This practical book presents an approach to developing corporate strategies that is built on a framework consisting of three pillars or “boxes.” The first of these strategies is to manage the present and keep the current business going (box one), the second is to forget what made the business successful in the past (box two), and the third is to create a new model for the future (box three). Throughout the book, Govindarajan emphasizes innovations and their essential nature for sustainable future businesses. However, although Govindarajan notes that linear and incremental innovations are important means of maintaining one’s present business, he also explains that future business models require a much greater focus on experimentation. The author illustrates his framework with a wide range of real-world examples and drives home his key message that successful leaders are those who are able to balance all three pillars.
In terms of structure, one chapter is dedicated to each box (the present, past, and future), and these three are followed by one that offers advice on developing and maintaining a realistic balance between the three dimensions. The book concludes with a chapter on the critical role of innovations. Each chapter ends with a list of key takeaways and tools that people can use to put the framework into practice. These practical tools definitely represent an advantage in a book that includes an abundance of charts, tables, and detailed subchapters.
In Chapter 2, the author discusses the importance of efficiently managing one’s present business. After all, this operation provides the cash flow to finance future business development. Furthermore, banks will naturally pay close attention to the health of current business operations with regard to debt financing. Having a strong and vibrant business is thus essential for future business development. Encouraging new ideas and leads is an essential attribute for leaders, who need to have confidence in their organizations’ readiness to move forward with new business models. However, many organizations continue to focus exclusively on their current business operations, considering this a “strategy.” Govindarajan sees this as one of the key strategic dilemmas facing business leaders: How should they create their futures while managing their presents?
In Chapter 3, the author turns to the challenge of forgetting the past. He sees a number of potential pitfalls here, including the following:
Complacency.
Concerns about the cannibalization of old businesses to create new ones.
The fear of losing colleagues who may no longer be needed.
A resistance to changing established management practices that may support the existing business but might hinder the development of the businesses of the future.
These are the principles that should be emphasized:
Try to avoid internal organizational complacency.
Serve your key customers well, and bear in mind that future customers may have different requirements than present ones.
Motivate and train your staff to pay attention to work ethic, cost efficiency, focus, and realism.
In a nutshell, you should selectively set aside beliefs, assumptions, and practices created in the past that act as barriers to future success.
In Chapter 4, which is about creating the future, the author stresses several crucial insights:
Pay attention to weak signals that might indicate nonlinear changes in the industry and act as leads for new opportunities.
Place relatively small bets at first to test your critical assumptions.
Create an effective culture for the development of innovations, in which experimentation, learning, and patience are rewarded.
The author sees the allocation of resources to future opportunities as a central leadership task. Businesses should set aside these resources and establish a different set of criteria to evaluate future business ideas. They need to test hypotheses and learn new things. In addition, business units should be asked to provide separate plans for present and future business. Govindarajan provides the emergence of the Internet as an example of a driving force of nonlinear change that enabled companies such as Amazon, Uber, and Airbnb to thrive. Businesses may need to bring new capabilities into the organization to exploit this type of nonlinear development.
In Chapter 5, the author discusses ways to keep the three temporal boxes in balance. This requires the capability of simultaneously handling multiple time frames. Even though at times the focus might need to fall on more than one particular box, it is important to restore balance relatively quickly. Govindarajan links his framework’s elements to highlight a common challenge for business leaders: selectively forgetting the past and creating the future. He describes this as “closing the possibility gap.” Good leaders ensure that this possibility gap is greater than the firm’s performance gap.
In the final chapter, the author returns to the important role of innovations, both in maintaining the vibrancy of one’s current business (linear or incremental innovations) and in driving future business success (nonlinear innovations). Behavioral factors are crucial in that regard, and especially:
Avoiding the traps of the past.
Being alert to weak signals.
Building the future every day.
Experimenting and learning.
Practicing planned opportunities.
Investing in “the horse you can control.”
The author concludes by reiterating the importance of maintaining an effective balance. All three perspectives matter: managing the present, forgetting the past, and creating the future! Although the boxes are different, they are equally important, and regardless of each box being able to characterize distinct time perspectives, effective management involves operating within a multidimensional time frame. This requires short-term urgency and long-term patience, a capability that has been identified in management literature as “ambidexterity.” However, as Govindarajan notes, “simple to say does not mean it’s easy to do!”
Vijay Govindarajan is the Coxe Distinguished Professor at the Tuck School at Dartmouth, and he is the Marvin Bower Fellow at Harvard Business School. Regarded as one of the world’s leading experts on strategy and innovation, he is the lead author of the New York Times bestseller Reverse Innovation.
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