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Understanding the power of markets is central to much of our work. We believe that the boundaries and even the core strategic functions of firms are being fundamentally transformed by three fundamental forces that have been accelerating since the early '90's:
First, the reemergence of an integrated global capital market and the relentless demands for better returns by the institutional investors that dominate that market.
Second, the integration in a single generation of over three billion new producers and consumers into the global market for goods and services.
Third, the revolution in information logistics, which has vastly increased the ability of service businesses as well as manufacturers to effectively access the global labor market while making both financial and product markets more transparent and competitive. | |
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The net impact of this market-centric global economy is often, wrongly described as “globalization.” We believe it is more accurate to observe that the balance of economic power is shifting from institutions -- including the traditional business firm -- back towards markets. We are well into an era of accelerating creative destruction, with the traditional firm squarely in the crosshairs of market forces. In our view, companies must acquire a new set of core skills to harness the raw power of markets, or risk being crushed by them.
Amid increasingly brutal global competition in all goods and services markets, the key to business success is no longer managing the internal processes of the firm better than competitors. The only thing that really matters is identifying and executing against rapidly changing customer demands before competitors can. The traditional tools of firm-centric business strategy and management practice, as well as those of conventional management consulting, are increasingly ineffective in a world where markets are far more powerful than firms. Becoming more efficient is not enough.
The way for firms to prosper in the New Economoy is to transform themselves as rapidly as possible into value-enhancing intermediaries between changing customer demands and dynamic global supplier markets for goods and services. This requires a disciplined, rigorous and measured process to balance what firms produce internally to meet customer demand and what they contract for in global supplier markets. This requires a set of analytical and execution skills that transform the relationships between the firm and its customers and suppliers to create real strategic advantage. Firms must move beyond conventional approaches to organizational effectiveness and firm-centric strategic thinking to acquire these skills. Direct2Market can help them do this. | |
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