Harvard Business School Publishing's Harvard Business Review - September 2009 PDF

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Like its rivals, HP felt that the industry needed more time to develop an alternative. The company was able to persuade regulators to postpone the ban by one year so that it could complete trials on organic and trivalent chromium coatings. This saved it money, and HP used the time to transfer the technology to more than one vendor. The vendors competed to supply the new coatings, which helped reduce HP’s costs. Companies in the vanguard of compliance naturally spot business opportunities first. In 2002 HP learned that Europe’s Waste Electrical and Electronic Equipment regulations would require hardware manufacturers to pay for the cost of recycling products in proportion to their sales.

But when conditions are unfavorable and they are going to work against you whatever your resources and capabilities might be, a structuralist approach is not a smart option. This often happens in industries characterized by excess supply, cutthroat competition, and low profit margins. In these situations, an organization should adopt a reconstructionist approach and build a strategy that will reshape industry boundaries. Even when an industry is attractive, if existing players are well-entrenched and an organization does not have the resources and capabilities to go up against them, the structuralist approach is not going to produce high performance.

They believe it will add to costs and will not deliver immediate financial benefits. Talk long enough to CEOs, particularly in the United States or Europe, and their concerns will pour out: Making our operations sustainable and developing “green” products places us at a disadvantage vis-à-vis rivals in developing countries that don’t face the same pressures. Suppliers can’t provide green inputs or transparency; sustainable manufacturing will demand new equipment and processes; and customers will not pay more for eco-friendly products during a recession.

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Harvard Business Review - September 2009 by Harvard Business School Publishing

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