Description
strategic management talk about the various strategies adopted by AT&T, challenges faced and performance measures
StrategyIt is hard for companies to give up trusted ways of doing business. Most companies’ think what worked well in the past will continue to lead them to success in the future too. In today’s life this does not happen. Companies plan strategies, come up with innovations hoping that success will happen. Most of the times, they are disappointed. The person who innovates is admired. But the problem lies elsewhere. Actually a lot of work happens after the innovation- in the implementation stage. Innovation/ strategic plan are just the beginning. Thereafter, the organization has to be involved/ built to implement the strategy. Most companies pay attention to the idea and not enough attention to execution. If you look at fortune 500 list of 1955, only 10% of the companies are in the list today. Implementation/ execution are the key to future success. A company has to take care of the present, at the same time be able to look at the future. Satisfy today’s customer, yet be able to focus on customer of Tomorrow. This is a three pronged process. 1 2 3 Manage the present. Selectively forget the past. This is to prepare for the future Create the future. This about future competition and the customer
A T & T hit upon the cellular phone idea in the 80’s when they were big players in the land line phones. Their challenge was to protect the landline business. Future competition was about how to respond to non linear shifts in technologycellular technology. Their present was to focus on today’s customer. Their future was tomorrows customer. Many companies spend too much time on present customer for the following reasons: 1. Making huge profits in the landline business. If you make huge profits in the current business, you tend to repeat what you have done in the past. 2. The core competencies are built to support their mainstay business, in this case the landline business. The same core competencies become core liabilities in the wireless world. 3. Managers are judged on financial results. If my today’s revenues and profits come from landline business, venturing into cellular business sinking in the money today for future profits. So I won’t put my resources there. So the whole resource allocation supports the present. …2
When A T & T got the cellular idea in the mid 80’s, McKinsey’s estimated the global market for cellular phones at 90, 000. Today more phones are sold may be every hour. When you are planning for the future conventional marketing research does not work. So what are the options with a company? They have to rethink the implementation process For the current business, the conventional planning process is annual, since you can predict the revenue streams. So if A T & T depended upon annual plans for cellular business, it would spell disaster. At A T &T they should have focused on ‘ Critical Unknowns’ to enter the cellular business. Critical unknowns such as potential size of the market for cell phones, customer need satisfaction, how would technology be produced at reasonable cost. You prepare a plan around these critical unknowns and revise it every month when you have more information on how the market has evolved.
The company which learns faster wins and not the company with the best strategy.
The established companies find it hard to innovate because what succeeds is seen as the right way of doing things. It is not easy to forget the past. They have to let go of this without loosing out on what is relevant. The key is to look at the three points mentioned earlier simultaneously and not either or. Focus on the current business and continue to nurture and execute new strategies. While creating new breakthroughs create a space between the new and the current business, so that you don’t keep new business inside the current business. Hire from outside. Let an outsider head the new business. Have different performance measurement systems. But keep some links with the current business so that you can benefit from the core. Some companies do not keep any links. Or they keep too many links thinking that core can give a lot to the new. e. g. a common human resource function for the core and the new business. Because you will hire similar people with the same performance measurement systems. There should be only one or two necessary links that could provide advantage to new business. The new business must prepare a strategic plan focused around critical unknowns or around success variables of the new business. The performance measures are not based on financial results but on how fast you can resolve those critical unknowns. So some experimentation to gain some knowledge about the business, So that you create a strategy for this business, based on your hypothesis on how this new business will evolve and not on financial results.
doc_863677915.doc
strategic management talk about the various strategies adopted by AT&T, challenges faced and performance measures
StrategyIt is hard for companies to give up trusted ways of doing business. Most companies’ think what worked well in the past will continue to lead them to success in the future too. In today’s life this does not happen. Companies plan strategies, come up with innovations hoping that success will happen. Most of the times, they are disappointed. The person who innovates is admired. But the problem lies elsewhere. Actually a lot of work happens after the innovation- in the implementation stage. Innovation/ strategic plan are just the beginning. Thereafter, the organization has to be involved/ built to implement the strategy. Most companies pay attention to the idea and not enough attention to execution. If you look at fortune 500 list of 1955, only 10% of the companies are in the list today. Implementation/ execution are the key to future success. A company has to take care of the present, at the same time be able to look at the future. Satisfy today’s customer, yet be able to focus on customer of Tomorrow. This is a three pronged process. 1 2 3 Manage the present. Selectively forget the past. This is to prepare for the future Create the future. This about future competition and the customer
A T & T hit upon the cellular phone idea in the 80’s when they were big players in the land line phones. Their challenge was to protect the landline business. Future competition was about how to respond to non linear shifts in technologycellular technology. Their present was to focus on today’s customer. Their future was tomorrows customer. Many companies spend too much time on present customer for the following reasons: 1. Making huge profits in the landline business. If you make huge profits in the current business, you tend to repeat what you have done in the past. 2. The core competencies are built to support their mainstay business, in this case the landline business. The same core competencies become core liabilities in the wireless world. 3. Managers are judged on financial results. If my today’s revenues and profits come from landline business, venturing into cellular business sinking in the money today for future profits. So I won’t put my resources there. So the whole resource allocation supports the present. …2
When A T & T got the cellular idea in the mid 80’s, McKinsey’s estimated the global market for cellular phones at 90, 000. Today more phones are sold may be every hour. When you are planning for the future conventional marketing research does not work. So what are the options with a company? They have to rethink the implementation process For the current business, the conventional planning process is annual, since you can predict the revenue streams. So if A T & T depended upon annual plans for cellular business, it would spell disaster. At A T &T they should have focused on ‘ Critical Unknowns’ to enter the cellular business. Critical unknowns such as potential size of the market for cell phones, customer need satisfaction, how would technology be produced at reasonable cost. You prepare a plan around these critical unknowns and revise it every month when you have more information on how the market has evolved.
The company which learns faster wins and not the company with the best strategy.
The established companies find it hard to innovate because what succeeds is seen as the right way of doing things. It is not easy to forget the past. They have to let go of this without loosing out on what is relevant. The key is to look at the three points mentioned earlier simultaneously and not either or. Focus on the current business and continue to nurture and execute new strategies. While creating new breakthroughs create a space between the new and the current business, so that you don’t keep new business inside the current business. Hire from outside. Let an outsider head the new business. Have different performance measurement systems. But keep some links with the current business so that you can benefit from the core. Some companies do not keep any links. Or they keep too many links thinking that core can give a lot to the new. e. g. a common human resource function for the core and the new business. Because you will hire similar people with the same performance measurement systems. There should be only one or two necessary links that could provide advantage to new business. The new business must prepare a strategic plan focused around critical unknowns or around success variables of the new business. The performance measures are not based on financial results but on how fast you can resolve those critical unknowns. So some experimentation to gain some knowledge about the business, So that you create a strategy for this business, based on your hypothesis on how this new business will evolve and not on financial results.
doc_863677915.doc