Wednesday, November 20, 2013

Recovering after a Big Fail

This week’s readings discussed the many ways in which an organization’s strategies could backfire due to poor due diligence and planning on the management’s part. Consequently, I wanted to learn more about how companies pick themselves up and prepare for a comeback post such backfires. After a company faces a setback, one of the many comeback strategies they can use to repair the damage is the ‘Strategic Organization Renewal’ (SOR) practice which can be defined as –

“Strategic renewal includes the process, content, and outcome of refreshment or replacement of attributes of an organization that have the potential to substantially affect its long-term prospects.”

However, the attributes spoken about are extremely specific to the situation.

The SOR is a transformation process and is of two kinds:

(i) Discontinuous Strategic Transformations: these are major transformations which involve not only large amounts of change, but also change along multiple dimensions, such as with regard to the business model, technological base, organizational structure, resources and capabilities, and organizational mindset.

(ii) Incremental Renewals: If undertaken proactively, these enable firms to cope with changes in the external environment as they take shape, and thereby reduce the need for a much larger and more difficult transformation later on. These have been used by Boeing and Quicken in the past.

These transformations could be a result of environmental pressures but at times, they could be a company’s endeavor to become coherent and stronger in its internal capabilities. For example, Johnson and Johnson regularly conducts many activities that may facilitate renewal. One of these renewals seeks to sustain innovation in the R&D department. On the whole, incremental renewals are more common and talked about as a strategy.

Hence, the SOR process calls for a paradigm shift in strategy. It wants to re-invent companies using an approach different from the traditional one and given a chance, I would like to study case studies on IBM, Boeing etc. where it has been used.

References:
http://www.rhsmith.umd.edu/faculty/rajshree/testing/research/32%20Agarwal,%20Helfat%20-%202009.pdf 

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