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Even the Best-run Companies Reach Inflection Points
At some point in the lifecycle of most companies, a strategic inflection point occurs where the company’s future is poised between growth and decline.
- Markets may have shifted, causing disruption to the company’s core business;
- the company may have stumbled due to poor product, poor customer service, or poor leadership;
- the company may have attempted to achieve growth through the introduction of new products or services but these attempts have failed;
- or the company has attempted to grow through M&A but has chosen poorly or integrated poorly.
In most cases the causes are complex combinations of these factors that may have taken years to reach critical mass. Sometimes these inflection points are visible as they are occurring; in some cases, they are only clear in hindsight. The best-run companies plan for these strategic inflection points and follow the processes outlined here on a continuous basis. The net result is a consistently growing company which is perceived as market and thought leaders – precisely because they have anticipated and planned for these inflection points. Most companies will not have the extraordinary combination of vision, market timing, and execution that lead to the absolute heights of corporate performance, and for those, an inflection point, whether sudden or slow in occurrence, is inevitable.
Inaction is not an Option
A company balanced on a strategic inflection point has only two potential outcomes:
- For companies that successfully navigate through the inflection point, the potential outcome is a re-energized and renewed company that grows and delivers increased shareholder value for years to come. Iconic examples of this include IBM after Gerstner, Oracle after the financial problems in the early 1990’s, and Apple after Jobs’ return as CEO.
- The second potential outcome is a declining company that missed the critical inflection point and did not take the leadership actions that were necessary for renewal, leading to an inevitable decline with an asset sale as a high-probability termination point. The industry is littered with many examples of these companies: Borders, Digital Equipment Corporation, and Netscape, among others, all missed a critical leading indicator of fundamental change – the move to online books in the case of Borders, the move to Unix systems in the case of DEC, the fact that the value was in the search not in the browser in the case of Netscape. In some cases, fragments of assets remain within an acquirer, but sometimes even the fragments have disappeared.Sometimes the decline is short and explosive – usually coupled with revenue recognition or accounting errors — causing an immediate and catastrophic decline in shareholder value. This includes companies such as Worldcom, Enron, and Nortel. Sometimes the decline is long and slow. But for companies that fail to recognize the inflection point, or who fail to take prompt action to safeguard the company’s survival, the outcome remains the same – destruction of shareholder value.
Leadership is the Key
The key differentiator between these two outcomes is leadership. Whether you are a new CEO leading a company-wide renewal, a founder faced with a business challenge, or an executive leading a division or sub-entity of a large corporation, this guide, written by an expert in corporate transformation, offers a proven step-by-step process for newly-promoted leaders or more experienced leaders to follow, through a detailed template for corporate transformation that lets leaders bridge the gap between strategy and successful execution.
This proven process of corporate renewal can be used by any leader motivated to achieve change, whether a sitting CEO or general manager who has been surprised by an unexpected inflection point, or a new CEO or general manager who has been recruited to turn around or divest a business – what is required is motivation, discipline, and a concerted focus on re-energizing and renewing the company to create shareholder value for years to come. However, often a crisis response will entail new leadership, and this guide contains additional sections specifically tailored to incoming leaders.
Don’t “Go It Alone”!
When facing these strategic inflection points, seasoned management consulting professionals can make a difference between failure and success. BusinessExcelleration’s former operating executives have “been there, done that” through multiple similar situations and can bring a wealth of knowledge and experience and expertly apply it to your particular corporate transformation. Learn more about our services!
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