Rejuvenating the Mature Business. By Charles Baden-Fuller and John M Stopford. Routledge; 232pp; £18.99. Review by Malcolm Wheatley.
Must companies go through life cycles? Having grown and matured, is it inevitable that they should then decline and shrink? And instead of developing strategies to cope with decline, could they not instead develop approaches with which to counter it? The authors of this book - both academics - have attempted to find out.
Their theme is straightforward. "Maturity is a state of mind," they say. A corporate mindset that accepts the inevitability of decline becomes self-fulfilling. Challenge the rules instead, they say: innovate, integrate sales and production, improve quality. A business can be profitable even in an unpromising industry. The evidence shows that mature industries still offer good prospects for success. Managers may need to adopt different strategies, but it can be done. Lord Hanson will surely be relieved.
So what should the strategies be? The authors demonstrate them via a series of case studies that include Hotpoint, Benetton, the US financial institution Banc One, castings manufacturer William Cook and cutlers Richardson. Combine high quality and low cost. Combine variety and low cost. Combine speed and low cost. Fragment the market, then exploit the resulting niches. And so on. It's all good textbook stuff, laced with a some strategy theory.
But there is little here that is new, and much that is aged or repetitious. The story of quality guru W Edwards Deming and Toyota is now too well known. Schreiber's turnround of Hotpoint dates from as far back as the mid-1970s, so does Richardson's renaissance. The authors' claim - made in the foreword - that much of what they say is controversial - is simply not true. Their arguments might not have appeared in business strategy texts before, but they have certainly been amply expounded - even in books which are cited by the authors themselves, such as Womak, Jones and Roos's The Machine That Changed the World and Kantner's When Giants Learn to Dance. If this book is a "landmark in corporate strategy", it is only theory catching up with reality.
Nevertheless, the book succeeds in weaving many disparate strands into a coherent whole. It is aimed at businesses which are at a particular stage in their evolution, and its nine chapters (together with a couple of useful questionnaires) can be seen as a rejuvenator's manual. Having persuaded readers that rejuvenation is possible, the authors identify and discuss the options available for achieving it - with ample reference to their case studies, plus more general examples. The focus is on strategy, and on the suitability of certain improvement approaches.
Businesses may stumble upon the benefits of quality improvement, rapid response or innovation - or they may not. They may simply adopt these strategies because everyone else is doing so. Baden-Fuller and Stopford want them to see where they are going. They lead the reader through the logic of identifying the most appropriate path.
One possible path is illustrated by the case of Richardson's "Laser" knives. The authors recount the details of chairman Gerry Hahn's brief to his management. "I've got the name, I haven't got the product. We'll call it Laser. All we have to do is develop a knife that doesn't need sharpening."
The strategy having been identified, the focus switches to implementation. Managements are too often cynical, bemused or even exhausted by past failures. The middle and lower levels of organisations almost always need coaxing to raise their sights.
The problems of motivating managers in stagnant or shrinking organisations are very different from those found in growing businesses. Carrots are few and sticks are already an accustomed part of everyday life. The authors do not pretend to know all the answers, but they survey the range of possible approaches - drawing, again, on the extensive case material.
The book's principal failing is its rather academic approach. Is it a "how to" text or a learned discourse? The authors never seem quite sure. Young MBAs will discover much that they did not know here. A seasoned manager looking for answers will have to sort through a lot of chaff first.
The summary tables are first class, yet many of the diagrams should have been left on the lecture theatre blackboard. There are editing irritations: the text is over-italicised, and the authors are so keen to extol Schreiber that they never get round to telling us his first name. This is a good book but it could have been much better.
Malcolm Wheatley is a freelance consultant and writer.