According to Yoram “Jerry” Wind, professor of marketing at the University of Pennsylvania’s Wharton School and founding director of Wharton’s SEI Center for Advanced Studies in Management, “wealth is created during periods of uncertainty. Making money depends on identifying opportunities in a turbulent marketplace.” Wind proposes three essential characteristics of organizations that flourish in times of turmoil:
1. Disciplined opportunism. Think of the world right now as one magnificent fire sale. “There are huge tactical opportunities to buy cheap assets,” Wind says. “You can buy technology or talent for very little money and build assets that will create the great companies of the future. But you need to have discipline about this,” he continues. It’s one thing to snap up a failing technology outfit for half of its book value. It’s another to land an asset that truly plays to your company’s strategic strengths.
2. Continuous learning — and unlearning. According to Wind, “The fundamental challenge is to ask, what do we do, and why do we do it? We do things because they’ve worked in the past. But those things may not work in the future.” In a fast-changing marketplace, the assumptions driving your current vision and strategy won’t stay compelling for long. “We talk about the learning organization,” says Wind. “But we have to balance learning with unlearning. What can I learn from the past, and how can I unlearn the things that might constrain me? Balancing the two, learning and unlearning, must be a dynamic process. And the CEO must drive this. The CEO should be the ‘chief unlearning officer.'”
3. Adaptive experimentation. In a turbulent environment, Wind says, no strategy is optimal. So you have to create an environment of continuous experimentation — a way to design projects that allows you to learn, adapt, and change. These experiments must be big experiments, because it’s hard to measure the difference that small changes make. But even more important, why waste the resources required for experimentation on something that isn’t really new?
How does this impact the hospitality industry? The disciplined opportunism means that we will wait to see what assets are going back to lenders that can be snapped up at 60 cents on the dollar and we are finding that there are no steals out there. Hence, now it is time to look for those 20 percent returns…location, brand, barriers to entry, and dynamic and diverse markets. There are deals out there for all.
Learning and unlearning? Well, we learned all about getting business through global distribution systems. All that was changed with the Internet…hotel guests go online to book billions of dollars in rooms. That means a new “middleman” to pay and to look to for business. What is the net profit of a room if you get too much business from middlemen?
Adaptive experimentation does not mean “throw away your strategy.” It just means that you are going to need to experiment a bit…perhaps a new internet strategy will occur to you when you see where new business is coming from! Another strategy might be to create or improve your own ability to influence business through your web site or perhaps through social media marketing.
At the end of the day, strategy now includes all of the above. Strategy has always been about staying at or ahead of the curve and seeking competitive advantage.