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Thursday, April 14, 2022

What Makes a Company Future Ready?

 Mostly paying close attention to changes, testing adaptations in changing contexts. 

What makes a company “future ready”?   in the HBR     by Howard Yu, Jialu Shan, Angelo Boutalikakis, Laurence Tempel, and Zuriati Balian,     March 21, 2022

What makes a company “future ready”? The author analyzed top companies by revenue across four sectors, measuring seven equally weighted factors, then analyzed what leading companies were doing differently. They discovered industry specific insights, which also informed more universal lessons. First, don’t play zero-sum games with disruptors. Looking at the financial industry, companies that explored new tech early were able to develop partnerships and exploit that tech more quickly. Second, when everyone is digitizing, only going deep sets you apart. Learning aggressively, with a strong viewpoint, helped retail companies find opportunities to differentiate. Third, in a high-speed sector, you have to branch out fast. Looking at the tech sector, the author saw the importance of knowing what kind of decision you’re making, so you can make it quickly. ....'

The pandemic put companies under a tremendous amount of stress. It revealed who is ready for the many changes the near future will bring — and who is not. In times of crisis, this type readiness doubles as a source of resilience. It reflects how companies can adapt, the robustness of their internal capabilities, and how capable of finding new sources of growth they really are. And the more uncertain the world seems to be, the more important for companies to become future ready.

Consider how fashion brands and retailers have navigated the past two years. Executives have been talking for more than a decade now about how retail is moving toward direct-to-consumer, omnichannel, and personalized offerings. Then the pandemic hit. The winners have been the ones who have scaled such capabilities ahead of their competition. Stock prices at Hermes, Nike, and Target have hit all-time highs as they have pivoted to e-commerce, in stark contrast to the parade of bankruptcies among some of retail’s most iconic names: Brooks Brothers, J. Crew, and JC Penny.

The automotive industry offers another example of the importance of becoming future ready — specifically, in cultivating mastery of software and electronics. While major carmakers have made strides to pivot to electric vehicles, the ongoing semiconductor shortage has forced companies like VW and GM to halt their production lines. Tesla, on the other hand, was able to “substitute alternative chips, and then write the firmware in a matter of weeks,” explained Elon Musk. This process required quickly rewriting the car’s software, which was possible because of Tesla’s in-house mastery, and helped Tesla deliver 308,600 vehicles in the fourth quarter — up from 180,667 the previous year — achieving a “trophy-case” performance.

Becoming future ready means scaling up capabilities relevant to future competition. In previous research, we found that a company must make regular shifts in its know-how in order to stay ahead of competitors over the long run. If a company’s know-how stagnates, it will face competition from copycats, fall behind in advancements, and eventually fail.   ... '

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