Listen up, biz leaders: It’s time to rethink everything

Here is an excerpt from article co-authored by Geoff Colvin that appeared in Fortune magazine. To read the complete article, check out other resources, obtain subscription, and sign up for email alerts, please click here.

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We’re not living in ordinary economic times. Every company needs to determine if its strategy requires an overhaul or just thoughtful tweaks. Here’s how to start.

FORTUNE — Remember when Motorola (MMI) ruled the mobile phone business worldwide? And then Nokia (NOK) did? And then BlackBerry (RIMM) did? And now none of them do? As Fortune headlined a recent BlackBerry article, “What the Hell Happened?”

We all ask the same question about Kodak, monarch of the global photo industry for a century, now bankrupt, while Instagram, a photo-sharing service with a dozen employees, is sold to Facebook (FB) for $1 billion. And while we’re at it, what happened to Hewlett-Packard (HPQ)? To Yahoo (YHOO)?

We’re not living in ordinary economic times. The convulsions of the past five years have left many business people asking the most fundamental questions about their companies: Will our strategy work in this environment? What must we change, and what must we not change? Do we need a new business model?

Reconsidering strategy can turn into a miasma that consumes endless time and yields nothing. Yet the process is manageable. One way to think through your strategy in today’s uncertain environment is to answer three basic questions.

1. What is our core?

A finding that’s consistent across cycles is that the best performing companies keep investing in their core no matter how bad things get. Look at what Dupont (DD) did during the Great Depression. Even as profits plunged, the company resolved to keep funding chemical research — its core — no matter what. Among the results: nylon, neoprene, and other products that brought Dupont billions of dollars over the following decades.

In good times, companies often wander into businesses for which they command no special capability. Then, when a downturn hits, those non-core businesses blow up and have to be axed. Pioneer bailed out of the grindingly competitive flat-screen TV business in the recent recession. Home Depot (HD) shut down its Expo chain of home design centers. Google (GOOG) closed non-core businesses that sold advertising on radio stations and in newspapers.

Excellent companies are certain of their core. Early on in the recession, Brad Smith, CEO of software firm Intuit (INTU), said, “We’re not going to cut innovation. This company for 25 years has been fueled by new product innovation. We’re protecting the innovation pipeline so we come out of this strong.” He would cut elsewhere if necessary, but in the realm of personal and small business finance software, he’s up against mammoth competitors, including Microsoft (MSFT). He cannot afford to fall even a fraction of a generation behind.

Are you sure of your company’s core? If not, you’ve got to do some corporate soul-searching.

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To read the complete article, please click here.

Geoff Colvin is senior editor at large at Fortune magazine. A longtime Fortune editor and columnist, he is one of America’s sharpest and most respected commentators on leadership, globalization, wealth creation, and management. As former anchor of Wall Street Week with Fortune on PBS, he spoke each week to the largest audience of any business television program in America. His national bestseller, Talent Is Overrated: What Really Separates World-Class Performers From Everybody Else, won the Harold Longman Award as the best business book of 2009. His email address: gcolvin@fortune.com.

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