Business transformation: the lesson of the High Line

In this Italian-language video, shot while walking along the High Line, I say that the purpose of strategy is not to freeze things but to make them evolve, and that this elevated rail line, now a garden, is a lesson in applied strategy. Here I tell the story of how it came about, because it is longer and harder than a stroll along it suggests, and I look at what strategy research has to say about it.

Video transcript (translated from Italian)

Today we are on the High Line, here in New York.

The High Line was an elevated rail line.

Built in 1934 to carry freight on the West Side of Manhattan.

After decades of service, it was abandoned in the ’80s.

It was due to be demolished, until two private citizens decided to transform it.

Resources were invested and a clear strategy was drawn up for its redevelopment. Designers were brought in, landscape designers like Piet Oudolf.

Today it is an elevated garden, one of the most beautiful in the world.

A green corridor between architecture, art and nature.

It has become one of the symbols of New York.

But also one of the greatest lessons in applied strategy.

Because strategy, like the High Line, is a dynamic process.

Its purpose is not to freeze things, but to make them evolve.

It is the ability to look at what exists (a piece of infrastructure, a company, a model) and imagine how it could work better, how it can create new value.

This transformation does not happen just once: it requires care, adaptation, constant listening.

That is why I say that the work of the business strategist never ends.

He is a professional who knows how to seize the opportunities in change.

It is a craft that lives in movement, because only what moves can stay alive.

And the High Line is the clearest proof of it.

A rail line no one wanted anymore

The High Line was built to take freight trains off the streets of Manhattan’s West Side. The first train ran on it in 1933, and by the following year the line was in full operation, connected directly to the warehouses and factories it passed through. With the arrival of trucks it lost its purpose: the southernmost stretch was demolished in the 1960s, and the last train, in 1980, pulled three freight cars loaded with frozen turkeys. In the years that followed, the landowners asked several times for it to be torn down, and in 1991 another stretch, five blocks long, came down.

In 1999 two neighborhood residents, Joshua David and Robert Hammond, founded Friends of the High Line to save it. They had almost everyone against them, and a demolition order signed by the outgoing city administration. In 2002 they won in court; in 2004 the design team was chosen (the firm James Corner Field Operations with Diller Scofidio + Renfro and Piet Oudolf); in 2005 the railroad company CSX donated most of the structure to the city. The first section of the park opened in June 2009.

A decisive part of strategy is seeing what a company’s existing assets can become.

David and Hammond did not build a park: they found one inside a ruin. The structure was there, solid, elevated, more than two kilometers (about a mile and a half) long. What was missing was someone who would look at it and ask more than how much it would cost to tear down.

Reconfiguring: dynamic capabilities

In 1997 David J. Teece, Gary Pisano and Amy Shuen published an article in the Strategic Management Journal that has become one of the most cited in the field. They were trying to explain why some companies stay competitive when their environment changes quickly and others do not, and their answer lay in what a company is able to do with its resources, more than in the resources themselves.

David Teece, with Gary Pisano and Amy Shuen, used the term dynamic capabilities for a company’s ability to integrate, build and reconfigure internal and external competencies when its environment changes quickly.

Ten years later Teece broke that ability down into three parts: sensing opportunities and threats, seizing them, and, when necessary, reconfiguring the company’s tangible and intangible assets. The third is the hardest, because it goes against habit. An organization that has done one thing well for years tends to keep doing it, and its procedures, its incentives, even its language push it in that direction.

The High Line is an almost pure case of reconfiguration. The structure is the railroad’s: the girders, the route, the height above the streets. What changed was the function, and with the function, the value of what stood around it.

What a company’s existing assets can become

For a small or mid-sized Italian company, the High Line question is very concrete. A factory building put up for a kind of production that no longer exists. A strong brand in a shrinking market. A technical skill developed for one customer that could serve ten others. Faced with these assets, the temptation swings between two extremes: defending them as they are, or getting rid of them to start again elsewhere.

Strategy usually starts with a third possibility, the hardest one to see: asking what those assets could become. It is a question worth asking when reviewing the initiatives under way, in the work on direction and priorities, alongside the question of what to stop. And it is closely related to another idea I wrote about when discussing the strategic plan: the direction stays, and the path to get there is updated. In the case of the High Line, even the purpose of a piece of infrastructure was updated.

Who pays for the transition

The story has a side that people strolling on the High Line today do not see. Ten years passed between the founding of the group and the opening of the first section. The first two sections cost $152.3 million, of which $112.2 million came from the city, $20.3 million from the federal government and $400,000 from New York State (NYC Parks, 2009). Meanwhile, Friends of the High Line raised tens of millions from private donors.

Reconfiguring has a cost: before changing the function of what you have, you need to know who pays for the transition and how long it lasts.

In a company, the transition is paid for by today’s margins, by people’s time, sometimes by customers’ patience. That is why a decision to repurpose is made knowing how long the in-between phase will last: the phase when the old use no longer pays and the new one does not pay yet.

In the video I also say that a business strategist’s work never ends. That is true of strategy, which, like a garden, needs care even after the opening: on the High Line, Oudolf’s plants are tended, pruned and replaced all the time. The engagement, on the other hand, has a beginning and an end, usually six months or a year, as I explain in my answer on why an engagement lasts that long. Its purpose is for the company to learn to provide that care on its own. A business strategy that works keeps moving even when the strategist is no longer there.

What to do and what not to do

• Review the company’s assets by asking what they could become, as well as what they earn.
• Estimate how long the transition will last and who will bear its cost, before starting.
• Look for people who see value where others see only a cost, inside and outside the company.
• Do not defend an asset just because it is there, nor tear it down just because it no longer pays as it used to.
• Do not confuse the ongoing care of a strategy with an engagement that never ends.

Sources

• David J. Teece, Gary Pisano, Amy Shuen, “Dynamic Capabilities and Strategic Management,” Strategic Management Journal, 18 (7), 1997, pp. 509–533.
• David J. Teece, “Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance,” Strategic Management Journal, 28 (13), 2007, pp. 1319–1350. https://escholarship.org/uc/item/2k86c3mf
• Friends of the High Line, “History.” https://www.thehighline.org/history/
• NYC Parks, press release on the opening of the first section of the High Line, June 2009. https://www.nycgovparks.org/parks/the-high-line/dailyplant/21962
• Joshua David, Robert Hammond, High Line: The Inside Story of New York City’s Park in the Sky, Farrar, Straus and Giroux, 2011.