The Three-Box Solution: A Strategy for Leading Innovation by vijay govindarajan

Author:vijay govindarajan
Language: eng
Format: epub
ISBN: 9781633690158
Publisher: Harvard Business Review Press
Published: 2016-04-25T16:00:00+00:00

The Challenge: Restoring Box 1

Although URI had little control over the economic forces that afflicted it, a couple of other circumstances added urgency to its plight. Whenever a company is being acquired, the impending deal introduces distractions that are hard to avoid. URI’s preoccupation with the Cerberus deal had diverted some management attention and sown unsettling concerns about the future throughout the company, affecting its ability to deal with a crisis. These concerns were compounded when, after the deal evaporated, the economy worsened throughout 2008, becoming widely catastrophic in 2009. Not only were many of URI’s customers concentrated in construction—always vulnerable in a downturn—but another large segment consisted of relatively small, independent local businesses, also likely to suffer early and acutely when the economy sours.

Another part of the problem was structural. The speed with which URI had grown—and attracted the attention of a firm like Cerberus—was beginning to cause problems that further deepened the recession’s impact. While URI’s strategy of rapid growth by acquisition had been a tremendous success, it now needed to streamline its portfolio of assets. Moreover, so great had been the pace of acquisition that many new properties were left to operate much as they had done previously. This created an eclectic mix of business practices that many customers found confusing or, worse, exasperating.

URI needed to align its various parts around a clearly articulated strategy. It also sought to refocus the way it was organized and managed, and the way it defined its culture and values, more explicitly around customer needs. Finally, the business recognized that it had too many eggs in one or two baskets. It therefore planned to diversify its customer base to become less reliant on vulnerable small businesses and the construction industry as the dominant sources of its business.

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