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According to a research article published in the Harvard Business Review, US firms are holding large amounts of cash, totaling $6.9 trillion, which is larger than the GDP of all but two countries. The article explores various reasons for this, including the need for investment and operational flexibility, managerial opportunism, and multinational tax savings. The research also introduces a new explanation called "precautionary cash holdings," suggesting that companies hold cash as a form of insurance against sudden economic shocks that could lead to failure. The study emphasizes that for small and vulnerable firms, cash holdings should be seen as an operating asset rather than a surplus asset. The article concludes by highlighting the importance of boards and managers assessing their circumstances and communicating with shareholders to explain the insurance benefit of cash holdings. [Extracted from the article]

“Planned opportunism” is the author’s term for responding to an unpredictable future by paying attention to weak signals—early evidence of emerging trends from which it is possible to deduce important changes in demography, technology, customer tastes and needs, and economic, environmental, regulatory, and political forces. That attention gives rise to fresh perspectives and nonlinear thinking, which help an organization imagine and plan for various plausible futures. Planned opportunism is a discipline that creates a “circulatory system” for new ideas; develops the capacity to prioritize, investigate, and act on those ideas; and builds an adaptive culture that embraces continual change. Govindarajan illustrates his thesis with several compelling company stories. For example, Tata Consultancy Services decided to divest its fast-growing call-center operations at the height of the boom in that business, because its leaders could see that technologies were moving to the cloud and that global enterprises would eventually demand higher-level, more strategic outsourced services. Call centers would just get in the way of that future. And Hasbro, the toy and game maker, acted on numerous technological and demographic shifts in the 1990s to significantly outpace its leading competitor, Mattel. INSET: How Hasbro Responded to Nonlinear Change. [ABSTRACT FROM AUTHOR]

Yet even for industries battered by recession, it's the best time to take advantage of the following opportunities for the forthcoming expansion: • Companies can attract ambitious employees who would thrive in a forward-looking, growth-oriented environment. The firms that increased investments during the recession showed improvement in return on equity, sales growth, and market values in the recovery phase. Such companies lack the financial muscle that allows large companies to make brave moves during a recession. For example, a company was considered successful if its market value improved to 40th-percentile rank in the recovery phase from 55th-percentile rank during the recession. [Extracted from the article]

By Vijay Govindarajan, Anup Srivastava, and Luminita Enache Published on HBR.org / February 17, 2021, Updated February 18, 2021 / Reprint H064OX Simone Hutsch/EyeEm/Getty Images When the Covid-19 pandemic hit, a record number of companies, many of which had survived for more than 50 or even 100 years, had no other option but to file for bankruptcy. We defined midsize companies as those in the middle 40% of all companies listed on the U.S. stock exchanges by market HBR / Digital Article / The U.S. Economy Is Leaving Midsize Companies Behind Copyright © 2021 Harvard Business School Publishing Corporation. [Extracted from the article]

The article discusses why companies should let go of old practices and cultures to exploit and explore new businesses, with information on the approaches adopted by conglomerate holding company Mahindra Group, technology company IBM, and equipment rental company United Rentals.

A letter to the editor is presented in response to the article "Building Breakthrough Businesses Within Established Organizations," from the May 2005 issue.

The article focuses on strategic innovations. The authors claim that companies that perform such innovation can deliver breakthrough growth and produce new life-cycle curves. They add that a new business developed from an established one should forget the assumptions of why its mother company became successful, borrow its assets and learn how to make a profit in its uncertain market.

The article discusses the emergence of process innovation as a sound means to strategize enterprise management. Information technology is considered as the economy's most powerful tool for productivity growth. Leading IT departments have been adept at finding ways to automate information flows and streamline processes. At the back end of the innovation process, three fundamental challenges exist, and they are: forgetting, borrowing, and learning. To tackle these challenges means to create tension.

Discusses ways for young, aspiring business leaders to deal with the unpredictable nature of business. Definition of how an organization works; Advantages offered by the corporate environment in the form of existing knowledge, skills and relationships; Implications on management.