Guest blogger and a Group Chair for the mentoring and business coaching group The Executive Connection and lecturer at QUT Executive MBA, Guy Hamilton looks at a board’s role in spotting and managing a maturing business
Philips, once an electronics and white goods powerhouse that today occupies a much more modest position in the global market, is but one corporate reminder that markets and customer demands do not stand still. And that a business model left unchanged will, with few exceptions, mature and eventually decline.
With executive management focused on day-to-day performance, it’s vital that the board actively reviews and discusses the status of the current business model to determine whether it needs to be refreshed or changed. A business in decline not only erodes shareholder value – which for most boards puts them at risk of not delivering on one of their core responsibilities – but has other associated challenges such as the ability to retain staff.
Growth – A lot more than just a strategy statement
Governance Matters Associate Guy Hamilton talks about economic growth…..
Since 2009, a feature of both global and local economies has been a prolonged period of slow growth and reduced customer expenditure. Excess productive capacity that had to be reduced or re-purposed, (“resized” becoming a popular term), cost reduction and cost efficiency strategies became prevalent and yield and margin management became common conversations in board rooms and executive management meetings.
Signs of enduring economic growth are emerging and with it the question is whether it is time to become growth orientated and look towards building increased enterprise value over the medium to long term? Intuitively, the answer is now “yes”.
It is easy to say, “we are now going to move to a growth strategy” but for many it will be a challenge to deliver enduring value growth as an outcome. Simply, in flat economic conditions management mindset is founded on “more from less” whereas growth requires focused investment and re-allocation of resources to ensure “more from more”.