Strategy

In a global economy, sustained competitive advantage arises from tackling social, political and environmental issues as part of a corporate strategy.

Managers need to learn from history about what they can and cannot predict, and develop plans that are sensitive to surprises.

Many companies have trouble making the transition from a failing business model to one that works. Often, one culprit is an inability to experiment.

When venture capitalists are more tolerant of failure, the successful companies in their portfolio tend to be more innovative.

Grameen Bank and others know that you get the best answers by burying yourself in the questions.

New research offers insights into an increasingly important boardroom role.

Fallout from the financial crisis could hinder innovation—by limiting options for technology start-ups.

Leaders of many of today's mature organizations don't have the right mind-set or practices to help their organizations survive. They grew up with management practices that are suited to a different age--one with higher barriers to entry, greater transaction costs, fewer capable competitors, growing and increasingly affluent markets and less information. But today's business environments are less predictable, more complicated and more volatile. The result is that many core businesses are themselves becoming more uncertain and in need of renewal. Established management tools, such as net present value, are built on a foundation of assumed certainty that it's realistic to forecast likely cash flows into the future and discount them to today. In volatile business environments, though, such thinking is no longer practical. As an alternative, the authors offer practices used by successful growth companies, entrepreneurs and corporate new-business-development groups to navigate unpredictable, resource-constrained and surprising environments. In an unpredictable world, trying to be right can lead managers terribly astray. The "discovery-driven" approach outlined in this article emphasizes finding the right answers and reducing the assumption-to-knowledge ratio.

In his 2004 MIT Sloan Management Review article “Principles of the Master Cyclist,” the author made the case for why companies need to learn how to integrate strategic business-cycle management into their tool kits. The article presented a set of principles that savvy managers can use in making tactical decisions (in areas such as inventory management, marketing and pricing) and strategic decisions (in areas such as capital expansion and mergers and acquisitions). At the time of publication, there was a growing perception that the business cycle had largely been “tamed” by the sophisticated application of discretionary fiscal and monetary policies. However, that myth has since been completely shattered–not just by the 2008-2009 recession but also by the U.S. Federal Reserve System’s role in formulating the economic policies that helped trigger the crash. In this current article, the author discusses the heightened importance of economic and financial market literacy and how smart forecasting can help companies manage the business cycle more effectively than their competitors. The author highlights three major activities managers need to focus on: (1) developing and deploying forecasting capabilities to anticipate movements and key turning points in the business cycle, (2) applying well-timed business-cycle management strategies and tactics across the functional areas of the organization in a synergistic and integrative fashion, and (3) building an organization with a business cycle orientation, a facilitative structure and a supportive culture.