Saturday, April 20, 2013

What multinational firms need to do to succeed in the 21st century

Giving importance to strategic intelligence and the need to sense disruptive innovation in the external environment is extremely critical for companies today. People should be tasked with scouting such intelligence (they are called Bridgers), which can be built into performance metrics and reviews in a meaningful way

Quote 1: “The firms that can best scout and implement valuable strategic intelligence from environments that are not their native terrain…will be the clear winners.”

Quote 2: “Firms must operate better in unfamiliar environments. The Bridger Strategy is key.”

This is a new world with new dynamics. We are seeing dramatic rises in emerging market economies and, in response, an acceleration of interest in re-tooling for these new realities by mature market firms. Both require a dramatic redoubling of how strategic intelligence is sourced and implemented by firms. Leading edge firms realise that those who best scout and implement valuable strategic intelligence from environments that are not their native terrain will be the clear winners. How well strategic intelligence is scouted and acted on is a great measure of overall organisational health – and a powerful predictor of a firm’s performance.

Our research spans several years and began with the observation that the many critical strategic insights, particularly when sourced from the external environment, do not get implemented by firms. We tested this across a larger sample of firms and identified that less than 10% of firms excel at scouting great strategic intelligence in the environment and getting these ideas implemented across the business unit. Those that do, however, experience exceptional results compared to their peers. Naturally, we became curious as to what they do differently. Our work highlights specific patterns that make it more or less likely that a valuable idea survives from being identified in the environment to being implemented by the firm. The irony is winning in the new world dynamic relies extensively on the firm’s ability to do this, yet the majority of companies are structured to deliver the opposite – to leave these innovations untapped and to deflect them if proposed to headquarters.

Three things have to happen for a great idea to get implemented: it needs to be scouted in the environment, it needs to be accepted by the firm, and the firm has to apply the appropriate resources (both people and capital) to give it life. While that seems straightforward, it is actually three ways a great idea can die before the firm realises its full value. Let’s look at scouting, for example. First, the idea must be intentionally observed in the environment. Most firms, however, send people into the environment exclusively to implement strategies. They are wasting half of that resource. It is in primary observation at the local level that some of the best transformative ideas are discovered, not through distant studies and aggregated surveys.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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