Editor's note

Citation

Healy, N. (2009), "Editor's note", Journal of Business Strategy, Vol. 30 No. 4. https://doi.org/10.1108/jbs.2009.28830daa.001

Editor's note

Article Type: Editor’s note From: Journal of Business Strategy, Volume 30, Issue 4

We are in a global recession as I write this (in April 2009) and we will be in a recession as people read it (in July or August 2009). So much has been written and spoken about the reasons for the economic downturn that I would not dream of adding to the punditry. But there is a connection to the field of business strategy, I believe.

General Motors is in a death spiral, but not only because of the recession. GM’s problems began years ago and the company may have declared bankruptcy by the time JBS appears in the summer of 2009. Although writers of all persuasions and backgrounds will be analyzing the reasons for GM’s downfall for years, it seems obvious that failed strategy was a major cause, along with difficult economic conditions in many parts of GM’s markets. BusinessWeek’s cover story of May 2005 declared that GM’s strategy would not work. But the CEO, Rick Wagoner (now deposed), and his team simply could not face facts. They did not downsize soon enough or enough. They were committed to retaining all or most of the brands and waiting for all those retirees to fade away so that health care costs would stop crippling the company.

While academics and practitioners alike emphasize the importance of executing strategy, they tend less often to recall that sometimes companies need to change their strategies radically and quickly to save themselves. But corporate hubris gets in the way. And that may have been a factor for GM. The leaders and the workers could not accept the need to eliminate certain brands and make drastic cuts. They stuck to the old strategy, reworked and massaged but still the old commitment to bigness. Unless they are up against the wall, with bayonets pointed at the bottom line, most companies never consider getting smaller. Perhaps in this new world that might be an attractive option.

This issue of JBS does not, in fact, focus on the recession or downsizing except for two of our columns. Stuart Jackson’s column, “The value of a dollar,” cites examples of companies that did not just lower prices. These companies cut prices while telling customers they were getting unusual value for their money. McDonald’s dollar menu has proved an inspired offering, with sales way up in the past few years and happy consumers eating large amounts of consistently palatable food for a couple of dollars. Patrick Marren, in his column, reminds us that a foolish consistency is the hobgoblin of little minds. He has sound bites from a number of the country’s leading economists on the stimulus package and the length of the recession. There is not a shred of consistency among them. Not even from Nobelist Paul Krugman, who tries to put the housing bubble in perspective but falls flat on his economic face.

Two of our feature papers focus on Australia. Graeme Cocks interviewed over 1,000 leaders in Australia’s best-performing companies and concluded that the successful companies had nine best practices in common. He also found important differences between US and Australian companies in which practices were most important for high performance. In the second paper based on Australian business, the authors examine the phases of an outsourcing relationship Shell Australia forged with Transfield Services. With more companies today than ever before engaged in outsourcing, this paper has valuable suggestions for making the partnership work better.

As recently as 2005 Unilever was on a course of declining sales and profits despite a strategy designed to cut costs and winnow brands. It was strongly decentralized until a new CEO (who collaborated on this article) took the helm and began executing a strategy that sought buy-in from all 180,000 employees. Through a highly disciplined process, managers drove the strategy down through the organization and established transparent communications to build credibility and enthusiasm and, ultimately, sales growth and productivity.

From two Deloitte consultants in India we include a paper that deals candidly with the problems multinationals often encounter as they do business in that sub-continent. Rather than hope the problems, or conditions, will not occur, the authors suggest, companies need to assume they will occur and build in contingencies to their plans. Emerging markets have their pluses and their minuses, although sometimes foreign businesses perceive more negatives than advantages. But, by definition, emerging markets are still on a steep learning curve. Successful companies, both local and foreign, understand this and account for the uncertainties in their plans.

Rounding out this issue is a paper on a new digital ecosystem the author calls World 2.0. Difficult though it may be to absorb words and concepts like Zango, InnoCentive and folksonomies quite as fast as we need to, that is the future. But whether the cyberworld will really lead to a genuinely more connected real world is up for discussion. Besides, maybe the virtual world is now the real world.

Nanci Healy