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Management article
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Reference no. R0902F
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 2009

Abstract

This article includes a one-page preview that quickly summarizes the key ideas and provides an overview of how the concepts work in practice along with suggestions for further reading. Competing in volatile markets feels a lot like boxing: Punches come from all directions; strategies change constantly; and one powerful blow could knock out your company at any moment. As firms fight their way through tumultuous times, they can learn much from boxing champions. London Business School Professor Donald Sull outlines two fundamental approaches to mastering uncertainty - agility and absorption - using the classic 'Rumble in the Jungle' between Muhammad Ali and George Foreman to illustrate them. Both capabilities can help companies survive turmoil. Agility, exemplified by Ali, is the ability to quickly spot and exploit opportunities. It comes in one of three forms: (1) operational agility, the capacity to seize opportunities to improve operations and processes within a focused business model; (2) portfolio agility, the ability to shift resources out of less-promising units and into attractive ones; and (3) strategic agility, the ability to jump on game-changing opportunities. Each kind of agility is enhanced by a distinct set of assets and leadership priorities. Absorption, exemplified by Foreman, is the strength to withstand punishment and weather sudden shifts. Sull describes 10 ways that companies can build absorption, including capitalizing on size, diversifying assets, and stockpiling a war chest of cash. Balancing agility and absorption is critical. Apple's iPod is an excellent example of agility, but it was absorption - in the form of a small core of fanatical customers - that kept the company going during the 1990s, when its market share shrank dramatically. Those customers kept Apple alive until changes in context created its golden opportunity. Ali won the Rumble by maintaining his agility while enhancing his absorption. Companies that follow his lead and cultivate both capabilities increase their chances of emerging from turbulence as new market leaders.

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Abstract

This article includes a one-page preview that quickly summarizes the key ideas and provides an overview of how the concepts work in practice along with suggestions for further reading. Competing in volatile markets feels a lot like boxing: Punches come from all directions; strategies change constantly; and one powerful blow could knock out your company at any moment. As firms fight their way through tumultuous times, they can learn much from boxing champions. London Business School Professor Donald Sull outlines two fundamental approaches to mastering uncertainty - agility and absorption - using the classic 'Rumble in the Jungle' between Muhammad Ali and George Foreman to illustrate them. Both capabilities can help companies survive turmoil. Agility, exemplified by Ali, is the ability to quickly spot and exploit opportunities. It comes in one of three forms: (1) operational agility, the capacity to seize opportunities to improve operations and processes within a focused business model; (2) portfolio agility, the ability to shift resources out of less-promising units and into attractive ones; and (3) strategic agility, the ability to jump on game-changing opportunities. Each kind of agility is enhanced by a distinct set of assets and leadership priorities. Absorption, exemplified by Foreman, is the strength to withstand punishment and weather sudden shifts. Sull describes 10 ways that companies can build absorption, including capitalizing on size, diversifying assets, and stockpiling a war chest of cash. Balancing agility and absorption is critical. Apple's iPod is an excellent example of agility, but it was absorption - in the form of a small core of fanatical customers - that kept the company going during the 1990s, when its market share shrank dramatically. Those customers kept Apple alive until changes in context created its golden opportunity. Ali won the Rumble by maintaining his agility while enhancing his absorption. Companies that follow his lead and cultivate both capabilities increase their chances of emerging from turbulence as new market leaders.

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