Have the right processes and incentives in place to shift resources when and where they’re needed.
Investment decisions include capital expenditures, marketing and sales, and R&D. Companies that actively reallocate resources when necessary outperform those that don’t. Yet obstacles – from cognitive bias to inconsistent decision-making processes – stop you being an ‘active reallocator’.
Writing for McKinsey Quarterly, Massimo Garbuio, Tim Koller and Zane Williams outline eight ways to overcome the problem.