The Quest for Resilience
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The Quest for Resilience

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Gain competitive advantage through resilience.

Gain competitive advantage through resilience.

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    The Quest for Resilience The Quest for Resilience Presentation Transcript

    • The Quest for Resilience Ref: Gary Hamel & Liisa Valikangas
    • The world is becoming turbulent faster than organizations becoming resilient. • corporate earnings are more erratic • large bankruptcies In a turbulent age, the only dependable advantage is a superior capacity for reinventing your business model before circumstances force you to! 2
    • The Quest for Competitiveness Restructure smaller Reengineer better Reinvent different Coca Cola: Share of the throat Challenges! McDonald’s: burger weary customers McDonald’s: burger weary customers 3
    • Essential forms of innovation Revolution Renewal Creative destruction Innovation w.r.t industry rules e.g. Southwest, Dell, Ginger Hotels Creative reconstruction Innovation w.r.t traditional business models e.g. Google Capacity for continuous reconstruction Resilience Innovation w.r.t. orgn values, processes, behaviour(7S) Success >>> success Success>>failure>>success 4
    • Things that can’t go on for ever, usually don’t % of Capex on IT:US Firms 70 59 60 % 50 40 30 20 19 10 0 1990 2000 Bubble burst 5
    • 1994- Great to Just OK -2003 6
    • To Stay Ahead, Cos must have Bold Aspirations 1. 2. 3. Forever morphing strategies in response to emerging trends and opportunities An orgn that is constantly remaking its future, rather than defending its past. A co. where revolutionary change comes in lightning quick, evolutionary steps – with no calamitous surprises, indiscriminate layoffs & colossal writeoffs 7
    • GM vs Toyota: Share Price Toyota on course to overtake GM in 2007 as the biggest auto manufacturer 8
    • GM and Ford can't design vehicles that Americans want to pay "Toyota money" for. GM and Ford still treat customers as strangers engaged in one-time transactions. GM and Ford are clueless as to how to work with their suppliers. GM and Ford have miasmic management cultures. 9
    • Zero Trauma? A turnaround is a transformation tragically delayed IBM Profits 8 6 6 6 4 $ bn 2 0 -2 1990 1993 1997 -4 -6 -8 -8 -10 10
    • Strategic Resilience: its the ability to…..  dynamically reinvent business models and strategies as circumstances change  Continuously anticipate and adjust to changes that threaten their core earning power, and  Change before the need becomes desperately obvious 11
    • To Become Resilient, Master 4 Challenges 1. Conquer Denial 2. Value Variety 3. Liberate Resources 4. Embrace Paradox 12
    • 1.To Conquer Denial, Understand Change. Here’s how…  Witness change close (labs, activists etc)  Find who in the orgn is plugged into the future and understands its implications for your business model  Strategy will eventually get ..  Replicated by rivals  Supplanted by better strategies  Exhausted as markets saturate  Eviscerated when power shifts to new players 13
    • Strategies start decaying the day they are born….  Scissors  Western Roll  Eastern Roll  Fosbury Flop: +3” 14
    • Anticipating Strategic Decay  Replication: Is our strategy losing its distinctiveness?  Supplantation: Is our strategy in danger of being superceeded?  Exhaution: Is our strategy reaching the point of exhaution?  Evisceration: Is increasing customer power eviscerating our margins? 15
    • 2. Valuing Variety Life on earth survived:  Meteor showers  Seismic upheavals  Radical Genetic variety within and across species is nature’s insurance policy against the unexpected. climate shifts 16
    • Big Co s take big bets  Disney: Theme park outside Paris  Motorola: Satellite phone venture-Iridium  HP: Acquisition of Compaq  GM: Hydrogen powered cars 17
    • Value Variety Variety is an insurance against the unexpected 1000s of ideas Dozens of promising ones Not a single billion $ bet, but a swarm of $10-20 K bets A few huge successes 18
    • Test Ideas Thru’  Prototypes  Computer simulation  Customer interviews 19
    • A stream of new products from  10,000 employees brainstormed product breakthroughs  Generated 7000+ ideas  300 small scale experiments 20
    • 3. Liberate Resources  Get cash to people who can bring ideas to fruition (Thinkers/ doers)  Create market inside the firm for seed funding  “investors” cud form syndicates to take bigger risks 21
    • 4. Embracing Paradox: Execution and Creativity To be Efficient  Stick to your knitting  Exploit what you know  Meet current customer needs  Plan  Demand accountability  Impose process & structure To be creative  Think outside the box  Explore what you don’t know  Anticipate future customer needs  Let things emerge  Allow freedom & flexibility  Avoid process. Encourage unstructured interaction 22
    • As an ideal, OPTIMIZATION is sufficient only as long as there’s no fundamental change in what has to be optimized. 23
    • Mapping an Organization 24
    • Responses to Ups & Downs of Business Cycles  Quickly rebalance product mix  Retrenchment can’t revitalize a moribund business model  Great execution can’t reverse the process of strategy decay  Forces of optimization are seldom interrupted in their slow march to irrelevance. 25
    • Gaps Performance Gap Cost  Quality  Speed  etc…..  Opportunity Gap Mkt growth Vs Co. growth Resilience Gap Turbulence Vs Resilience 26
    • In less turbulent times AT&T  American Airlines Insulated from competition by regulatory protection & oligopolistic practices GM  Coca Cola Relatively stable product paradigm  McDonald’s Intel First mover advantage Petroleum  Aerospace     capital intensive  high entry barriers 27
    • Dodging Environmental Bullets Value  Loyal customers  Strong brand  Deep industry know- how  Preferential access to distribution  Proprietary assets  Patent portfolio Attacked by  Tech discontinuities  Regulatory upheavals  Geopolitical shocks  Ind. Deverticalization  Ind. Disintermediation  Shift in consumer tastes  Non traditional competitors 28
    • Exploring New Opportunities Resources & Competencies Businesses & Opportunities Existing Existing     1 2  New New   3   4 29