The document summarizes key points from a presentation on competing for the future. It discusses how companies must shift their focus from short-term goals to long-term possibilities. Rather than just reducing costs, companies need to reinvent industries and regenerate strategies. The presentation also examines the difference between "numerator management" which grows net income through new opportunities, and "denominator management" which focuses only on cutting assets and costs. Companies that do not anticipate and shape future industry changes risk becoming "road kill" unable to adapt.

1. Presentation By: Manish Bhatnagar
Enrollment No.: 6010091012357

2.  Authors:
 GARY HAMEL: A professor of strategic &
International management at London Business
School and chairman of a strategic consulting
company, Strategos
 C.K. PRAHLAD: A professor of business
administration and professor of corporate strategy
and internal business at University of Michigan
2014-11-13 05:11 Presented by Manish Bhatnagar Enrollment No.: 6010091012357 2

3. ▪ Shifts the focus from:
▪ What is feasible in short term to what is possible in long term.
▪ Re-engineering processes to reinventing industries.
▪ Reducing overheads to regenerating strategies
▪ Describe the strategy to New generation Managers, how
they should look at the future.
▪ Focus on core strength as a route to future strategies.
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4.  In an effort to satisfy investor requirements, ROI is usually
the goal
 There are 2 components to this calculation a numerator
and a denominator.
 This leads to 2 options for top management - numerator
management and denominator management
 Surest improvement in ROI is cut the denominator.
 To follow this way of improvement top management only
needs no more than a red pencil.
 This is called top management obsession with
denominator.
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5.  Numerator = Net Income
 Denominator = Investmnt, Net
Assets or capital Employed(Total
Assets-Current Liabilities)
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6. How To Calculate ROCE( Return on Capital Investment)
ROCE = Earnings Before Interest and Tax (EBIT)
Capital Employed
(Total Assets – Current
Liabilities)
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7. Numerator Management
To grow the numerator (net income), top management
must have:
a point of view about where new opportunities lie
(calculative investment , good return)
must be able to anticipate changing customer needs
(diversify themselves along with customer needs)
must have focused on invested in building new core
competencies (strong are of the organisation)
must provide clear and consistent leadership
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8.  The US and Britain have produced an entire generation of
denominator managers.
 They can downsize, deduct, delay & divest better than any body.
 Denominator management is an accountant’s shortcut to asset
productivity.
 In a world where competitors are capable of achieving 5, 10 or 15%
real growth in revenues, aggressive denominator reduction, under a
flat revenue stream, is simply a way to sell market share profitably.
Market strategists term this a “harvest strategy” and consider it a no-brainer
(easy to answer or make)
 Many managers realize that it is a lot harder to raise net income
(numerator), than to cut assets and headcount (Denominator).
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9. If senior executives don’t have reasonably detailed answers to the “future” questions, and if
the answers they have are not significantly different from the “today” answers, there is little
chance that their companies will remain market leaders.
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10. Chapter Wise Understanding…..
Chapter 1: Getting Off the Treadmill
In addition to paying attention to their position in the current market, companies must focus
more on creating the future of the industry and their stake in it.
What if the billion of dollars / brain power spent/ written off on restructuring/
reengineering would have been applied to creating tomorrows market?.
A large restructuring/ reengineering is infact a penalty that company must pay for not having
anticipated the future.
Any company that is more successful in restructuring/ reengineering will find itself getting
smaller faster than it is getting better.
Any Company that succeeds in restructuring & reengineering but fails to create the market
of the future.
Such a company will find itself on a treadmill. Just trying to keep one step ahead of another
step which is steadily declining margins and profits of yesterdays business.
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11. Chapter Wise Understanding…..
Chapter 2: How Competition for the Future is Different
We are standing on the verge of a revolution as profound as that which gave birth to modern
industry.
Existing industries education, health care, transpiration, telecommunications ,pharmaceutical,
retailing will be profusely transformed
Many of tomorrows mega opportunities are in infancy stage and companies around the world
are competing for privilege of parenting them.
Competition for the future is competition to maximize the share of future opportunities.
In this race for future there are drivers, passengers and road kill.
Those who drive industry revolution have clear view of where they want to take their industry
and are capable of orchestrating resources to get there will be handsomely rewarded.
Failure to anticipate and participate in opportunities of future both companies and nations will
loose its economic standing
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12. Chapter Wise Understanding…..
Chapter 3: Learning to Forget
Like dinosaurs threatened by cataclysmic climate changes , companies often find it impossible
to cope with a radically altered environment.
Dinosaurs died off because species was enable to adopt fast enough to changing conditions.
Unless a company wishes to meet the fate of the dinosaurs, it must stop looking in the rear
view mirror.
For corporate dinosaurs a company’s genetic coding can be altered in many ways.
Company that fails to reengineer its genetic coding periodically will be much at the mercy of
environmental upheaval.
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13. Chapter 4: Competing for Industry Foresight
The goal of competition for industry foresight is to built the best possible assumption base about the
future.
Develop the prescience needed to proactively shape industry evolution.
Industry foresight gives a company the potential to get to the future first stake out leadership
position.
Industry foresight informs corporate direction.
Industry foresight should be clear and strong enough that it could meet even the unarticulated needs
of organization.
Foresight arises from wanting to make a difference in people's lives.
Trick is to see the future before it arrives.
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14. Chapter 5: Crafting Strategic Architecture
Organisation have to focused on:
"Not only must the future be imagined ... it must be built.“
Architecture must be capable to of dreaming the things not yet created.
Strategic architecture is a set of plans on how to turn your dream into reality.
Every company needs a strategic architecture.
Top management must have a point of view on which new benefits and functionalities will be offered
to customer over next decade or so and how customer interface need to be changed to enable the
customer to access these most effectively.
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15. Chapter 6: Strategy as Stretch
" Strategy must be built upon the juncture of where the firm is and where it wants to be.
Getting to the future first is a matter of resourcefulness rather than resources.
Resourcefulness stems not from an elegantly structured strategic architecture but from deeply felt
sense of purpose, a broadly shared dream and a truly seductive view of tomorrow’s opportunity,
Strategic intent is the term for such an dream.
Strategic intent implies a significant stretch for the organisation where current capabilities and
resources are manifestly insufficient to task.
Traditional view of strategy focuses on the fit between existing resources and emerging opportunities
When what is feasible drives what is desirable an ambitious strategic intent becomes impossible.
 Senior management must be ready to commit to a goal that lies outside the planning horizon.
 Strategy as a stretch is a strategy by design in the sense that top management does have a relatively
clear view of the goal line and broad agenda of capability building and challenges that lie ahead
between today and tomorrow.
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16. Chapter 7: Strategy as Leverage
The real issue for many struggling managers is not a lack of resources, but too many priorities,
too little stretch, and too little creative thinking about how to leverage resources. ( Lack of
recourses is not the problem but how to use the available resources in effective & efficient way
is the main area of concentration.
Chapter 8: Competing to Shape the Future
Companies have to set their rules for the future in such a manner that they decide how they
want to deal with their competitor in future; Simply they are the rule makers for their
competitors.
Chapter 9: Building Gateways to the Future
Every top management team is competing not only to protect the firm's position within
existing markets, but to position the firm to succeed in new markets. (Not only capturing new
market but also ensuring success over their)
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17. Chapter 10: Embedding the Core Competence Perspective
For the core competence perspective to take root in an organisation the entire management
team must fully understand and participate in five key competence management task.
Identify existing core competencies
Establish core competence acquisition agenda
Building core competencies
Deploying core competencies
Protecting and defending core competencies leadership
 All too often, opportunity that falls in the cracks of existing market gets overlooked.
Chapter 11: Securing the Future
What counts most is not hitting a bulls' eye the first time, but how quickly one can improve
one's aim and get another arrow on the way to the target. Its not counted that who hit the
target most but how ones improve his quality to hit that target is taken into consideration
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18. Chapter 12: Thinking Differently
If the goal is industry leadership restructuring and reengineering is not enough.
To build leadership a company must be capable of reinventing its industry.
To build leadership a company must be capable of regenerating its core strategies.
It is not enough to become smaller and better.
A company must also have capacity to become different.
But to ultimately be different company must think differently.
To have a share in the future a company must learn to think differently about three things:
The meaning of competitiveness
The meaning of strategy
Meaning of organisation
"To ultimately 'be' different, a company must first 'think' differently." To share in the future,
a company must learn as much about thinking differently as it does about what to do.
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19.  In order for a company to be successful it must create its future
instead of following other companies into the future.
 The goal is how do one create a company that can innovate and
change.
 EVERYONE in the company needs to be creative and innovate.
How do we unleash the creative potential of everyone .
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