When we finally pull out of this economy we will look back and see all the dead companies it has left in its wake. Complete industries have suffered significant loss; banking and real estate are two obvious examples. Those companies lying in the wake of the economy are likely those with executive teams who choose to "Let Things Happen" while those that leave the economy in their wake are those who "Make Things Happen."
This economy is a major external force putting a strain on companies' strategy. Executive teams cannot ignore the effects this external force will have on their company's performance. They are forced to act on one of the following:
- Weather the storm and hoping for the best
- Switch to cost management strategies
- Innovate your way out
- Reinvent the company to take advantage of new/greater opportunities
Weathering the storm and hoping for the best is akin to sticking your head in the sand. Any executive team following this line of action deserves what gets. Unfortunately, that would likely be at the expense of employees and customers.
Switching to cost management strategies is prudent, but this strategy alone is like treating the symptom and not really curing what ails the company. This may buy the company time until it can develop growth strategies to pull itself out or it can delay the inevitable and ultimately place executive teams along with those that elect to weather the storm.
Innovate your way out is great on paper, but it is easier said than done. This is especially true in highly competitive industries. Many executive teams are looking for ways to be innovative, and it is likely that companies in highly competitive industries will develop similar innovative strategies. Assuming a company can create some form of advantage, it will be the company that has the core competencies and/or capability to execute. Companies that pursue an innovative strategy without the capability are likely to speed up the process of becoming another dead company in the wake of the economy.
Reinventing the company is high risk / high reward strategy. It requires executive teams highly in tune with their external environment. They must know not only what opportunities exist but where it stands to take advantage of those opportunities in relation to the competition. They must also be familiar with their internal environment and know what they can execute on. Do they have the right resources in-house to be successful? If not do they have the alliance partnerships that can help bridge the gap until they can create the internal capability?
One example of reinventing the company is that of retired CEO, Darwin E. Smith, of Kimberly-Clark and his decision to "sell the mills" (http://www.jimcollins.com/lib/articles/01_01_a.html). Darwin Smith is a perfect example of a leader who "Makes Things Happen".
No comments:
Post a Comment