Managers are told that they must transform their companies – and themselves. Radical change, risky and prone to failure though it may be, is their only hope.
In a turbulent world, the pressures of competition and rapid technological change demand nothing less. Yet how far is this advice useful or even relevant? We need to know when transformation is, and is not, sensible.
Suppose that you are running a chain of branded, upmarket hotels. It could be Hilton, Inter-Continental, Shangri La, Four Seasons, Meridien, Ritz-Carlton or Kempinski. Your city hotels are typically in elegant areas, close to good shops, theatres, museums and galleries, restaurants, business districts and parks. You might be located on the Reforma in Mexico City, Park Lane in London or Union Square in San Francisco.
One of your executives has a bright idea. Let us be radical and transform what we do, he declaims. Our present hotels are built on very costly and constrained land; labour isn’t plentiful or local. Let us reduce our cost base by building in a slum area, where land is cheap so that we can have space and easy parking. There is endless unemployed labour, admittedly unskilled, but we can train them and pay low wages. Of course, there are no local facilities that our guests might want, but at least the sound of gunfire is only intermittent. Security might be a problem but we’ll still save on costs. He rests his case.
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