Page 159 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

egories. It was also an unusual move because diversification was
the norm in the Japanese pharmaceutical industry, and under-
performing units were often subsidized by profitable ones. The
move paid off for Takeda, however. From 2002 to 2003, its mar-
gins increased by 2.5 percent, and EBIT increased by 29 percent.
These examples highlight the importance of a good divest-
ment strategy. At a time when most companies should be exam-
ining their business portfolios, looking for potential divest-
ments, most are not. In our survey of company executives, only
44 percent of respondents said they had taken divestment-
related action in 2009. Fewer still said they were planning such
actions in 2010. In contrast, some 73 percent of companies were
planning to increase M&A activity in 2010.

■ EMPLOY GAME-CHANGING STRATEGIES ■

The damaged economy opens up some opportunities for game-
changing strategies. True game-changing strategies are, in
essence, forms of fundamental business model innovation. They
may well draw on many individual elements of the strategies we
have already discussed, but what distinguishes business model
innovation is the number of strategic pieces being changed.
For companies that respond not just by changing a single com-
ponent but by changing much or all of their business system, the
Great Recession and the following slow-growth period can be a
watershed. BCG analysis shows that business model innovation
provides greater returns over the short and long term when com-
pared with individual process, product, or service innovations.
After three years, companies completing successful business
model innovation were found, on average, to have delivered a

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