Industry Transition and the General Manager

Industry transition to maturity, especially when it requires many of the strategic adjustments described above, often signals a new “way of life” in a company. The excitement of rapid growth and pioneering are replaced by the need to control costs, compete on price, market aggressively, and so on. This change in the way of life has important implications for the general manager.

The atmosphere of the company may well change in ways the general manager may find undesirable. He or she cannot provide as much opportunity and advancement for personnel and must increas-ingly measure performance closely through detailed and formal sys-tems. The old informality and personal friendships may be hard to maintain in such an environment. The skills required of the general manager shift as the key requirements of the organization shift. Tight cost control, cross-functional coordination, marketing, and so on may be very different skills than those required to build the orga-nization in a rapidly growing industry. These new skills are both strategic and administrative, and thus the adaptation is doubly diffi-cult.8 Finally, the mood or feeling of excitement and pioneering the general manager has felt in the past may give way to one of increas-ing pressure to keep up and concern for survival. Often a sort of malaise appears.

Thus transition to maturity is often a difficult period for a gen-eral manager, particularly for the founding entrepreneur but not ex-clusively so. Some unfortunate but common outcomes are as follows:

  • Denies transition: The general manager fails to recognize and accept the changes required or lacks the required skill As a result, the historical strategy and organizational arrangements are doggedly continued. This sort of rigidity is a com-mon reaction to strategic difficulty not only during transition but also in other adverse company situations.9
  • Leaves active management: Recognizing that either the new way of life in the company is no longer satisfactory or that his or her managerial skills are inadequate for the new environ-ment, the general manager relinquishes control.

The implication of industry transition for the general manager carries an important message not only for the general manager him-self but also for the corporate management of diversified compan-ies. The standards for measuring business unit managers usually need to change in a mature business, as do the skills and orientation of the general manager. It may be, for these reasons, that rotation of managers is appropriate as a division enters maturity. There is a ten-dency in diversified companies to apply the same standards to divi-sion managers regardless of their fundamentally different strategic situations and to expect managers skilled in one setting to manage well in another. Attention to the managerial implications of transition to maturity is one way to avoid these difficulties.

Source: Porter Michael E. (1998), Competitive Strategy_ Techniques for Analyzing Industries and Competitors, Free Press; Illustrated edition.

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