Forbes, 7 Jul 2010
Today many companies from automakers, the news media, entertainment industry businesses, banks and other financial institutions are being seriously challenged by market forces, technology shifts and the changing dynamics of a global economy. Some of them are fighting for their very survival.
The author’s company IBM has also been there.
25 years ago, IBM was at the pinnacle of success, having practically invented general-purpose computing for business, helped put a man on the moon, Nobel prizes for their researchers and revenue and market share skyrocketing as customers clamored for their latest products.
But 10 years later they had in 1993 posted what at the time was the biggest loss in the history of corporate America, $8 billion. They had missed a number of key technology shifts and were being abandoned by customers.
It was difficult finding their way back to the but it illustrates that companies on the brink can turn things around if they do what is necessary. The author shares a few lessons they learned from their near-death experience and rebirth.
1. Businesses must be genuinely global. Technological advances and globalization have completely changed the rules about how and where things can and should get done, yet many companies still cling to their old models for operating, duplicating the same functions and organizations in various locations. This leads to layers of complexity, discrepancy and redundancy that produce a significant drag on efficiency and performance.
2. Sometimes companies must fully transform their portfolios. Companies in a crisis need to look at their entire portfolios, rationally and candidly, and figure out what they have that customers want today and what customers will want tomorrow. Then get rid of anything that does not fit the resulting model, and invest in the growth opportunities.
3. Success comes from leadership, not mere survival. The people running some companies may be inclined, at least initially, to resist the tremendous economic, social and technological forces of change they face. We have seen evidence of this approach--and its devastating results--across the range of industries I mentioned at the outset. But the only thing anyone ever accomplished by standing in the way of progress was to get run over. The path to success lies in understanding the relevant trends, figuring out how your strengths and resources can capitalize on them and staking out a leadership position.
The author concludes that she is sharing these experiences and examples as a reminder that changing times can imperil even the most successful companies but if troubled companies are willing to reinvent themselves in ways that will make them viable and relevant in today's global economy they can make their way back to the top.
Banish complacency as it kills business and understand that transformation is a constant and continuous process that can never end. And she says, “embrace the notion that when faced with tough times your goal must be not merely to survive but to succeed, and success comes through leadership”.
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