The Art of Making Smart Big Moves

For many companies, incremental growth is not sufficient. The changing business landscape is forcing corporate leaders to learn how to reposition their businesses more fundamentally.

Companies make big moves when they change direction with a large commitment of resources. These moves typically involve a different set of products or services, a new customer base or new ways of operating. Nokia Corp.’s shift in the early 1990s from forestry, TVs and tires to mobile phones is an example of a big move. Such strategic shifts are risky — companies that attempt them often fail to meet their stated objectives. Yet they are essential for value creation in the long run. Although companies may have long periods of incremental growth, the constantly changing business environment periodically forces corporate leaders to reposition their businesses in fundamental ways.

Our interest in studying big moves — specifically, why some companies succeed in making smart big moves while others fail — was triggered by longitudinal case studies conducted by us as well as by other researchers.1 These case studies included some big moves that were industry firsts and others that were in response to industry or macroeconomic shifts or to company-specific problems. The case studies suggested a number of hypotheses, which we first tested in the executive classroom and then more systematically on 24 multinational companies. (See “About the Research.”)

About the Research »

In some respects, our findings were predictable.

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References

1. For example, case studies on ABB (2003) by P. Strebel and N. Govinder; HSBC and Oticon (2005), by P. Strebel and B. Rogers; and Medtronic (2002) and Best Buy (2004) by B. Chakravarthy in “Leading for Growth: Managing Dilemmas” (forthcoming with P. Lorange), all published by IMD, Lausanne, Switzerland.

2. C. Zook, “Beyond the Core: Expand Your Market Without Abandoning Your Roots” (Boston: Harvard Business School Press, 2004), 256; and J. Collins “Good to Great: Why Some Companies Make the Leap ... and Others Don’t” (New York: HarperCollins, 2001), 320.

3. This exhibit originated in work about outpacing strategies done with X. Gilbert and work on breakpoints by P. Strebel. It was also influenced by work on new competitive strategies by A. Boynton and B. Victor. See X. Gilbert and P. Strebel, “Strategies to Outpace the Competition,” Journal of Business Strategy 8 (summer 1988): 28–36; P. Strebel, “Breakpoints: How Managers Exploit Radical Business Change” (Boston: Harvard Business School Press, 1992), chap. 1 and 11; P. Strebel, “Trajectory Management: Leading a Business Over Time” (New York: Wiley, 2003), chap. 4; and B. Victor and A. Boynton, “Invented Here: Maximizing Your Organization’s Internal Growth and Profitability” (Boston: Harvard Business School Press, 1998), 255.