Essay about Article Review of When Growth Stalls

780 Words 4 Pages
Article Review of When Growth Stalls

Review of: Olson, Matthew S., Van Bever, Derek ,Verry, Seth. 2008. When Growth Stalls. Harvard Business Review, 51-62.

The article raises the issue of revenue growth stalls that affect even the most successful companies. The article focuses on four major causes of the crisis. The first cause is the premium-position captivity that is”the inability of a firm to respond effectively to new, low-cost competitive challenge or to a significant shift in customer valuation of product features” (p.54). The second reason is the innovation management breakdown that is”some chronic problem in managing the internal business process for updating existing product and services and creating new one” (p.56). Third
…show more content…
Next, 3M fell into the innovation management breakdown trap when they decided to decrease R&D expenditures below their conventional average and shifted the R&D activities to the company’s divisions. Accordingly, “major new-product development activity was replaced by incremental product line extensions” (p.56) that resulted in a major revenue stall. The premature core abandonment cause is illustrated with the Kmart example. While the company was investing in a range of unrelated businesses searching for growth, Wal-Mart developed effective distribution and inventory systems. Kmart’s management failed to monitor and match these systems and fell far behind its rival. Hitachi’s example illustrates the talent bench shortfall. One of the leading causes of the stall was the company had executive management that lacked capabilities.

The concepts of the growth stall and its main underlying reasons highlighted in the article are closely related to many firms that functioned or that are still functioning today. Authors demonstrate that the crisis most often results from poor strategic decisions made by management and concludes that guarding against growth stall should be an important part of the strategy program. Since the article underlines those decisions that are strategic in nature and that affect a firm’s performance, the article is closely related to the content of the strategies management
Open Document