Business Strategy: When Should Companies Change Course?
Picking a time to commit to a new business strategy is one of the hardest and most pivotal decisions any company’s leadership will have to make. Staying on one course for too long can leave an organization out of step with its competitors, but the costs of change are significant enough to make any wholesale refocusing difficult to commit to.
Management Issues recently pointed out that when formerly influential companies such as Kodak declined to shift business models quickly enough, that decision was the beginning of the end. (Apr.19, Collins) These businesses were held back by the fact that their projections of future performance were largely based on the assumption that market conditions would stay roughly the same.
Today, it’s clear that markets are changing so quickly that the aforementioned approach to forecasting no longer works. Instead of focusing on planning as the main determinant of business strategy, companies can switch to a sense-making model. This new style of decision-making means accepting opinions from multiple corners of the company and not assuming that the market will stay consistent for any length of time. This is one way to avoid meeting Kodak’s fate.
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