With all the change in today's world, businesses must adapt quickly—or be doomed to fail.
That was the resounding salvo of a keynote address delivered by Abol Jalilvand to the Financial Executive Institute’s Chicago Chapter in March.
Jalilvand, Ralph Marotta Professor of Free Enterprise and Professor of Finance at Loyola’s Quinlan School of Business, has developed some strategies to guide businesses toward success. His talk, “Flexibility, Innovation Strategy, and Performance under Turbulent Environments: Evidence from a Multi-Industry Sample”—based on research he has conducted with Quinlan Associate Professor of Management Sung Min Kim—underscores that few companies are highly profitable, only a small fraction of firms (just 0.1 percent in a sample of six million) live to age 40, and many industries are in need of major restructuring if they want to prosper.
“This requires three key elements of leadership,” Jalilvand says. “1) Strong and pro-innovation management, 2) a balanced financial strategy, and 3) the ability to effectively manage both in a turbulent environment.”
In an effort to provide organizations with a “how-to” for responding to changing environments, Jalilvand and Kim have developed a model for corporate adaptability. Successful firms, they say, are those that simultaneously pursue investments in core efficiencies and future growth opportunities by maintaining a match between their slack resources type and the nature of investment opportunities they are facing.
Jalilvand and Kim’s research is unusual in that it brings together principles from both finance and strategy. And it has spurred Jalilvand to develop a new Quinlan course, Financial Strategy and Strategic Change, which will be offered next spring.
“What we’re trying to do is develop some guidelines so we can look at an industry and highlight how it can improve strategic and financial decision making to react more smoothly and appropriately to change,” Jalilvand says. “We predict as more adaptable companies achieve higher profitability over time, others will be pressured to better manage the balance between their resources and investment strategies to become more adaptable and responsive to the changing environments.”