Business Success Can Be More Dangerous than Failure

How can business owners and managers take the risk blinders off? We admire leaders of businesses around the world as strategic thinkers only to witness those same leaders missing the most fundamental emerging changes/risks in market conditions.

When Apple launched their new IPhone in 2007, Microsoft CEO, Steve Ballmer made this observation, “500 dollars? Fully subsidized? With a plan? I said that is the most expensive phone in the world. And it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine.”

Or consider Apple’s Founder, Steve Jobs who proclaimed when Samsung and Google came out with phones larger than the 3.5” original IPhone, “Nobody’s going to buy that!”

Historically, when things were moving a bit slower, managing in terms of quarterly results or even monthly results were deemed adequate.

Unfortunately, in today’s business environment, sticking to old reporting and decision time frames may threaten the very survival of the enterprise.

Leadership teams who devote time proclaiming their commitment to the old familiar ways of doing business over training and preparing to confront dynamic market changes are infusing their cultures with a blindness to emerging market risks.

How do managers prepare the business culture to see and exploit new market opportunities? How should management prepare for emerging competitive threats?

First, getting precise answers to real-time market dynamics goes well beyond a good technology reporting solution that so many management teams rely on. Yes, we do need traditional key performance measures (KPIs) but enterprise leaders today need to go beyond basic information and actively educate & train every level of management how to track and navigate real value creation within the enterprise and how to respond correctly when changes occur.

Second, the information viewed by each level of management needs to be aligned and connected to the overall objectives of the owners of the enterprise. All management levels need to see performance measures that deliver one coherent view of the entire enterprise.

This is the essence of building a truly collaborative organization.

A collaborative organization is one that enables the right technology solution to rapidly and precisely measure real value creation throughout the enterprise coupled with a management team that is trained to identify opportunities and resolve problems at that point of value creation.

What is the real value of a route? What is the value of a store, category or department? How is waste impacting the profitability of the bakery and meat departments? How will changing logistics and consumer dynamics change the economics of the entire supply chain?

This collaborative approach includes not just simply measuring value in current market conditions but actively confronts and implements creative solutions to measure value in the future. This approach removes the old linear methods to management and enables a more complete whole systems methodology.

Creating a successful collaborative culture requires an executive team that not only has passion for the entire enterprise and its objectives but also includes all stakeholders associated with the enterprise including all employees, suppliers, services vendors and other providers. This approach ensures a sustainable culture that is responsive to all emerging changes and risks.

The key factor that hinders effective collaboration for most organizations is speed to answers. If managers can’t engage business success performance metrics, get to the root cause of problems or identify opportunities in less than 10 seconds, then adoption to new methods is jeopardized. Managers simply resort to old habits.

Another key is current systems must be capable of integrating new market related insights into the dynamics of daily reporting so that all market insights are as accurate and timely as possible.

For example, if you can’t understand your consumer demographic, you are at risk. If you can only see business performance over the past 13 or 26 weeks, you are blind to emerging competitive threats. If you can’t measure all on-ticket and off-ticket discount and promotion items against a specific promotional event, you are incapable of making a truly informed promotional decision.

In today’s dynamic marketplace, celebrating past business success is good, but be careful not to allow success to preserve outdated routines and blind management to future risks and business opportunities.

Karl Edmunds

About the Author

Vice President, Salient Management Company

is a nationally recognized business leader and author with more than 20 years of experience working with suppliers, distributors, and retailers in the CPG industry. His focus is aligning technical solutions with sales, marketing, and organizational needs to drive long-term profitable growth.

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