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Strategy is not a dirty word.

When businesses have tremendous success, it conceals a great many sins.

During times of growth and general prosperity, as was the case in the decades after World War II, CEOs could have stayed home and their companies would have done well. It's during boom times like these that executives learn the wrong lessons about managing for success. And it was during those years that the concepts of strategy and marketing became "dirty words" to many in the metalcasting industry.

The effect of long periods of success is captured best in, of all things, a study done years ago at a major university concerning learning among pigeons. In this study, a mechanized device was set up to randomly toss pellets of food into a cage full of pigeons. After a while, if you looked in at the pigeons, some of them would be flapping their wings, some of them scratching at the bottom of the cage and others would be wandering around in circles.

That was because when the pellets came flying in, that's what the pigeons happened to be doing--and they associated those actions with the reward of being fed. This behavior was called superstitious learning. It was a matter of being locked into a mind-set based on chance and actually irrelevant beliefs.

Similarly, during the post-World War II boom decades, CEOs experimented with all manner of "strategy." They created barriers between managers and front-line workers, they expanded manufacturing capabilities in diverse and unconnected ways, they distanced themselves from customers, and yet they continued to do well. Much like the pigeons, they believed these practices caused their success, when in fact their companies succeeded despite them.

This was the case in the metalcasting industry right up through the 1970s when, regardless of the business' "strategy," success was all but assured as long as the foundry kept on making castings. In this environment, the notion of strategy became synonymous with contemplating one's navel, and marketing came to mean chasing new business that the foundry didn't need anyway. Thus, superstitious learning of the worst kind was imbedded in the assumptions on which most metalcasting organizations, and their future CEOs, operate. Thus, too, were the notions of strategy and marketing discredited.

But the postwar boom years are over. In the past 14 years, the metalcasting industry has made a 180-degree transition from growth and general prosperity to little real growth and industry maturity. In this altered environment, organizations' assumptions about what worked in the boom times are now their most acute competitive liability.

Clearly, CEOs are faced with the urgent need to overcome many of the lessons they and their organization have learned. They must also enable their organizations to unlearn the prevailing set of new obsolete assumptions regarding their customers, markets, competitors, core competencies, technology, products and processes.

New Strategies Needed

To make these changes, CEOs must reformulate the strategies that guide--either consciously or unconsciously--their businesses. Just as important, they must change the organization's culture and mind-set by repositioning their companies on a new set of assumptions.

The time has come to learn new lessons about managing for success, and that means taking strategy seriously and becoming customer (marketing) oriented. In other words, it's time to discard the notion that these concepts are "dirty words." Instead, they must become the CEO's essential task.

But how to begin? How does a CEO begin to understand and grapple with issues of business strategy and marketing? How does he or she change the culture and the assumptions upon which everyone now operates? The answer, in short, is that he or she must stop the organization from thinking "we know" and begin saying "let's ask." And there are three sets of fundamental questions that must be asked and answered.

The first defines modern marketing and the idea of being customer oriented: Who are our customers and who are the noncustomers? What are their requirements and expectations? What do they value? Why do they buy from us or, conversely, from our competitors? How do they define quality and customer orientation?

The second set of questions begins the process of establishing business strategy and is rooted in a rigorous benchmarketing analysis: What does the new breed of successful metalcaster do that we don't? What can they do that we always believed couldn't be done? What don't they do that we have always done?

The third set of questions is the key to implementing a new set of corporate assumptions: How can I work with and learn from my customers, suppliers and employees to implement change? How can I develop a well-trained, fully utilized and actively involved work force?

Although these questions were rarely asked even in the recent past, we are now seeing more and more CEOs asking them and moving in the right direction. Their businesses have become the industry's "haves," and more are entering their ranks every year. Unfortunately, many more--the industry's "have-nots"--are falling by the wayside.

Without question, the years ahead will bring rapid changes in technology, in markets and market segmentation, in customer requirements and expectations, in human relations and more. They will, therefore, steadily make the lessons and assumptions of the past--and the present--obsolete. In fact, many management thinkers believe that no working business strategy will be valid 10 years from now.

To achieve success in the 1990s, CEOs must accept that fundamental change is needed to turn "have-not" businesses into "haves," and that constant change is needed to keep the "haves" ahead of the pack. Success also will require a new attitude toward marketing and strategic planning as well as markedly different business strategies and new sets of business assumptions.

In our view, success will require nothing less than a different business.
COPYRIGHT 1993 American Foundry Society, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:adoption of corporate strategies by chief executive officers
Author:Gibson, Tom
Publication:Modern Casting
Date:May 1, 1993
Words:951
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