The 1950's there were the GO BIG Conglomerate Era, when Harold Geneen's ITT, Litton Industries ruled and became so big that they failed.
In the 1960's it was other giant GO BIG companies, like GM, Ford and major steel and chemical companies went BIG and ultimately became so big that they allowed the smaller, more focused Japanese companies to gain beachheads in the US market and gradually eroded their share and profitability. Today they are contracting and beginning forced to merge to just survive.
In the 1990's it was the DOT COM Wonder kids, who WENT BIG and forgot that they had to make money on the way up the growth curve. Most have died or been combined with other companies.
The major Business Schools, academics, consultants and management publications and books taught management to THINK OUT OF THE BOX.. be imaginative, destroy the bureacrats, forget about the inhibitors of doing it right, be creative with the accounting and financial systems, USE OTHER PEOPLE's MONEY and not have large reserves.
In short, the " experts" promoted the GO BIG proponents and eliminate those in their organizations who challenged and required the organization to consider the positives and negatives of growth.
In the past year, THE "GO BIG insurance company", AIG, "THE GO BIG mortgage" company, Countrywide, "GO BIG Energy company", ENRON all went into bankruptcy and have had to be rescued.
The MESSAGE is loud and clear...BIGGEST for its own sake, is not a viable long term goal and all companies must reinstate the solid, objective and "tough minded" strategic thinking and decision making that made the strong in the first place.
They must remember that:
In the 1960's it was other giant GO BIG companies, like GM, Ford and major steel and chemical companies went BIG and ultimately became so big that they allowed the smaller, more focused Japanese companies to gain beachheads in the US market and gradually eroded their share and profitability. Today they are contracting and beginning forced to merge to just survive.
In the 1990's it was the DOT COM Wonder kids, who WENT BIG and forgot that they had to make money on the way up the growth curve. Most have died or been combined with other companies.
The major Business Schools, academics, consultants and management publications and books taught management to THINK OUT OF THE BOX.. be imaginative, destroy the bureacrats, forget about the inhibitors of doing it right, be creative with the accounting and financial systems, USE OTHER PEOPLE's MONEY and not have large reserves.
In short, the " experts" promoted the GO BIG proponents and eliminate those in their organizations who challenged and required the organization to consider the positives and negatives of growth.
In the past year, THE "GO BIG insurance company", AIG, "THE GO BIG mortgage" company, Countrywide, "GO BIG Energy company", ENRON all went into bankruptcy and have had to be rescued.
The MESSAGE is loud and clear...BIGGEST for its own sake, is not a viable long term goal and all companies must reinstate the solid, objective and "tough minded" strategic thinking and decision making that made the strong in the first place.
They must remember that:
- ALL THINGS TO ALL PEOPLE strategies never work and
- SELECTIVITY,
- CHALLENGING everything and being willing to prune the portfolio and focus on those segments that are attractive and where they are strong.
In short this means relearning and applying the disciplines of sound strategic thinking, execution and being prepared for change. I have spent my entire career teaching and helping my clients do this type of thinking and decision making and it has worked. I continue to provide these services.
Bill Rothschild, author of the PUTTING IT ALL TOGETHER- a guide to strategic thinking and decision making. The first guide to strategic thinking and its updated edition and STRATEGYLEADER (R) strategy software and tutor. BOTH are available on http://www.strategyleader.com/, take a look.
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