A company that strives to fit its company to the market is not necessarily wrong, just in many cases imbalanced. As Hamel and Prahalad discuss, "leveraging resources is as important as allocating them, and the long term has as much to do with the consistency of effort and purpose as it does with patient money and an appetite for risk." This concept is based on the theory of stretch. Stretching, for the most part, entails maximizing the efficiency of a company's aspirations with the company's resources. Stretch is the main reason that smaller companies can adequately compete, if not outperform larger companies in the same industry. As defined in the article, the products of stretch include a view of competition as encirclement rather than confrontation, and accelerated product-development cycle, tightly knit cross-functional teams, a focus on a few core competencies, strategic alliances with suppliers, programs of employee involvement, and consensus (78). .
One of the most important roles of top management's strategic role has been allocating resources across businesses and geographies. However, leveraging has become a more creative response to economic and resource scarcity. Hamel and Prahalad list two basic approaches to attain greater resource productivity: the first is downsizing, cutting investment and head counts; and the second is resource leveraging which seeks to get the most out of the resource on-hand. While both approaches produce productivity gain, a company that continues to downsize without leveraging its resources will soon find itself continuing to downsize until drastic leadership changes have to be made. .
Hamel and Prahalad suggest that managers look within their companies to assess the scope within their company for resource leverage. They go on further to list five basic ways to that top management can further their resource leverage in both the financial and non-financial arenas.
