LONDON, ON, Sept. 10 /CNW/ - Corporate strategy planning can be a gamble,
especially when managers have to commit resources to choices about the future
based largely on guesswork.
But it is possible for business managers to take strategic risks and lead
their firms to success, as long as they hedge their bets, according to
management consultant Michael Raynor, author of "The Strategy Paradox", a
Business Week Top 10 book of 2007.
Raynor will share his advice for managing uncertainty in long-term
strategy planning with executives and business leaders during a presentation
at the Richard Ivey School of Business' ING Leadership Centre in Toronto on
Thursday, September 18. He will later address students in London, Ontario.
Raynor is an Ivey alumnus and former adjunct professor with the school.
Raynor, a consultant with Deloitte Consulting LLP and a Deloitte Research
Distinguished Fellow, coined the phrase "strategy paradox" to describe how the
same behaviours and characteristics that maximize a firm's probability of
success, also increase its likelihood to fail.
He also developed a solution, "strategic flexibility", a multi-stage
process to create and manage a broad portfolio of strategic options so that
companies can mitigate risk without compromising performance.
"Many companies intuitively respond to strategic risk by taking a
middle-of-the-road strategy but that leads to mediocre returns," said Raynor.
"To succeed, companies need to make bold strategic commitments to the future
but also be able to reverse course and adapt to unforeseen developments."
Raynor cites Sony's launch of its Betamax VCR as an example of great
strategy that ended badly due to unforeseen circumstances. Sony pitched a
cutting-edge product, a high-fidelity recording device for taping television
programs, but along came the launch of the video-rental business. It turned
out people prefer using VCRs to watch rented movies so Matsushita's
lower-performing, lower-cost VHS won the format war of video recording
On the other hand, companies, such as Microsoft, have demonstrated
strategic flexibility by being prepared for the unexpected. In the late 1980s,
Microsoft created different operating systems, Windows, MS-DOS and OS/2, so
that it would have a variety of strategy options.
Arguing that corporate strategy has been focused too heavily on managing
operations with little attention to managing risk, Raynor calls for
traditional management roles to be redefined. His plan for success involves
having senior executives, because they are responsible for longer time
horizons, be accountable for managing strategic options and uncertainty,
instead of operations, while line managers oversee operations.
"Only by shifting the emphasis at the top of the hierarchy from making
and executing strategy to managing strategic uncertainty, can corporations
hope to mitigate strategic risk while simultaneously creating strategic
options," said Raynor.
It's a broad and enterprise-wide approach to corporate strategy that fits
with the Richard Ivey School of Business' focus on cross-enterprise leadership
education. Raynor's book draws on work done in collaboration with Ivey's
Stewart Thornhill, Executive Director of the Pierre L. Morrissette Institute
for Entrepreneurship and Associate Professor of Strategic Management and
Entrepreneurship, and Rod White, Associate Professor of General Management,
which found that firms with pure strategies make more profit but have higher
failure rates. This previously unobserved fact demonstrates the need for ways
to manage better the risks created by bold strategic moves.
This event is part of the Ivey Idea Forum: A Cross-Enterprise Leadership
Series, which provides executives, Ivey alumni, business students and
prospective students with guest speakers and events to develop
cross-enterprise leadership thinking on key business issues.
Event: Michael Raynor, Author, "The Strategy Paradox"
Date: Thursday, September 18, 2008
Time: 7:30 a.m.
Location: Ivey ING Leadership Centre, The Exchange Tower
130 King Street West, Toronto, Ontario
For more information or to purchase tickets, please contact Ashleigh
Nimigan at 519-850-2999, email@example.com
Media interested in attending, please contact Dawn Milne at 519-850-2536,
About the Richard Ivey School of Business, The University of Western
The Richard Ivey School of Business at The University of Western Ontario
(www.ivey.ca) offers undergraduate (HBA) and graduate (MBA, Executive MBA and
PhD) degree programs in addition to non-degree Executive Development programs.
Ivey has campuses in London (Ontario), Toronto, and Hong Kong. Ivey recently
redesigned its curriculum to focus on Cross-Enterprise Leadership - a holistic
issues-based approach to management education that meets the demands of
today's complex global business world.
For further information:
For further information: Dawn Milne, Communications Specialist, Richard
Ivey School of Business, (519) 850-2536, firstname.lastname@example.org