Established companies like IBM, among others, have found it difficult to succeed in new business ventures. Despite countless trials, results from case studies show that strategies applied by companies in new business ventures have failed intolerably. Firstly, reputable companies have been found to be stringent on low-income ventures. Secondly, the companies emphasize on short term goals. Furthermore, established companies emphasize on immediate success. This paper will explore established companies, as shown in the case study. It will also examine their approach to leading mature, high growth, and emerging business opportunities. Additionally, the paper will examine the organization design and leadership models required to manage each type of business. Furthermore, the paper will explore ways through which companies like IBM can manage the innovation process (Applegate, Austin & Soule, 2008).
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Why established companies like IBM find it difficult to build successful and suitable new businesses
A number of events cause new business failure for established companies like IBM, among others. From the case study, IBM’s management system rewarded executions propelled towards short-term results. Focusing on short-term rewards has contributed greatly to failure in establishing new businesses. Instead, these established companies rarely focus on promoting strategic business building. In essence, such companies focus mainly on short-term goals, which keep them competitive in the business environment. Established business usually focuses on prevailing market conditions. In fact, the companies’ management keeps them involved in existing offerings and current markets. Current markets preoccupy the managers to the extent that they forget to strategies effectively for new products or new businesses.
Moreover, the kind of business model applied by established companies emphasizes on earnings per share, as well as sustained profit. New business ventures can sometimes start on a wrong note whereby the business incurs losses before it starts earning profit. However, established businesses think only on the profit margin (Applegate, Austin & Soule, 2008).
The case study also shows that established businesses ignore the emphasis on higher growth of the business as compared to sustained profit. Such emphasis is only short term since they rely on current market conditions. Additionally, most of the established businesses do not strategize effectively when gathering information on market insights for new technologies, new businesses, and emerging markets. Furthermore, most such companies lack adequate disciplines and procedures for choosing, testing, financing, and ending new business ventures.
This contributes to failure in such companies to succeed in new businesses since they put little effort into researching the ventures. Moreover, poor execution has also been seen to be a contributing factor to their failure in new business ventures. In essence, strategies applied by established companies like IBM, which emphasize maximizing, as well as sustaining profits, lead to failure in new business ventures. Essentially, starting a business involves complexities, which requires companies to be perverse, evaluate, innovate, and cut costs when necessary to avoid excessive emphasis on such ventures (Crowther, 2000).
IBM’s approach to leading mature, high growth, and emerging business opportunities
From the case study, it is clear that IBM started with emerging business opportunities, also known as EBOs. After some time, the business model utilized by IBM moved from H3 to H2. In addition, some of the new ventures were found to be redundant and hence dropped (Applegate, Austin & Soule, 2008). IBM’s approach to achieving mature, high growth, and emerging business opportunities faced numerous challenges. It should be noted that selling globally presents numerous challenges to companies. These challenges may include cultural diversity, local competitors, the economic viability of new markets, consumer behavior, and market forces, among others. It should be noted that companies must be willing to adopt flexible management strategies to achieve success in new business ventures (Clark, 2014).
Organization design and leadership models required to manage each type of business
Each business model needs to be designed and managed differently. In fact, one of IBM’s major mistakes was to design and manage the business models in the same way. This resulted in a failure to succeed in new business ventures. Companies should look at their long-term viability; they have to focus on other ways of acquiring and protecting wealth; these include customer base, product cycle, the marketplace, external environment, and other stakeholders.
Companies with a wide customer base are considered wealthy; in addition, companies with high ratings or branding are also considered wealthy. However, this cannot be achieved by utilizing the same business model for each kind of business. Therefore, it is necessary that an established company adopt different design and leadership models for each kind of business. Leadership styles are also essential for implementing organizational plans, motivating employees, and providing direction. Each kind of business venture requires a specific leadership model. The established business should consider employing various leadership models to manage their ventures in order to achieve success (Crowther, 2000).
How a company like IBM (or AT & T, for example) manage the innovation process
Creativity and innovation is a process that can be successful or faulty. Established businesses should realize that failure is also part of the process. In fact, failure is an essential part of a creative process. Failure leads to further analysis of reasons for failure, which can result in solutions with better results. In essence, failure acts as a catalyst for increased engagement in a creative process (Clark, 2014). Established companies should, therefore, view failure as part of a creative process. In fact, failure should not be considered as the end of creativity in business environments. When businesses consider failure as part of a creative environment, they tend to pursue creative goals and hence achieve great innovations. Moreover, businesses that accept failure would learn from it easily.
Therefore, IBM should make the innovation process part of its business model irrespective of its outcomes. In essence, the company should focus on both short term and long-term goals. This would help it to build its business structures around strong values aimed at mature and high growth as opposed to current market environments. The innovation process should be managed with a lot of care because failure can result in heavy losses for the company involved (Crowther, 2000).
Established businesses like IBM have found it difficult to succeed in new ventures. The failure in new ventures has been because of poor strategies, which focus mainly on short term goals. Moreover, these companies have been unwilling to sacrifice adequate resources for secondary investment options. Additionally, the companies have done very little to factor in new technologies and researches in emerging business opportunities. This has contributed heavily to established companies’ failure to strike in new market ventures. Established companies like IBM should learn that each business model requires its own leadership and management style. In fact, companies should design strategies, which are effective for each business model chosen. Companies should also ensure that adequate research and testing is done to guarantee a positive outcome in new business ventures. This would be important in reducing the rate of possible failures in achieving success.
Applegate, L., Austin, R., & Soule, D. (2008). Corporate Information Strategy and Management Text and Cases (8th ed.). New York, NY: McGraw Hill Irwin. Web.
Clark, D.R. (2014). Leadership Styles. Web.
Crowther, D. (2000). Social and Environmental Accounting. London: Financial Times Prentice Hall. Web.