C.K. Prahalad on Managing in a Volatile Market EnvironmentYou can get an overview of the thinking of C.K. Prahalad (Ross School of Business at the University of Michigan) concerning how firms should gird themselves to deal with a volatile market environment by reading the one-page column he wrote for the September 21 issue of BusinessWeek.
Prahalad's central point is that in today's environment firms must structure themselves so they are able to operate with agility and they must do so in a way that, however paradoxical it may sound, is compatible with maintaining a consistent strategy.
When you read the column, you will see the steps Prahalad would have firms take to protect themselves from the risks associated with volatility, such as conserving cash, converting fixed costs to variable costs, and focusing on core competencies. I would call particular attention to his comments on the type of human resource management that is required in order to have a flexible workforce:
To better handle the constant project turnover, employees are cross-trained in many different skills. This requires an arsenal of training programs. Employees are regularly tested, and the hallmark of the best of them is the ability to learn quickly.There is a clear affinity between what Prahalad is saying here, and the nature of needed employee capabilities and qualities in a "post-Fordist" organization discussed in last Tuesday's post.
Having this much flexibility in a staff, and within each staffer, forces these companies to equip their managers with instant access to data on what each employee can do and where they are physically and in terms of the finish date of their current assignment. All employees know they will be moved from one assignment to another, and in many cases across the world. It becomes the cultural expectation.