By Jo Whitehead *
In our research into 10 years of corporate stumbles, in which the CEO leaves under a cloud after a significant drop in share price, we find a common feature — the mis-management of growth strategies.
Sometimes this strategy is forced upon companies — for example, Nokia had to grow into smart phones to preserve its market position; Yahoo had to reposition itself as Google eroded its position as a leading search engine.
Sometimes the strategy is a management decision — for example, British Telecom’s expansion into international markets, or the many financial institutions who chased the higher returns on offer by investing in sub-prime derivatives.
Why is growth difficult?
Because it often requires extending into “adjacent” markets that, in reality, require different skills and expertise. Such strategies require a change in the composition of the senior team and board that many public companies appear to find difficult.
Also, there are a lot of positive feelings about growth — feelings that can translate into a range of biases.
* The writer is a director of Ashridge Strategic Management Centre.
Editor’s note: This is a guest post.