Thursday, May 3, 2012

Will you be in business five years hence ?? !!

Extreme Turmoil and No Optimism. Country after Country is going Bankrupt. Large Corporations are finding it difficult to sustain Growth Rate & Momentum , smaller companies difficult to survive and Mid Caps are finding difficult to grow.  Commodity & Oil prices are rising and volatile,  currency rate dependency is a killer, right manpower very hard to get and retain. Governance and Regulatory Laws are tightening – in short no entrepreneurs are happy about the state of affairs he is in and managing. Yet Terrorism, Political Policy Paralysis, Corruption are the facts of the life we have to live with.
On top of these external factors which are worrying , companies usually die internally first due to various self destructing habits.  Veteran of Marketing Jagdish Sheth has written about Self Destructing habits of Good Companies. He states that companies die due to various internal inaction and ego.
 Lets run through these habits to understand what applies to your enterprise.  Objective read will help. ( I & You referred here if for business owners and CEOs)
1) Denial – Lead to Denial – of emerging technologies, changing consumer tastes, new global environment - Symptoms - I am different Syndrome, blame other for the situation
2) Arrogance – Lead to Arrogance - Exceptional success of the past, you r smarter than the other guys - Symptoms –   You stop Listening, You Flaunt it, You are high handed, you want to be surrounded by people approve your idea
3) Complacency - Lead to Complacency- Pass success if through regulated monopoly or by distribution monopoly or chosen by Govt , Govt owns and control business -  Symptoms – no hurry to make decisions, bureaucratic processes, cross subsidies by function, product ,market and customers
4) Competency Dependency - Lead to Competency Dependency – R & D Dependence, Design Dependence, Sales & Service Dependence  -  Symptoms -transforming exercise futile, thrill is gone, stakeholders are jumping ship
5) Competitive Myopia – Lead to  Competitive Myopia –  Natural Evolution of the Industry, Clustering Phenomenon  -  Symptoms – you allow small niche player to coexist, underestimate new entrants, helpless against new technology
6) Territorial Impulse -Lead to Territorial Impulse - Corporate Ivory Tower, founder’s culture subsumed in large corporate culture  -  Symptoms – many headstrong lieutenants, decision making is long and difficult process,  no one is happy, no internal communication mechanism
7) Volume Obsession - Lead to Volume Obsession – High Margin Pioneer, Fast Growth Phenom, Paradox of Scale -  Symptoms - free and adhoc spending patters, culture of X subsidies, functional level cost centers
Well some points are difficult to understand unless read with relevant examples. However its time to test check the status of your business and scenario analysis with some experts to gauge whether you will be in business five year down the line?  These pointers are analysed by the author while analysing various case studies of companies at various scales.
Risk Management , Scenario Analysis & present Health Check of the Enterprise is very critical functions and activites of the TOP management.  Just do it. Who knows Kal Ho Na ho!!!