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Cover Story

Enter ‘Tactical’ Strategy
In a Superlative & most Insightful analysis, B&E Documents how Corporate Leaders have Transformed their Organisations & Implemented continental strategic shifts that have Rewritten Global Management case books
Issue Date - 17/02/2011
In sharp contrast to IBM, the bosses at GM continued churning out monstrous gas guzzling cars even though they realised that nimbler rivals like Toyota and Honda were steadily taking away market share from the company. The false prosperity of the George Bush years and the Americans’ crazy love affair with SUVs made it appear as if the bumbling and stumbling GM might just pull through the imminent debacle. That never happened, and GM had to face the mortification of bankruptcy and a state sponsored bailout.

I am pretty sure even diehard skeptics who dismiss the ‘strategic’ importance of changing strategies for survival and growth would be convinced by now that changing strategies at the right time does matter even in a world tormented by Black Swans. But there is another sucker punch in this tale of changing strategies. Leaders like Deng and Gerstner often had the luxury of decades to contemplate the necessity of changing strategies – or changing course midstream if you may say. Leaders of the 21st century, whether of nation states or of corporations, simply do not have the luxury of time anymore. Change that occurred at a glacial pace once upon a time, now happens at a speed so blinding and dazzling that even battle-hardened veterans fail to grasp. Information technology is playing a key role in dictating the pace of this change; as is the relentless march of globalization. In effect, the time needed to change strategies is becoming so compressed that changing strategies often acquire the shape of what would be once considered a change in tactics.

Once upon a time, there used to be a Test Match played out over five days. That dictated its own strategy as well as a change in strategy. Now, we are ruled by 20-20 cricket. So, the captain, who could earlier adopt and then change strategy over a span of 450 overs, now has just 20 overs to do the same. Things are not very different in corporate boardrooms as change constantly gathers pace and keeps surprising us in a Black Swan manner. It is no longer enough to realise that you need to change strategy. You have to do it damn fast if you want to survive.

Perhaps that is the real Black Swan impact on nations and corporations!

GM’s Detour trick
The new gm is all about change – smaller, fuel-efficient cars, customer-centric approach, focus on emerging markets and most importantly, profits. pawan chabra writes about how GM’s strategic shift saved its day.

For decades together, General Motors was exalted as a symbol of American success. A success that would only be got by thinking big, making big and selling big. Today, it is cited as a failed American freighter. Its very DNA got the better of it, forcing the Detroit giant to detour. Precisely fifty years back, GM had grown into a Godzilla-making factory. It had embraced vertical manufacturing and its list of offerings either included products designed to match up to the budgets of luxury car buyers, or live up to the fancies of truck-lovers. Its audacity clouded its vision – the downfall was imminent. And so it happened in January 2009, when GM filed for bankruptcy. Fuel-guzzlers do not please a nation which is battling with rising unemployment. Not even if they carry a GM warranty. Change it needed, and change it did. From 51.4% of market share in US in 1961 to 30% in 1990, and to under 20% today, GM is a story of how a King-turned-pauper, finally realised that serving the middle-class is as important. And the fact that it still has a strong change of making it to history books as a phoenix of the modern capitalist world, is because all the three CEOs who followed Rick Wagoner (Fritz Henderson, followed by Ed Whitacre, followed by the current CEO Dan Akerson) during the past two years, have appreciated this change in mindset.

Cut to the present, and any GM insider who has lived the horrors of the downturn will confess that GM investors giggle more while talking about the muted GM DNA, than while ranting about the world-record IPO on the 18th day of November last (which helped raise $23.1 billion and marked the comeback of the company on NYSE). Muscular brands like the Saturn, the Pontiac, the Hummer and the Saab, no longer take shelter in GM’s umbrella (the company sold them about a year back) and the $80 billion in losses, accumulated over a period of four year, could soon become a thing of the past. The world is staring at a new GM, with a new strategic vision, take the differentiating leap ahead with its consumer-friendly and smaller offerings.


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