Summary of The Three Tensions

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Rating

7

Qualities

  • Innovative

Recommendation

Dominic Dodd and Ken Favaro explain how companies try to solve the conflicts between competing business goals by making unnecessary compromises, and then get trapped in the never-ending spin of “the corporate cycle.” Their book shows how to resolve three central “tensions”: whether to grow or profit, whether to take a short view or a long view, and whether to favor individual units or the larger firm. Their case histories detail how leading companies (Cadbury Schweppes, Gillette and Nokia) thrived by resolving their tensions – and how other major corporations (General Motors and Coca-Cola) lost ground by not heeding them. Dodd and Favaro’s “customer benefit” mantra is simple but appealing, and their writing is pretty sharp. The authors make their case using Russian proverbs, metaphors such as “the mud hut conundrum” and amusing anecdotes of managers caught on the tension treadmill. Their “new way of thinking” sometimes evokes a motivational speaker at the local Holiday Inn, but the authors readily concede that carrying out their advice isn’t easy. They quote some blunt wisdom from corporate executives to add a needed dose of real world gravitas. getAbstract recommends this useful analysis to managers who are trying to balance equally worthy priorities.

About the Authors

Dominic Dodd is managing director of an international consultancy and Ken Favaro is its co-chairman.

 

Summary

Trapped in the Spin Cycle

You see it in the business news all the time. A company announces a major acquisition to help it diversify, but later its leaders decide it has become unwieldy, and they divest and trim costs. Companies invest for the long term and then retrench to improve today’s numbers. They decentralize into autonomous units to encourage adaptability and quick response, and then announce a consolidation to get economies of scale. Welcome to “the corporate cycle,” in which companies strive endlessly to stay competitive by swinging back and forth between strategies.

“The three tensions” that confront every company lie at the heart of this corporate cycle. They are: “profitability versus growth, short term versus long term, whole versus parts.” Most companies do well with one side of each tension, usually at the expense of the other side.

For example, a corporation will launch a farsighted “Brave New World” approach emphasizing growth and the future. But, then profits and short-term performance drop, so the company’s leaders hustle to get “back to basics.” When growth and the long-term outlook begin to suffer under that new regimen, the CEO – or perhaps...


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