- Research Feature
- Read Time: 25 min
As managers revamp their organizations for closer alignment with customers, one of the biggest challenges is determining how far and fast to go.
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Corporate strategy is supposed to be the means by which an organization achieves and sustains success. Yet, it rarely rises to that level, despite an abundance of corporate strategy theory and significant research from countless organizations over the past few decades.
The term “competitive cognition” refers to the framework with which a manager organizes and retains knowledge about competitors and directs information acquisition and usage. It is the process by which managers make sense of the market environments in which they compete.
The design of a corporate portfolio should be based primarily on its strategic intent and desired competitive impact, that is, on how a select set of market positions builds a platform for growth while influencing the behavior of rivals and the structure of the industry.
Today’s almost mythical notion of the hero-leader demands that vision be a pre-eminent executive trait. Time and time again, if a corporate leader is successful, his or her vision is cited as the cause and lauded as the foundation of the leader’s greatness.
A corporate sphere of influence is not just a platform for a company’s offensive or defensive initiatives. It is the basis upon which the company builds market power over rivals so it can maneuver freely without fear of retaliation.
Growth is not perpetual, and its continued pursuit can be costly, especially for large, mature companies. Instead, say the authors, smart managers should acknowledge the natural limits of their company‘s path to growth and consider viable alternatives.
For many years, when it came to setting goals, organizations took a top-down approach. It made sense: Goal setting requires information of the sort only top-level managers had, and it was their job to make the calls and pass them along to the lower levels of the company.
Risk has been a top-of-mind consideration since September 11, but corporations are also concerned with less catastrophic forms of risk: customer credit problems, labor strikes, changes in market acceptance or energy prices — any type of uncertainty that could cause their businesses to stray from plan.
Venture capital has dried up. Business pages report on getting back to basics. It has even become fashionable to snicker about the foolish mass hallucination of the New Economy. Anyone with a new idea in a corporation is being told “cost cutting is our focus right now.&
Managers typically think that the competitive pressure their companies experience is solely the result of the behavior of their rivals. But, by mapping the system of pressures in which they operate, they can make the optimal choice of competitors, allies and markets to gain superior strategic influence over the evolution of their industry and their organization”s role in it.
Global companies today are struggling with a Catch-22. On one side is the legacy of the 1990s, when investors became accustomed to double-digit annual growth.
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