&G’s decades-long evolution. Instead of structuring decisions around corporate power centers, P&G under A.G. Lafley reorganized from the “front line backward.” The company identified five core capabilities—innovation, consumer understanding, trusted brands, go-to-market scale, and cost efficacy—and trimmed any business that couldn’t benefit from them. By divesting food and pharma brands that didn’t align, P&G sharpened its focus where it created genuine customer value.

“Every layer must serve the one below it; if it doesn’t make the front line more competitive, remove it.”

This rule transforms the corporation into a chain of internal customers, aligning every task with what ultimately wins in front of real consumers.

Value Creation as a System of Support

Martin’s framework requires an iterative “theory of the firm,” where each unit defines how it adds net value to those it supports. When P&G found its regional presidents weren’t adding enough value relative to their cost, it axed that layer. The company grew leaner, faster, and closer to consumers. Similarly, PepsiCo’s Frito-Lay exemplifies how scale works properly: its snacks share distribution routes, lowering costs for each brand, while local responsiveness remains intact.

For you, this means rethinking leadership’s role—from commander to supporter. As a leader, you’re not managing complexity but enabling simplicity: helping the front lines serve customers better. The most effective level is always the one closest to the customer, because that’s where actual competition—and success—occurs.

By reframing competition as a front-line phenomenon, you begin to see organizations as living ecosystems that must constantly justify their layers. The higher your position, the greater your duty to empower—not control—the people who touch your customers directly.

Can focusing on shareholders actually hurt them? Roger Martin’s answer is yes, and his argument is both historical and compelling. The idea of “shareholder value” has dominated management thinking for decades, but Martin demonstrates that it hasn’t improved shareholder returns—and often undermines long-term success. The real way to create shareholder wealth, paradoxically, is to put customers first.

Two Eras of Capitalism

Martin traces modern capitalism through two phases. First came managerial capitalism (1932–1976), shaped by Adolf Berle and Gardiner Means, who argued that companies should be run by professional managers rather than owners. It gave rise to the great corporate era of General Motors, Coca-Cola, and GE. Then, in 1976, economists Michael Jensen and William Meckling flipped the script: managers were accused of self-serving behavior, and their paper on agency theory inaugurated the era of shareholder value capitalism. Suddenly, CEOs were told their sole purpose was to maximize shareholder wealth.

Why Shareholder Value Fails

Despite decades of adherence, shareholder returns under the “maximize shareholder value” doctrine have barely changed. Between 1933 and 1976, S&P 500 shareholders earned 7.6% real annual returns; from 1977 to 2020, they earned 7.8%. The dogma didn’t move the needle. Martin explains why: stock prices are based on future expectations, not current performance, so managers can’t sustainably manipulate them. Every success merely raises expectations, making future performance harder to satisfy. CEOs end up managing perception rather than reality—boosting near-term expectations only to see them crash later (GE under Jack Welch is a prime example).

Customer Capitalism: The Better Model

The antidote is what Martin calls “customer capitalism,” borrowing from Peter Drucker’s timeless insight: the purpose of business is to acquire and keep a customer. Companies like Johnson & Johnson (guided by its 1943 Credo) and Procter & Gamble have long structured their priorities around serving customers first, employees second, communities third, and shareholders last. Ironically, by putting shareholders at the tail end, these companies have historically delivered the best shareholder returns.

Martin recounts J&J’s handling of the 1982 Tylenol crisis. CEO James Burke ordered a nationwide recall—even though the tampering was local—because customer safety came first. Profits plummeted initially but loyalty skyrocketed, and Tylenol emerged stronger than ever. Decades later, J&J remains one of the world’s most valuable firms. That’s what happens when you turn shareholder hierarchy upside down.

Culture and Compensation Matter

Martin links this model to compensation systems. If CEOs are rewarded based on short-term stock performance, they’ll manipulate expectations. But if incentives are long-term, tied to operating results that drive customer satisfaction—sales growth, margin improvement, capital efficiency—they build lasting value. A.G. Lafley at P&G redesigned incentive plans around such metrics. He even delayed vesting of stock until years after retirement, ensuring leaders were invested in the company’s post-tenure success.

“If you want shareholder value, stop aiming for it. Aim for customer value—and shareholder value will follow.”

By shifting attention from speculative markets to real customers, leaders build businesses that thrive beyond quarterly cycles.

The Lesson for Modern Leaders

In a world of activist investors and impatient markets, Martin’s advice sounds counterintuitive but rings true. When managers treat customers as their primary stakeholders, they make better long-term decisions. They innovate based on need, invest in employee commitment, and manage with integrity. No storytelling or expectation management required. Financial success follows naturally from human-centered value creation.

For you, the takeaway is simple: if your business prioritizes pleasing investors over serving customers, you’re sowing short-term volatility. The smartest path to durable prosperity—and true shareholder success—is through relentless, patient focus on customer happiness.