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OK, jump! Featured

9:34am EDT July 22, 2002

First-time skydivers confront two very specific emotions. You confront the first --terror -- when you stand on the strut of a small airplane, looking straight down two miles, and your instructors say, "OK, jump."

The realization strikes that we have millions of years of evolution to overcome to let go of the relative safety of that rickety airplane.

After jumping, the drogue chute slows you to a frightening 125 mph, which limits your free-fall to 20 or so seconds. Not until the opening of the main chute do you transition from terror to exhilaration, and you realize you are not going to die.

Euphoria takes over and you begin to settle in and enjoy the ride. The last mile can take 20 minutes -- 20 wonder-filled minutes. Other than the quiet, 5 mph wind flowing past your ears, it's absolutely silent. You are alone, quiet, completely undistracted, overtaken by the panorama before you. You can see forever.

Initially, strategic planning produces a similar set of emotions. You experience terror after realizing you may end up doing things that are counterintuitive to your business sense, such as buying a business, diversifying or undertaking other equally novel ventures. However, you feel exhilaration once you consummate the plan and begin to see the positive outcomes brought about by your decisions.

This month, as I continue to develop your strategic options, my purpose is simple: to admonish you to overcome your terror and open yourself up to exhilaration.

With an innovation strategy, a firm dedicates a large portion of its resources to changing the technological base of the industry. In other words, we are not just completing product innovations but really changing basic products or services.

In addition to concentrated growth, market development and product development, consider the following options:

Horizontal integration. Sometimes it's much faster to grow by acquisition than by new geographic market development and concentrated growth. Should you have the financial wherewithal, buying the competition enlarges your firm and introduces opportunities: new managers, experienced salespeople, new processes, new customers and new technologies.

It also may pose serious threats: too much debt, unmanageable remote locations, bad union relations. You get the idea.

Vertical integration, forward and backward. Sometimes the critical success factor to your business is a vendor, distributor or retailer. If this is true, consider incorporating that person directly into your organization, allowing you more control and producing a strong competitive advantage.

Concentric diversification. You may decide to capitalize on synergies and compatibilities between your business and another to create competitive advantages, increase your strengths and opportunities and minimize your weaknesses and threats. Moreover, you may face a shorter learning curve, your barriers of entry may be lower and your costs may be significantly less.

Conglomerate diversification. This strategy typically is used by larger firms. The primary concern when here is profitability. Companies you might consider attractive to acquire are those that are financially distressed, short on investment resources or undervalued.

By the way, skydiving instructors never tell you that the deceleration from 125 mph to 5 mph in the matter of a few feet causes serious bruising in the unprepared. Similarly, business owners may feel a few bruises from their first forays.

The pain passes. The exhilaration is worth it.

Lance Kurke, Ph.D., is president of Kurke & Associates Inc., a Pittsburgh-based strategic planning firm. He is president of the CEO Club of Pittsburgh, serves on the faculty at Duquesne University and is an adjunct at Carnegie Mellon University. He teaches strategic planning and leadership. Reach him at (412) 281-2930 or lance@kurke.com.