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'Strategic Flexibility' Spells Success for Today's Multi-Business Enterprises According to Deloitte Research.

Strategically Flexible Companies Find a New Way to Balance Divisional

Independence and Corporate Control

NEW YORK, June 11 /PRNewswire/ --

To gain the edge in the high-stakes, high-uncertainty world of communications, some CEOs have discovered that the key to long term success is a new approach to balancing divisional autonomy with the need for company-wide cooperation, says a new Deloitte Research study.

Dr. Michael Raynor, the study's author, examines how leading communications companies such as Sprint, BCE, and AT&T are exploring new territory in the management of multi-business firms in the report Strategic Flexibility: Coping with Uncertainty in a World of Billion Dollar Bets. "Contrary to conventional wisdom, responding effectively to the changing environment requires more, not less, direction from the center," said Raynor, a director for Deloitte Research.

For example, Sprint, a forerunner in exercising "strategic flexibility," responded to emerging opportunities for integration through strong centralized leadership. The study quotes Mike Fuller, CEO of Sprint's Local Telephone Division, who explained the impact of closer cooperation between Sprint's otherwise highly independent divisions. "Capitalizing on the evolving relationship between our local telephone and consumer long-distance divisions, we launched One Sprint which expanded our local phone business by offering a full range of Sprint services," said Fuller. "The bundling of services was a major win for the company. In areas where Sprint was the local provider, we achieved 20% greater market-share in consumer long-distance than in other areas. And, our local telephone group became the long-distance division's best distribution channel."

According to Raynor, "the question for companies now is not whether they need to be flexible and responsive, but how. It is a complex task and has cascading effects on how executives manage a wide range of activities within the firm: whether they cluster divisions into groups, for example, and how they think about compensation, to name only two."

Organizations benefiting most from this dynamic approach to corporate strategy are those operating in highly unpredictable competitive environments, such as the communications industry, where many companies feel that competitive pressures are forcing them to make significant investments with long-term implications despite tremendous uncertainty about the future. Among the various strategic trade-offs facing major communications firms are:

-- expanding and improving existing infrastructure vs. deploying new

infrastructure;

-- enhancing existing services vs. developing new, potentially

disruptive technologies; and

-- defending entrenched domestic positions vs. expanding globally.

In a recent article in the Harvard Business Review, entitled "Lead from the Center: How to Manage Divisions Dynamically," which Dr. Raynor co-authored with Professor Joseph L. Bower of the Harvard Business School, the concept of strategic flexibility is applied to a number of different industries, including high tech manufacturing and the global media business. Raynor and Bower conclude that at the core of strategic flexibility are four management tactics: 1) Combine strict financial controls with a flexible structure; 2) Be a player and be informed; 3) Have a lean, but powerful corporate office; and 4) Spend time on strategy.

As uncertainty and change become increasingly present in a broad range of industries, Raynor expects many more firms to benefit from an increasingly flexible approach to strategy.

To obtain a copy of the strategic flexibility study or the Harvard Business Review article, please contact Rebecca Patrick at 212-419-8320 or rebecca.patrick@citigatedr-ny.com.

About Deloitte Consulting

Deloitte Consulting is one of the world's leading consulting firms, providing services in all aspects of enterprise transformation, from strategy and process to information technology and human resources. The firm's professionals help clients, from new economy start-ups to Fortune 1000 global organizations, to create, reinvent and defend their business models by guiding them through the complexities of the evolving digital economy. Deloitte Consulting is part of Deloitte Touche Tohmatsu, one of the world's leading professional services firms, providing world-class consulting, assurance and advisory, and tax services through nearly 90,000 people in over 130 countries to nearly one-fifth of the world's largest companies, public institutions and successful fast-growing companies. For more information about Deloitte Consulting, visit http://www.dc.com.

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Date:Jun 11, 2001
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