We have just wound up our discussion of the various exit strategies that flexible firms can use. But thinking about and using those strategic tools are not the only things that differentiate “deft” firms from old fashioned resource exploitation firms. Deft firms also manage resources differently.
Rita starts off with this very interesting idea
If you want to shape the way an organization behaves …
And who doesn’t want to do that?
an extraordinarily robust conclusion from academic research is that ..
drum roll please. This is an important area that we know something about!
the resource allocation process is key!
After tossing this bombshell, Riga describes a number of ways that exploitation-oriented firms (the ones who assume they will have a long term competitive advantage) differ from deft firms (the ones who assume the reverse). Here is an overview
- resources are held hostage by individual business units
- def firms allocate under centralized control
- opportunities are squeezed into existing structures
- deft firms organize around opportunities
- extend the useful life of assets as long as possible
- aggressive and proactive retirement of assets
- strategy is about investment
- access to assets is more important than owning them
Next up is the hostage problem.