The Changing World of Business


The poor performance of star companies in the 1980s and 90s, both MNCs and domestic, has amply demonstrated their susceptibility to under-perform in the face of rapid and marked changes in technology, competition and customer expectations. It is not that all these companies lacked resources, capabilities or competent managers to anticipate and assess the impending changes and initiate proactive action; what they lacked was concern on the part of their managers to enhance the shareholder value of their respective firms on a sustained basis. As a result, this value got diverted to the customers, employees, competitors and suppliers of the company. While it is well known that a firm needs to develop distinctive capabilities and also build a strong network with its key stakeholders to enhance its value creating potential and appropriation of value this created, what really happened in case of most of these unsuccessful firms was that one or more of the stakeholders gained at the expense of the shareholders. The proponsity of managers to take operating, investment and financial decisions without any concern as to how such decisions can affect their shareholders led them to pursue strategies and investments that were ill-conceived and poorly executed, thereby systematically destroying the capabilities and equity developed over the years.

We should argue how the outcome of such a tendency can be detrimental to not only the firms but also to the job and career of the managers, particularly in the light of the various new developments—such as economic liberalization and opening up of most economies to domestic and global competition, greater freedom to access and move capital, emergence of the market for corporate control, and rising shareholder, activism—which have brought the issue of enhancing shareholders’ wealth to the forefront.

It is clear that managers will need to take a fresh guard and revisit their strategies, business processes and organization in order to face this complex set of challenges and retain their firm’s ability to enhance wealth of their shareholders. Thanks to the contribution made by the academia and practising executives, managers now have access to various concepts based on experiences when it comes to facing such challenges. However, it must be stressed that the need of the hour is not another set of concepts and framework; rather what is required is a new “philosophy of business” that draws the attention of every employee of an organization, starting with the CEO, to the importance of creating, enhancing and sustaining shareholder value in everything that the company does—be it strategic, tactical or even routine matters. Needless to say, the employees will also need guidelines on how to operationalize this new philosophy and what actions are needed to sustain the same.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Advertisements

Opportunities in the Developing World


Examination of opportunities in developing countries is appropriate for two reasons. First, more and more developing countries are pursuing the growth path. The developing world is beginning to rely on the market mechanism to attract investment and technology and become industrialized. Second, government plays a significant role in business decisions. The bureaucrats approach foreign investment with much less sophistication and confidence than to private sector executives.

 

These characteristics suggest that in analyzing opportunities in the developing countries, a company should be willing to lay more emphasis on long-term potential than on short-term gains. In addition, adequate treatment should be given to political and social variables. Further, business condition vary so much from one country to the other that a comparative (i.e., multi-country) analysis may be difficult. Availability of reliable and timely information makes the opportunity analysis more difficult in developing countries. Thus, there is no way to systematically evaluate such factors as sociopolitical conditions. Instead, a general feel for the situation is necessary, for which a trusted native could be of immense help.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight

Deconstruction of Complex Change


It is important to break the complex goals down into manageable sub-goals. Individuals tend to get paralyzed when the problem is too huge to tackle. To maintain our sense of competence, we must feel that our problems are controllable at our level.

Obviously each of the sub-goals would have to be further broken down. Once this is systematically done, the challenge does not appear impossible any more to the organizational members. Deconstruction scales down the magnitude of the problem, and this has a positive effect on the quality of thought and action because the emotions such as frustration, arousal and helplessness are kept at bay. When people are able to identify a series of controllable opportunities of modest size that produce visible results, they feel stretched and challenged. This evokes emotions of moderate intensities, where its contribution to performance of complex tasks is most beneficial.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact http://www.asifjmir.com