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April 23, 1991

Test-Driving Your Strategy

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Group insurer Unum tried to achieve growth by merging with Provident, an individuals insurer. But the costs and complications of trying to unite the two sales forces proved insuperable. Too bad Unum didn’t insure the deal, because it cost them dearly. They experienced a 30 percent drop in stock price before they managed to undo the merger.1 Failed strategy.
Motorola invested $5 billion in producing satellite telephones that came with a price tag of $3,000 each, not including the hefty monthly fee. In the process, the company ignored evidence about the shortcomings of their technology and about market resistance to the consumer cost. Customers hung up on the offering in droves. Within a year, this business line was in Chapter 11. Failed strategy.
School bus operator Laidlaw thought they would be building on their core competencies by getting into the ambulance business. But the company wasn’t prepared for dealing with the technical and legal complexities of the medical industry. The ambulance operation quickly went code blue, and Laidlaw had to get out of it at a loss. Failed strategy.
If you don’t want your strategy showcased in the Strategic Hall of Infamy, or even just to fall short of your hopes for it, then my advice is to try to anticipate what could go wrong before you take it too far. When you know the risks, you can take steps to mitigate them—or even scrap the strategy altogether if it proves unworkable.
This chapter will show you how to subject your strategy to a diagnostic procedure to see if it’s in shape to go to work for you. I call it test-driving your strategy.

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