UofP - MBA580 - Read Me First - Weeks One Through Three - 08-26-06

UofP - MBA580 - Read Me First - Weeks One Through Three - 08-26-06

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Read Me First MBA 580 Read Me First Weeks 1 to 3 Why do some very successful leaders, companies and industries go astray? Some have said it is due to the changing nature of the economies worldwide (Demos et. al, 2001). New and disruptive technologies create uncertainty and make competitive advantage short-lived. Deregulation and globalization are making the economy more efficient and at the same time far more volatile. Executives are under pressure to figure out how to continuously grow shareholder value each and every year – or even every quarter. Additionally, speed and constant change are making it difficult to forecast the future and create long term plans (Roxburgh, 2003). Others have identified the convergence of the demand myth, faulty forecast, and financing traps as the reason for the demise of some companies and industries (Katz, 2002). As a leader for over twenty years in the telecommunications industry, I have seen it go from a values-driven economic giant of the Bell System with over one million employees to a set of warring competitors with declining profits, plummeting stock prices, increasing customer churn, increasing employee turnover and in some cases questionable business practices. You might argue that this is only one industry. Let me share a bit of this history and how I currently see some leaders make these same mistakes. According to some experts (Katz, 2002) the decline of the telecommunications industry is simply a case of overcapacity and “irrational exuberance” of hundreds of executives. A combination of the regulatory framework, overestimation of marketing demand and market share, and mistakes in entry strategies led to irrational strategic plans. But strategic plans are not created by themselves. Leaders create and drive them based on their view of the world, their approach to strategy and a number of psychological factors identified in the field of behavioral economics. Beginning as a manager in the Bell System, I learned a set of core values and a view of the world which was in many ways very insular. Values such as life-long employment as well as the focus on universal service, or providing telephone service to every home in America, were part of the culture. “Ma Bell”, as we called the Bell System, was akin to motherhood and apple pie . And strategic planning was a core business process that leaders engaged in across the business, creating comprehensive plans looking forward for 10 to 15 years. The economy and the environment appeared to be relatively stable, at least before the divestiture of the local telephone companies.
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With divestiture and the regulatory changes that occurred, the nature of the entire industry was being re-defined. Competitors were created. Each analyzed the industry and created new strategic plans. Most continued to grow and prosper for awhile.
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