Monday, May 17, 2004
Boston.com / Business / When innovation supersedes short-term results A very interesting review from Globe staffer Robert Weisman on Analog Devices Chairman Ray Stata's recent article in the MIT Sloan Management review. In it, he asks how can managers ready the next generation of products/services whilst still effectively managing the ones that currently generate sales and profits. He suggests that it may be more important for companies to measure their learning rather than focus on short-term financial gains which frequently don't live up to management expectations. As Ray himself says "''The challenge is to balance a culture of accountability in established businesses with a culture of learning in experimental businesses,". With business lifecycles getting shorter every year (current Fortune 500 company lifespan is 40-50 years and falling apparently!) - the companies that succeed are the ones who can transition in and out of new businesses and markets several times. This means accepting that you can't measure all your businesses by the same metrics. Instead, Strata says "''Companies need a system that helps them continuously refine judgments regarding the likelihood and timing of success, and also accelerates learning so that failing strategies can be quickly modified." - a good quick read.