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How to Strategize for Robustness
- 1. 1 2 3 4 HOW TO STRATEGIZE FOR THE NEW YEAR BY BCG HOW TO STRATEGIZE FOR ROBUSTNESS BY BCG Today’s business environment can be deadly 32%+ of US companies will likely die over the next five years, if past trends continue to hold. #H O W TO BYBCG need to ask themselves two questions: how can I win this game and how can I extend my game? Business Leaders A Japanese automotive manufacturer created group cohesion and trust so that even when one supplier failed, others were able to step up and fill the gap. A Danish pharmaceutical company entering the Chinese market built relationships with stakeholders and fostered a medical community around diabetes treatment. Minimize Uncertainty Create Feedback Loops Maintain Diversity Preserve Redundancy Structural Sustain Modularity BROUGHT TO YOU BY #HOWTOBYBCG To achieve robustness and ensure survival, leaders need to ask these four key questions: How robust is your company? Use our online tool and find out: Preserve Redundancy Canadian banks built modularity into their system by avoiding high-risk instruments (e.g. CDOs) and having less global exposure. Sustain Modularity An Indian multinational IT service addressed the inherent unpredictability of its environment by experimentation: placing small bets and amplifying successes. Create Feedback Loops A Japanese multinational photography and imaging company managed to grow while its core business, photography film, declined by 90% with its closest rival going bankrupt. Maintain Diversity A French optical company regularly scans the market for potential disruptors and takes precautionary actions to avoid becoming disrupted. Minimize Uncertainty Rapidly Changing InterconnectedDiverse 32% & I N C R E A S I N G Business environments are more Managerial Foster Trust and Reciprocity Biology gives us insights into structural and managerial principles for robustness Companies are putting principles into action ROBUSTNESS.BCGPERSPECTIVES.COM Foster Trust and Reciprocity How likely is my company to die? What is my robustness strategy? What is my risk environment? How aligned is my strategy with my risk environment?