There are 3 tests for sustainability:
- Do you build value over time?
- Can you resist imitators?
- How do you deal with fundamental change in your industry? (Ghemawat 2000)
Part of the value assessment is the leadership, can they get everyone to commit. The other is capability. In the Navy, strategic success = capabilities + credibility + the will to act + uncertainty about how you will act. In business, you may want your competitors uncertain about your next move, your ability to innovate rather than be predictable.
Sustainability is about managing the mature period in a product's life cycle. A wrong focus on cost reduction can undermine your uniqueness. Cutting costs may be desirable, but watch out! Is our cost containment a conscious choice to concentrate on activities and processes that do not contribute to your core business or are we emasculating our core competencies?
Sustainability is about using cash flows from operations to manage debt and ideally, finance new investments. At its heart, cash flow from operations sustains your ability to improve your resources. Where are we going to get the money?
As the industry leader, you should be able to adapt quickly when others imitate your processes. If not, what has changed?
|
