Tuesday, December 02, 2008

Strategy through hard times

The quarterly has a nice article on strategy during hard economic times as these - Strategy in a 'structural break', authored by Richard Rumelt:

"A structural break is the very best time to be a strategist, for at the moment of change old sources of competitive advantage weaken and new sources appear. Afterward, upstarts can leap ahead of seemingly entrenched players..."

"So during structural breaks in hard times, cutting costs isn’t enough. Things have to be done differently, and on two levels: reducing the complexity of corporate structures and transforming business models. At the corporate level, the first commandment is to simplify and simplify again. Since companies must become more modular and diverse, eliminate coordinating committees, review boards, and other mechanisms connecting businesses, products, or geographies...."

"Then start reforming individual businesses....In general terms, the first task is to understand how a business has survived, competed, and made money in the past. Don’t settle for PowerPoint bar charts and graphs. If the business is too complex to comprehend, break it into comprehensible parts. Once you gain this critical understanding, you can start the work of reshaping. There is no magic formula. Reforming a business always takes insight and imagination."
Post a Comment