Companies Should Invest in Early Warning Systems

Financial News, November 16, 2003 | Go to article overview

Companies Should Invest in Early Warning Systems


Byline: Kit Bingham

Chief executives, like boy scouts, should be prepared for the momentous strategic disaster that threatens every company.Leonard Fuld, president of Fuld and Company, the US competitive intelligence specialist, said companies should invest in early warning systems to alert them to developing threats.

He said: "There are business tsunamis out there. Early warning is about positioning yourself for the future, not predicting it."

The tsunamis, or destructive forces, might stem from regulatory intervention, market shifts or developments by competitors. In the pharmaceuticals sector, the introduction of price controls is a possible threat, while the demand for alternative energy poses uncertainties for oil and gas groups.

Fuld said: "You need strategies in your pocket in case an eventuality takes place. If you wait until the tsunami is upon you, it's too late."

A recent Fuld survey of company strategists found that 93% expected a sharp business shock in the next two years, but only a handful had plans in place to deal with it. "This is an area where I fear for companies," said Fuld.

Shell, the Anglo-Dutch energy group, takes strategic threat assessment seriously. Karl Rose, manager of strategic intelligence at Shell, said his unit defined risk as uncertainties surrounding the volume and timing of cashflows. He said: "It has everything to do with strategy. We identify and analyse risk. We don't manage risk - that's the job of management."

Rose said his remit covered subjects ranging from social trends to global politics. On the social side, his team's research found that young men would not buy a new car powered by a hydrogen fuel cell Shell had helped to develop because it did not make a throaty roar as it accelerated. On a larger scale, Shell keeps a close eye on events that are shaping the world.

Rose said: "For us, geopolitics is very important, we cannot ignore it. …

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