Onward with Rita Gunther McGrath and the end of competitive advantage. We just posted on the importance of deciding who is responsible to identify when to pull the plug on a business activity that is no longer optimal. Remember — in a world where competitive advantage is not long term, that becomes more and more important.
But how do you pull the plug? Rita offers six approaches. These approaches fit into a table thta plots how much time you have against the future of the asset or capacity involved.
There are three categories of future value
- capacity is core
- capacity has value but not for the firm
- capacity is in decline
There are two categories for assessing timing
- you have time
- you are under time pressure’
so the varieties when you have time are
- core with time – orderly migration
- value for others with time – garage sale
- capacity losing value with time – run off
so the varieties when you are under time pressure are
- core no time – hail mary
- value for others no time – fire sale
- capacity losing value no time – last man standing
The bottom line is that you are either moving on (migrating or doing a hail mary) selling (garage or fire sale) or killing off the activity (running down or ending).
We will take a look at each, but you may want to commit the above to memory.