The 2020 Mid-Year Economic Update_long

Tip: Reallocate Resources to Take Advantage of New Opportunities

Resource reallocation is at the crux of meaningful change.

In order to capitalize on new opportunities in a rapidly changing business environment, companies should continuously reassess how resources are allocated, according to author Rita Gunther McGrath in the MDM interview Redefining Competitive Advantage.

Companies that do this well, McGrath says, are constantly investing in something new while withdrawing resources from opportunities that are mature and beginning to fade.

“Resource allocation is at the crux of what happens in any company. If you want to change what a company does, that’s the first place to start,” she says. Although it can be difficult, companies must try to get resources out from under the core to pay for the innovations of the future.

Some investments will end up becoming the next core business, McGrath says, but not all. “You want to see some investments in options,” she says, which are small investments companies make today that buy them the right, but not necessarily the obligation, to make a bigger investment in the future.

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