A bias for action counts as a cardinal virtue in business. In turbulent markets, however, a bias for action can cause companies to chase every opportunity as if it were the chance of a lifetime or responding to every threat as if it could destroy the company. Frantic activity dissipates an organization’s war chest and focus and leaves it poorly positioned to seize golden opportunities when they do arise. (There are other risks to a bias for action, as I argued in an earlier post). Managers require discipline to say no to potential distractions to maintain reserves for golden opportunities and major crises when they arise.
When conducting research on Brazilian multinationals, I learned about the sport of spearfishing, which serves as a graphic metaphor to illustrate the importance of disciplined opportunism. Spearfishermen dive underwater without oxygen tanks, armed only with a gun with a single spear. Once submerged, they surround themselves with kelp, which both attracts fish and hides the fisherman from his prey. Then he waits, motionless in the murky water, conserving oxygen and energy while waiting for the right fish to approach. A good fisherman can stay underwater for up to four minutes, and during this time needs the discipline to let the small fish swim by, while preserving his spear for the big prey, which can be as large as a person. At the right time, the fisherman shoots his spear with deadly accuracy. If he succeeds in spearing the fish, he must then reel it in and quickly kill it before surfacing with his catch.
Not a sport for the impatient or faint of heart, spearfishing provides a graphic metaphor to illustrate the process by which companies can effectively wait for, identify and seize opportunities in a turbulent market. The
To understand how companies thrive in turbulent markets, Martin Escobari and I studied ten Brazilian companies that thrived despite Brazil’s turbulence during the 1990s. Brahma (brewing and beverages which through a series of acquisitions created Anheuser Busch InBev), Embraer (aircraft production), Votorantim (diversified conglomerate specializing in basic industries), Banco Itaú (banking), Natura (cosmetics), América Latina Logística (logistics), Promon (engineering), Sabó (auto parts), Pão de Açúcar (food retailing), and Aracruz (pulp and paper).
We paired each of the ten with a comparable firm that was less successful in managing turbulence. These paired companies provide a valuable contrast to our more successful firms. The similarities among the more successful companies, as well as the differences between them and their less successful peers, form the foundation for the findings in this book.
There are a few things to note about the companies we studied. First, they represent a broad cross-section of the economy. Most studies of management in turbulent environments have focused on U.S. information technology companies, primarily in the period between 1980 and 2000. By sampling across a variety of industries we hope to glean general insights about managing in unpredictability that would not emerge from a
The nature of work has shifted in the century since Henry Ford introduced the Model T. Today, activities adding the most value–entering new markets, for example, or shifting business models–cannot be reduced to standardized operating procedures. Economic activity has migrated beyond the boundaries of the firm and now takes place in an ecosystem of organizations that are interlinked but independent.
While work has changed, the tools to get things done have not. Executives invoke hierarchical power in a networked world, and try to standardize non-routine activities. Leaders rely on power and process not because they work, but because they are familiar.
An alternative approach frames an organization not as a hierarchy of power or bundle of processes, but as a set of overlapping networks of commitments that extend up and down the chain of command, across units within the organization, and beyond the boundary of the firm. Effective execution, in this view, occurs when people make the right commitments and fulfill them with vigor. Organizations can enhance the quality of execution by requiring public commitments, which confer five key benefits.
- Increase peer pressure to perform. Many executives rely on their positional power to drive execution. In
In October 31, 1989 Mitsubishi Estate bought a controlling stake in the Rockefeller Group, owner of iconic buildings including Rockefeller Center and Radio Center Music Hall. The acquisition, for many, underscored the inevitable rise of Japan Inc. In the preceding decade, best-selling books like Clyde Prestowitz’ Trading Places: How we are Giving Our Future to Japan and How to Reclaim It and Ezra Vogel’s Japan as Number One confidently predicted that Japan Inc. would dominate wide swaths of the global economy by the 1990s. Instead, Japan lost a decade, and Japan Inc lost its luster.
In the past few years, firms from emerging markets have acquired high-profile firms. Mittal Steel bought Arcelor, while the Brazilian-Belgian brewer InBev acquired Anheuser Busch. Many North American and European managers reassure themselves that the rise of emerging market firms will repeat the Japan Inc story–initial success, followed by massive hype that ends in a fizzle. The analogy to Japan Inc is reassuring, but deeply flawed. This comparison ignores the underlying sources of advantage enjoyed by the best emerging