“The Challenge of Rapid Change”: some thoughts for young aspiring executives / entrepreneurs

What is different about change in our era is not its presence but its pace — the rapidity with which ideas arise, are developed and applied, and the immediacy and degree of their impact on our lives.

Let me illustrate. It took almost 14 centuries to progress from the invention of paper to the Gutenberg printing press. It took just 4 centuries to move from Gutenberg’s hand-carved, hand-set type to the Linotype machine. And it took just over half a century from the first conception of the large-scale digital computer in 1937 to the wide use of personal computers by both business and individuals today. The Internet that has become indispensable to us all has taken a much less time span in its development and the changes it has generated could not be even dreamed of only a few years ago!

Despite progress in many aspects of civilization,

people have historically found change uncomfortable and even threatening. Change, especially rapid change, is often associated with disruption of stability. Since stability usually has connotations of security, dependability and order, which are perceived as positive, change tends to have connotations of insecurity, uncertainty and disorder, which can be viewed as negative. Examples of disruption due to change are all around us. A familiar instance in this state is job security. Until fairly recently, a job with some of our larger companies was considered a lifetime employment guarantee. Today many of these jobs have been shifted from such companies to their suppliers or other industrial sectors or sent overseas   due to technological and competitive changes.

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Insider Trading in the Post-Rajaratnam World

H. Nejat Seyhun, contributing writer to The BusinessThinker magazine, is the Jerome B. & Eilene M. York Professor of Business Administration and professor of finance, Ross School of Business, University of Michigan. He is an internationally  recognized authority on financial issues and Derivatives.

Hedge Fund billionaire Raj Rajaratnam has been found guilty of all 14 counts of securities fraud and conspiracy charges against him.  The case now goes to 2nd Circuit appeals court.  If upheld, Mr. Rajaratnam is facing the possibility of a maximum 190 years in prison, though he is likely to receive about 7 to 8 years based on the precedents.  Based on press reports, Mr. Rajaratnam may have spent $40 million on his defense, while government has spent $30 million to prosecute Mr. Rajaratnam.  Clearly, litigation required immense resources on both parties.  Meanwhile, the government has charged almost 50 people ranging from traders, hedge fund managers, lawyers and experts with similar crimes over the past year and a half.  What are the likely takeaways from these trials for investors, hedge fund managers and students of the market?

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Dynamic Management of Growing Firms–Part 4

This is the 4th and final part of the article on Dynamic Management of Growing Firms.

Market strategy and Sales Growth

 

In this section, we cover a wide variety of variables that may be viewed as aspects of market strategy, including the planning process itself and the types of strategies chosen. In particular, we cover the following variables: Formal strategic planning, market positioning and market research, product innovation strategy, breadth of strategy, customer relations and sales tactics, as well as a few  related industry characteristics including industry growth and market demand. We include industry variables along with other market strategy variables because in our view, the industry selection process is not random. CEOs consider the type and characteristics of industry both at start-up and at later points as a company diversifies or reorients its strategy.

Formal Strategic Planning. Strategic management authors urge use of the business plan. In fact, the business plan forms the cornerstone of most introductory entrepreneurship courses. And yet very few companies in randomly-drawn samples of small businesses actually do formal planning. Indeed, only five percent of CEOs in our own study claim to plan formally. One informal indicator of its value is the much higher incidence of its use reported among Inc. 500 companies with about 50% reportedly having prepared a business plan at start-up.36

Research evidence suggests that formal business planning may be valuable, but only if it is approached with sufficient understanding and motivation. Keats and Monanari suggest that successfully integrating strategic planning into normal operations is a function of cognitive development.37

The planners’ backgrounds, the intensity of planning, and the type of strategy may all change the relationship between formal strategic planning and sales growth. Admittedly based on fairly limited research, we may tentatively conclude that: Continue reading