Sisyphus is one of the most tragic figures of Greek mythology — a man condemned by the gods to spend eternity, pushing a large boulder up a hill. Every time he gets the boulder close to the top, it rolls back down, forcing him to start all over again.
Most companies across size, industries and countries are facing the mythical endless toil of Sisyphus in a series of disorientation and despair. What many CEOs might actually be feeling is a mixture of anger and fear. They find that no matter what they do or try to develop in terms of corporate strategies, their adjustments simply makes the problem worse. At least Sisyphus comes out with muscles. Many companies, however, lose out in terms of competitiveness and financial strength when pushing the rock up the mountain, as their rocky endeavours – restructuring, reengineering and leadership deployment - roll back for all eternity.
The reason for this sisyphusic experience is the lack of strategic foresight.
An example of such is seen in the case of Arcelor - a Luxemburg based steel company. The firm is currently at the center of a bitter take-over battle with Mittal Steel - the Indian steel giant. Arcelor was quite confident of the superiority of its European heritage; and was taken by surprise by the hostile take over bid launched by an Indian newcomer. The company was unprepared in face of Mittal’s move and is now asking the government of Luxemburg for help – a fallback into the times of mercantilism and protectionism.
One of the reasons for the lack of strategic foresight is the short duration of planning cycles practiced by corporations. While at business school, I learnt that corporations have to establish 3-year business plans to prepare for the future. A time period of three years is a very short period and corporations normally do not take into account the global changes and challenges of the future. Despite the credo of creativity and innovation, most CEOs are locked into practices of the past. Companies continue to do what they always did – interrupted by short-term adjustments that normally fall flat after a very short term – and perish. Recent examples of failing giants are GM, Sony and Alitalia. The typical planning exercise is attributable to a short-term-oriented management style that has increasingly dominated corporate America and Europe since the seventies. The model largely relies on the market co-ordination of economic agents and seeks to address market failures by providing additional market elements where they are missing.
Professional executives usually remain in a given company for less than five years. They are driven by the need to produce immediate profits during their short tenure. The maximization of a shareholders’ value is the new mantra of management thought. However, this shortsighted focus on squeezing the last penny out of every part of a business has exploited its key stakeholders in many cases. Systematic short-term thinking can damage the long-term prospects of companies and often lead to greed – just think of Enron and Worldcom – prime examples of such practices. In addition, CEOs do always have to reinvent the wheel again – when and if they notice that their companies are left out without a vision. In this uphill struggle, they have to reinvent the wheel, to survive in this ever-changing macro-economic and socio-political environment.
Conversely, companies that stay as market leaders for very long periods of time generally display relatively long-term-focused business thinking. The CEOs of those successful companies often interact with world leaders from different disciplines - including politicians, thought leaders, the media and representatives of civil society - to understand the challenges of the future. And they adapt their corporations’ business models to anticipate and map the future. They clearly focus on emerging markets like China and India, take into account of changing lifestyles, and deal with wild cards like the anti-globalization movement, terrorism, war among others. Two examples of corporations who have failed to take into account changing global scenarios in recent times are:
The Japanese film and camera maker Konica Minota recently announced its withdrawal from the camera and photo business. This is quite an astonishing move for the erstwhile market leader in the same. The firm failed to foresee the dramatic change in its competitive landscape - the disruptive nature of digital technologies.
Similarly, the mobile phone unit of Siemens also failed, albeit for different reasons; the company did not take account of the rise of China. China is now the manufacturing hub of the world and mass manufacturing is increasingly difficult to execute in Europe and North America. In spite of being a market leader, alongside Nokia and Motorola, Siemens produced mobile phones at too high a cost - being too hesitant to move its manufacturing facilities to China. As a result, its division was sold to BenQ, a Taiwanese Highytech firm, at a high loss for Siemens.
I call on CEOs worldwide to decrease their degree of short-term considerations and to support long-term visions. By doing so, CEOs might give up on some short-term profitability but they will gain a more lasting one. CEOs should believe in long-term and robust solutions, which tackle issues of strategic importance for corporations and society at large; rather than endlessly pushing the rock up the hill, as Sisyphus did, CEOs, can, instead leave the rock at the top by choosing to look into the future, by developing appropriate visions and by managing global challenges.
Frank-Jürgen Richter is President of Horasis, a Geneva-based advisory firm.
www.horasis.org
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