Knowledge that Transforms

Top management consensus on corporate objectives and on the competitive weapons employed to attain them was studied in 12 non‐diversified public corporations. It was found that while agreement on both is associated positively with economic performance, agreement on means is significantly more important—in fact, agreement on goals without agreement on means correlates with poor performance. This suggests that strategy makers should concentrate on reaching consensus concerning means rather than ends (corporate goals) when formulating strategies for single‐mission enterprises.

The paper presents a systematic approach for early identification and fast response to important trends and events which impact on the firm. Two versions of such an approach are described: a strong signal and a weak signal strategic issue management system . Strategic issue management, which responds to signals in “real time”, is compared to periodic strategic planning, and criteria for choice among the three are proposed.

Two characteristics of services—intangibility of the offering and simultaneity of production and consumption—have important implications for strategic planning. Four of these implications are described. Life cycle, experience, and market share, which are the usual determinants of profitability that provide guides for strategic planning are not easily applied to the service firm. Therefore growth strategies need to be revised. In its second part the paper suggests alternative growth strategy paths for service firms. It brings forward three main remarks. First, the service firm should not overuse its delivery system and its image by attempting to serve the needs of too many sociodemographic segments. Second, service development and concentric diversification are not sequential choices; the latter is not so distant from the former as may be commonly perceived. Third, expansion to out‐of‐country markets represents a risk discontinuity; it should be approached by service firms with considerable flexibility and willingness to interact with different cultures.