- Opinion & Analysis
- Read Time: 6 min
When you’re developing a strategy for a new business, testing assumptions in your plan in a logical order gives you the best chance to make course corrections early — and not waste time and money.
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Lurking within the financial statements and communications of public companies is a troubling trend. Alternative metrics, once used sparingly, have become increasingly ubiquitous and more detached from reality.
When developing strategy for execution, managers often want to start by setting their strategic priorities, but that’s a mistake. Management teams should start by identifying the corporate vision and critical vulnerabilities — both of which help clarify and shape priorities.
Organizations often struggle with corporate strategy because executives lack clarity on how the parts of the corporation fit together. Without a shared understanding of the relationships between headquarters and business units, executives risk talking past one another when discussing strategy.
When an ethics scandal damaged the reputation of Swedish telecom giant Telia and led to the ouster of its top managers, the company’s incoming leadership took a radical new turn: Changing from a corporate strategy with sustainability programs to a sustainable strategy.
Although traditional financial services companies now offer mass-market financial advice via “robo-advisers,” average U.S. customers seeking investment advice are still underserved — and platform-based digital powerhouses like Amazon are taking notice.
Most CEOs have detailed long-term plans, which are often closely held secrets out of concern that competitive advantage may be undermined by detailed disclosure. Yet disclosing a long-term plan provides an opportunity to identify financially material sustainability issues and demonstrate how the company manages business-critical issues — information that’s valuable to investors.
Companies with rigorous compliance programs hope such programs will curtail employee wrongdoing. But to prevent employee misconduct, companies also need to understand how employees reach unethical decisions — and what affects their decision-making processes.
Rather than trying to predict the future, organizations need to strengthen their abilities to cope with uncertainty. A new approach to scenario planning can help companies reframe their long-term strategies by developing several plausible scenarios.
Many companies’ decisions about share repurchases are handled mainly by management rather than boards — with repercussions for capital allocation. Boards should carefully balance the capital needed for repurchases against its use in value creation via internal development or external acquisitions — and be skeptical of repurchase programs financed by debt rather than profits.
Accelerating compression of both revenues and profits may rapidly prove fatal to traditional businesses. Consider the accelerating decline of voice calls as a means of communicating via mobile telephone: From 2013 to 2015, average mobile voice revenue per user declined globally by 19%, and a further decline of 26% is expected through 2020. To stave off disaster, incumbents must transform and renew their core operations — while also growing into new businesses and industries.
As busy as they are, leaders need to find ways to observe fundamental work processes in their organizations. When they do, they usually discover that there are gaps between theory and reality in how works get done. Michael Morales’ experience — in which identifying and addressing such gaps led to his company saving $50,000 in just 60 days — is a case in point.
Companies know climate change is relevant to their businesses, but they don’t address it in corporate reports because corporate leaders don’t believe it’s material to their business. The effects of climate change are beyond their planning horizon, they think, or they just aren’t clear whether or how climate change might be a material business risk. The Financial Stability Board (FSB) is hoping to change that.
To protect their organizations from cyberthreats, companies need to understand how hackers go about their work. The authors’ research suggests that hackers’ attacks typically involve four steps: identifying vulnerabilities; scanning and testing; gaining access; and maintaining access.
With the benefit of digital technologies, companies are using Big Data to identify supply chain risks and create early warning systems with much greater speed and precision. However, the ability to respond to these signals hasn’t advanced at the same pace.
Cyberattacks are in the news. All kinds of organizations — ranging from Target Corp. and Bangladesh Bank to the Democratic National Committee in the United States — have fallen victim to them in recent years. MIT cybersecurity expert Stuart Madnick explains some of the biggest cybersecurity risks businesses face today — and what executives should do to decrease their companies’ vulnerabilities.
Blockchain technology has the potential to transform how businesses are organized and managed. It allows companies to eliminate transaction costs and use outside resources as easily as internal resources. The implications for areas such as accounting, contract negotiation and enforcement, sales and marketing, and capital investment are myriad. Companies should start exploring how this technology could impact their industry and processes.
Investor relations managers and sustainability professionals can collaborate to communicate meaningfully with investors, converting them into a stakeholder group to help forward corporate sustainability.
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