Managermind

Our world knows many different branches and industry sectors. Generally, todays markets tend to become global, and therefore the national companies tend to meet global competitors in the future. Markets are full of products and services, so the customer has a good choice.

This leads to new strategies (of cause, they are not really new ) of competition. First, the enterprises tries to be first on market with their products. That leads to market dynamics, that described in my last post. But interesting for me are organisational issues, they are the subject of this post.

In the eighties the management was thinking, that solid company has to have many divisions with their own products and services in even completely different branches. That should ensure company’s revenue, even it looses positions in one of branch. Trend of the last years was an opposite to such, where concentration on core competence was in vogue again. That means that companies that are good in produce nails were no more interested to have cool IT division, that is just there to balance risk of “nail-branch”.

So the change in strategy was in saying: ok, we are good in producing nails, and that is what we can do better than maybe anyone else. And that is why from now on, we concentrate all resources of our enterprise to produce and sell nails. And we should (cause we can) have better nails, to secure our competitiveness on market. Maybe we have to develop our nails further and further, e.g. creating extra hard nails or even weak but pure gold nails, to be different. But we can do that better than anyone, cause we have enormous experience in producing them, selling them and we have the knowledge and experience in that market sector.

You maybe already notified that “nail” was not really good example ;). Nevertheless, building up new IT division in above example, just because nail market stagnates, possibly makes not much sense. That is what we notice in today business. Many companies have sources old core divisions out, by selling them, grounding child companies and bring them to the stock and so on. That process is still on going and allows companies that are innovative and qualitative to be competitive on global dynamic markets of today.

Post industrial economies have enormous dynamics. That dynamics leads to problems for slow-going and heavy-adaptive companies. The rapidity economy, or in a view of a particular company - dynamics of markets, demands new company organisation, new dynamic hierarchy, new leading styles, new staffing policy, new IT architectures and so on. Only dynamic companies that are able to adapt quickly to the market situations can be sustainable successful! Nearby every statistic will prove this statement.

The first question tearing me is, do CEOs understand such trends? Does science understand it?

The second question what the understanding of that lead to?

In my opinion, that subject is not actual for many CEOs and economists. This results from the lack of a clear solutions and methods. Awareness of dramatically economy dynamics can bring advantages in competition, especially for companies dealing with polypolistic markets.

That’s enough for the moment, the goal of this topic was only to raise you awareness of such development in economy and impact of that on modern enterprises.