• Allocation rigidities that make it difficult to redeploy talent and capital behind new initiates.
REJECT OR DISREGARD
THE NEED FOR A STRATEGY REBOOT
Every business that is successfull can in time become unsuc-cessfull. What is perplexing is how often the “C-Suite” occupants are surprised when it becomes “UN.” This belated recognition of dramatically changed circumstances virtually guarantees that the work of renewal will be significantly delayed.
It is therefore expected that as one moves up the hierarchy
where exponentially, one finds increased applied abstract
thinking presiding, the propensity to disclaim disconcerting
facts increases. The most prevalent reason for this mind-set
is the fact that corporate leaders are often not close enough
to the bleeding edge of change to sense for themselves the
growing risks to a long-respected business model.
A SCARCITY OF CONVINCING ALTERNATIVES
To escape the economically-challenged organizational collapsing ‘black hole’ phenomenon, a company needs a compelling
set of new strategic options. In other words, exciting alternatives to the status quo. The problem is few companies have a
disciplined process for generating hundreds of new strategic
options, yet that’s what it takes to fuel renewal. Don’t forget
the unwritten but nevertheless accurate Innovation Law:
• For every 1,000 oddball ideas, 100 will be worth examining further. Out of the 100, no more than 10 will merit a
significant investmet while only two to three will ultimately produce a roll-over prize.
Few managers, however, seem eager to acknowledge the
inescapable arithmetic of the Innovation Law.
ALLOCATION RIGIDITIES
Legacy programs are too often funded year after year while
new initiatives go begging for scraps. Too often companies
forfeit the future by investing in “what is” at the expense of
“what could be.” There are a couple of elements in today’s
organizations that frustrate the timely redeployment of
resources in medium- and large-scale organizations:
•A manager’s power correlates directly with the
resources managed or controlled. Therefore, the loss of
resources equals the loss of status and influence; and
• Personal success turns solely on the performance of
one’s own unit or project. Therefore, a natural resistance to
reallocation of their capital and talent is built-in.
The tendency to overfund the status quo is exacerbated
by two additional factors:
• In most companies there is a monopoly of new ideas.
Typically, a lower level employee with a new idea has only
one avenue to go for funding and that is up the chain of
STRATEGIES & ANALYSIS
Business Corner
command. If the embryonic project doesn’t agree with the
boss’s near-term priorities, it’s dead; and
• The resource-allocation process is typically biased
against new ideas since it demands a level of certainty
about volumes, costs, timelines and profits that simply
cannot be satisfied when an idea is truly new.
CONCLUSIONS
A clear-cut conclusion that evolves from this set of described
conditions is the fact that no matter how large or small the
organization, ideas for innovation must be allowed to surface
in real time and into an efficient evaluation system; the “
C-Suite” must become far less abstract and more involved; innovation incentives must be practical and appeal to all levels of
the organization; incentives for asset managers to give up
some asset control and collaborate where new ideas are forthcoming that will sustain the company’s longevity.
This is not easy. It’s a cultural issue that requires careful analysis, patience as contrasted against rate-of-change,
the right leaders, transparency and trust, and long-term
top to bottom commitment. CW
