Boundary Risk and What It Means for Value Creation

Abstract

This article focuses on strategic risks that companies absorb when they are unprepared—or unable—to develop new ways to create customer value. Using real-world examples, the article describes what happens when senior executives are lulled into complacency, causing them to turn a blind eye to emerging opportunities to drive sustainable revenue. In particular, the article profiles how other companies have successfully adapted.

What constitutes value for customers is ephemeral, adding risk to corporate strategies. Yesterday's cash cow can become today's obsolete product. Leaders must continually define what ‘prospective customer’ means in the context of their industry. They must figure out which products to develop and sell. They must learn how customers intend to buy what they and their competitors, produce. But not every executive fully understands the grave importance for solving these problems. In just five years, revenue sources for most companies will be quite different from the ones they depend on today, and some will not make the transition.

There are no ordained roadmaps for addressing boundary risk, but cited in the article are tactics common to the successful companies: acknowledging the risks, having adequate financial capacity to absorb failure and fostering a culture that accepts those outcomes, along with successes.