Corporate Strategy

The Economist has a great article on corporate strategy. Damn I love this kind of stuff. If you read Businesspundit regularly, you will already have been exposed to this article on strategy flaws and this on sustained business success. Here is the key strategy issue facing companies today:

As they search for growth opportunities, however, companies face a classic dilemma, one made more poignant by recent events: should they assume that the future will, more or less, be a continuation of the past; or should they try to anticipate the next big revolution? Should they, essentially, hang on to what they've got (their "core competence"), or should they strike out for a brave new world?

Only two companies have been on the Forbes top 100 since it began in 1917, and outperformed the market average during that time period — Eastman Kodak and GE. So it is obviously tough to get it right over the long term.

My view is this. First of all, stick with your core competencies and be the best you can at them. Secondly, keep an eye on the future to see if your core competencies may be going extinct. Thirdly, move into new business areas only if 1) you have a clear competitive advantage in this area or 2) you have a first mover advantage that you can exploit for awhile, then sell off what you have built to someone else. I could write a book about what I think of corporate strategy, but those three points will have to suffice for now. Check out the article, though, it is really worth the read if you like business strategy.