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Published: November 1, 2001

 
 

Security, Strategy, and the Commercial Enterprise

In the post-911 world, companies are faced with the challenge of simultaneously promoting openness and protecting the firm. To achieve this goal, senior executives must understand one fundamental principle: Security and strategy are interdependent.

President George W. Bush has confirmed what many of us in business already understood intuitively: The new war on terror will be fought not just by governments and soldiers, but also by the companies, large and small, that comprise the global economy — the terrorists’ real target. “Terrorists want to turn the openness of the global economy against itself,” the President told executives attending the Asia-Pacific Economic Cooperation forum in Shanghai recently. “We must not let them.”

Rising to that challenge, though, will not be easy. If we are to surmount the grueling test the free world now confronts, we must adapt both national and corporate strategies toward an unfamiliar but absolutely necessary goal: promoting openness and maintaining security at the same time.

“If we are to surmount the grueling test the free world now confronts, we must adapt both national and corporate strategies to maintain openness and security at the same time.”
Managing Contrary Forces
This task is made harder by its apparent internal contradiction. Our whole way of doing business has long been evolving toward greater openness and more individual empowerment. But as the assaults of September 11 have shown, transparency and empowerment allow technological, political, and social forces, abroad and at home, to threaten us. Yet to withdraw into protectionism, while a natural instinct, will prove far deadlier than Al Qaeda and its associates. From the NATO alliance to the airline industry’s Star Alliance, we have learned the value of diversity, collaboration, and partnership. Reversing the trend toward increasingly rapid technology transfer, global communications, and free capital flows is a recipe for moral decay, economic ruin, and entrapment, especially of the poor.

How can our nation and our companies preserve openness in the face of threats from suicide bombers, bio-terrorism, information warfare, and others as-yet unperceived? Clearly, security balanced with openness now must rise to become part of the CEO agenda. We suggest a framework based on six principles:

1. Security and strategy are interdependent. U.S. military commanders integrate security — force protection — into their strategic and tactical plans for accomplishing their missions. Indeed, guarding the ability to accomplish the mission is the commander’s primary force-protection goal. A business must assess the vulnerability of its people, physical and intellectual assets, and relationships with customers, and then assure the continuity of its business operations. Ultimately, companies will need to redesign their critical business processes and information flows to enhance security and maintain openness with the smallest possible increases in costs.

2. In establishing and maintaining corporate alliances, security must become a factor. The de-integration of the vertically integrated firm has benefited many companies, both domestically and globally. But the extended enterprise can reach too far, exposing a company’s core operations and competencies to the flaws in far-flung allies. Those weaknesses can range from data security to physical protection of overseas facilities. The answer will not be wholesale reintegration, for that would be economically counterproductive. Instead, companies will need to conduct new forms of due diligence on would-be alliance partners. Existing alliances should reevaluate their linked physical, personnel, and cyber-security processes. How will the alliance respond jointly and immediately to threats?

“A business must assess the vulnerability of its people, physical and intellectual assets, and relationships with customers, and then assure the continuity of its business operations.”
3. Your greatest business vulnerability may be with partners in your value web. A firm is only as strong as its weakest ally — or the links among them, for that matter. Indeed, it’s those links that are under the most potential pressure right now. Inevitable decisions on homeland security will affect the way companies transact business, especially if they place barriers on the open and rapid transportation of goods. In the three days after the September 11 attacks, border closings in the U.S. cost the General Motors Corporation $30 million in supply chain disruptions. At the very least, the headlong rush toward just-in-time delivery systems must be tempered by “just in case” planning, as companies in manufacturing industries and retailing begin to rethink the advantages of inventory-less operations.

 
 
 
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Resources

  1. “Terrae Incognitae: Survival Guides for Curious Globalists,” s+b, 2Q 2001 Click here.
  2. “What Does Business Owe Society,” s+b, 4Q 1997 Click here.
 
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