Kim Warren on Strategy
Strategy insights and living business models
More on strategic responses to the downturn
More from McKinsey on this, including a review on some useful thinking from last time.
I couldn’t find much in Leading through uncertainty on what to actually do, though it does offer some broad scenarios of how the future might play out, depending on the depth of the global recession and recovery of financial markets.
Strategy in a ‘structural break’ argues that this downturn is qualitatively different than others – in some sectors, things look very unlikely ever to return to where they were. ‘Structural break’ is a phrase from econometrics denoting the point in time-series data when trends and the patterns of associations among variables change. It’s the second part of this that is so dangerous, because it may disable policies and strategies that previously worked. But not sure it all hangs together:
- It asserts that “the most important element of a strategy is a coherent viewpoint about the forces at work, not a plan” – sounds smart, but a coherent view with no idea what to do in response seems inadequate.
- Surely, on its definition above, the internet revolution imposed sructural breaks on many more industries and business models than the current banking crisis and recession. It’s not clear this downturn meets those conditions in more than a few sectors. This is important, because the structural break argument is being used by consultants and writers to push firms into looking for changes to their business models that is mostly inadvisable. This article argues that “The wrong way forward in a structural break during hard times is to try more of the same. The break and the hard times are sure indications that an old pattern has already been pushed to its limits and is destroying value.” True, but that’s not what most firms are currently facing.
- Some good points it raises though … complexity may have grown, and needs to be sorted out – that was an important part of the case in my ‘Strategic Recovery‘ article .. the first task is to understand how a business has survived, competed, and made money in the past, and if the business is too complex to comprehend, break it into comprehensible parts.
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