At some point in the lifecycle of most companies, a strategic inflection point can determine if the future is poised for growth or decline. Markets may have shifted, causing disruption to a company’s core business. Or it may have stumbled due to poor products, customer service or leadership. Perhaps they 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. When these strategic inflection points are reached, visionary leaders realize that they have a mandate for corporate renewal.
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. But 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 that has established market and thought-leadership – 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.
A company balanced on a strategic inflection point has two potential outcomes. For companies that embrace the mandate for corporate renewal and successfully navigate through the inflection point, the potential outcome is a re-energized and renewed company that grows and delivers increased shareholder and stakeholder 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 misses the critical inflection point and does not take the leadership actions 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 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.
The key differentiator between these two outcomes is leadership. Whether you are a new CEO leading a company-wide renewal, or an executive leading a division or sub-entity of a large corporation, this guide offers a proven step-by-step process for newly promoted leaders or more experienced leaders to follow.
A proven operational template for success in translating strategy into successful execution is at the heart of this guide to executing on the mandate for corporate renewal. This proven process of corporate transformation can be used by any leader motivated to achieve change, whether you’re 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. Executing this process requires motivation, discipline, and a concerted focus on re-energizing and renewing the company to create shareholder value for years to come.