Firms
need to strategize in order to obtain a better future for
their companies. Firms today have reached the limits of incrementalism.
Squeezing another penny out of the already rock-bottom costs,
getting to make a product a few weeks earlier, responding
to customer enquiries a little bit faster, increasing quality
a bit higher, increasing market share by a few percentage
points will probably not help much. The mantra of today's
success is not about catching up, but about getting ahead.
In
order to understand the future strategic competition, it is
absolutely necessary to understand the past. Firms quest for
competitiveness have been based on three important aspects-restructuring
the portfolio of business and downsizing the head count; reengineering
processes and continuous improvement; and finally, reinvesting
industries and regenerating strategies (Hamel & Prahalad
1994). In the 1990s, firms such as IBM, Phillips, Texas Instruments,
Motorola, Digital Equipment, etc., who were the leaders in
their respective business, seem to have shed flab enormously
in order to remain competitive. But, very few of the above
companies have remained leaders in the present decade. This
strategy of denominator management (cutting costs) will probably
not hold these companies in good stead in the days to come.
Reengineering
is another strategy followed by firms to remain a leader in
business. Reengineering tries to move out needless work and
get every process in the organization directed towards the
customer. The basic premise is to do every process not only
efficiently but also at a faster rate. Various concepts like
lean manufacturing, just-in-time, etc., dominated the strategic
scenario. But the problem with such strategies when carried
to the extreme was that there would come a time when further
incremental improvement was not possible. |
