The Business Book

(Joyce) #1


The impact of the 9/11 terrorist
attacks on the US in September
2001 was felt across the world; for
some businesses it proved to be
a strategic inflection point. One
such company was Victorinox,
manufacturer of the ubiquitous
Swiss Pocket Knife. The company
had been producing pen knives
since 1884, but it was hit by new
airline safety regulations that
prohibited knives to be carried
on board aircraft following the 9/11
attacks. This had a drastic effect
on Victorinox, because purchases
of its products at airports around
the world accounted for a significant
portion of its annual sales.
Corporate sales also tumbled.
By the beginning of 2002, pocket-
tool sales had fallen 30 percent in
just a few months. The company
recognized that this could
represent the start of a long decline,
and that to survive, action would

have to be taken. The development
of other products—including
watches, travel gear, fragrances,
and fashion—that could be sold
at airports was accelerated. The
company also began to explore
new market opportunities, such as
selling in China, India, and Russia.
Victorinox also took action to
preserve one of its core strengths—
a skilled and loyal Swiss work force.
Layoffs were prevented by taking
crisis measures such as reducing
shift times, canceling overtime,
encouraging planned vacations,
and temporarily lending workers to
other Swiss companies. Victorinox
not only survived, but thanks to its
new products, was able to enhance
its high-quality brand image. More
than 60 percent of the company’s
turnover now comes from items
other than pocket knives.

Averting catastrophe
To detect the approach of a strategic
inflection point, the CEO of a
company, in conjunction with the
board, must analyze all the available
hard data, listen to the softer
information, and then take decisive


action. British Petroleum (BP), once
owned by the British government,
became publicly owned in 1987.
Its new CEO was John Browne, a
nonexecutive director of Intel, who
was influenced by Andy Groves’s
thinking on the importance of
paranoia. Browne was concerned
about something far bigger than
rival companies—something that
could harm the business of not
just BP, but the entire oil industry.
Browne reviewed the available
data on climate change, listened to
experts in the field, and considered
the impact on the business of BP.
He recognized climate change as
a slow-manifesting issue, but
realized it could impact the oil
industry. In 1997 he gave a seminal
speech at Stanford University, CA,
publicly acknowledging climate
change as a reality and committing
BP to do something about it.
This was a bold move for an
oil company at a time when rival
companies were trying to ignore
the issue. BP pursued a strategy of
investing in alternative energy, and
it was the first oil company to set
targets for reducing its own
greenhouse gas emissions.
Employees were asked to find ways

Real sustainability is
about simultaneously
being profitable and
responding to the reality
and the concerns of the
world in which you operate.
John Browne
UK former CEO of BP (1948 –)

Victorinox’s business model relied on
the sales of its Swiss Pocket Knives,
but a strategic inflection point—the
prohibition of knives on planes—forced
it to add luxury products to its range.

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