Ch2 Article 1 - Destination dustbin By Francesco Guerrera...

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Page 1 of 4 2009 Factiva, Inc. All rights reserved. Destination dustbin By Francesco Guerrera 2,130 words 9 August 2009 Financial Times (FT.Com) FTCOM English (c) 2009 The Financial Times Limited. All rights reserved Burning platform? Jeffrey Immelt (right) and Jack Welch in 2000 when the GE succession was decided. The group relies less on finance than before A crisis is a terrible thing to waste. The phrase is heard so frequently in the glazed corridors of Citigroup's New York headquarters that staff roll their eyes when yet another of their bosses paints the company's life-threatening plight as an opportunity. Yet the financial giant's leaders are hardly alone in trying to harness the force of a devastating crisis to revive a wounded company. The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused. In the middle of the worst economic downturn since the Great Depression, companies face a daunting choice. Do they exploit the tough times to lose the ballast accumulated during the boom years and make risky strategic changes in the hope of emerging as lighter but stronger organisations? Or do they adopt a defensive stance, trying to weather the storm without rocking the boat until their markets and the economy rebound? The dilemma is being played out all over corporate America and beyond as companies ranging from behemoths like General Electric to small-town retailers and community banks re-examine themselves in the unflattering light of a global recession. "This is the best time to create change and the most perilous time to create change within a company," says Michael Beer, a Harvard Business School professor and chairman of TruePoint, a consultancy. "It is make or break for many companies." Particularly in America, the decisions taken by business leaders throughout the current turmoil will shape more than the fate of their companies. Corporate renewal through crisis is a cornerstone of US-style capitalism - Lou Gerstner's salvation of IBM in the 1990s by ditching hardware and embracing software and services is a classic example. But this form of capitalism has been sorely tested by the crisis. As the focus of the past two decades on shareholder value, short-term profit performance and high executive compensation is accused of inflating the bubble that preceded the bust, US companies have a chance to prove that the Darwinian forces underpinning the American model can also rejuvenate the economy. "We owe it to ourselves, our shareholders and also to the critics of Anglo-Saxon corporate governance to show that companies can better themselves during the current mess" is how one US chief executive sums up the challenge. The big question for executives is just how radical they should be in driving change at a dangerously
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This note was uploaded on 01/26/2011 for the course MKT 337h taught by Professor Staff during the Spring '08 term at University of Texas at Austin.

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Ch2 Article 1 - Destination dustbin By Francesco Guerrera...

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