How not to let a good crisis go to waste: building architectural advantage
Michael G. Jacobides explains how firms who are not shy to make radical changes to their industry architecture will be the most successful
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How companies respond to the economic crisis will undoubtedly determine their future. Michael Jacobides, Associate Professor of Strategic and International Management at London Business School, explains that those who look beyond crisis management to the big picture in their sector will be best placed to survive the downturn.
Michael explains that companies who understand that the recession represents a change in need, not simply a reduction of demand, will offer opportunities for companies to change the way their sectors operate.
Firms can benefit from the changing industry landscape: For instance, hedge funds and private equity firms have begun to take advantage of the opportunities created from the fact that investment banking is changing, and firms such as Aldi and McDonalds repositioned themselves to take advantage of changing consumer demands.
Firms can also re-define the architecture of their sector, changing the rules and roles to their advantage. Past recessions show that proactive firms such as Microsoft have taken advantage of external change to carve out a position in their sector that makes them the least replaceable. Today Google is doing the same by moving into mobile technology and developing relationships with key companies to shape the sector around them.
But to be able to do so requires courage and leadership, and this doesn't come easy. As Michael concludes, "In these situations, companies instinctively take on the foetal position and hide, but they need to challenge existing ways of doing business to survive."