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Underperforming Corporations

Written by: Henry Gregor

Article Overview: Companies, (most of them) freeze up (become strategically rigid), get on the wrong track and underperform.

Underperforming Corporations

Many established businesses develop (or inherited) management processes that are 'strategically rigid'. Business managers (especially of new businesses) quickly develop rigidity of thought and action. Even after defining and launching a new business, or new product, managers quickly form processes of rigid thinking. They may bring this behavior with them from previous jobs, especially if the core values they had adopted brought success.

Collective evidence indicates that rigidity in market strategies and actions is more the rule than the exception in many businesses. This rigidity is a reaction to perceived threats, threats from VCs, or investors, or the threat of running out of money, or threatened reactions to missed objectives, etc. Strategic rigidity will prevail if reacting flexibly to these threats requires management to deviate from the company's core beliefs, values and learned behavior.

These threats cause decision-makers to take well known actions; and make practiced decisions that restrict open decision making by the management team. Rigidity causes businesses to become strategically myopic as well as product centric and centric to their core values. Often these core values causes a rigidity of thought that is amplified by the desire to gain market share, meet revenue or growth targets, or (for new companies) obtaining economic capital, or to satisfy investors. And the desires to achieve these targets and not violate learned behaviors.

At the same time, management teams become unaware of other strategic or environmental requirements; like the need to develop social capital, or to optimize their human capital. And most usually, they are unaware of the ambiguities facing them; or possess the strategic flexibility to deal with them, especially if developing flexibility pulls them away from the application of values developed from previous successes.

It is what businesses don't know that presents the greatest threat to their performance and their existence!

Companies need to obtain (or develop) the ability to apply 'knowledgeable objectivity' to their processes, whether it be to business planning, new products, evaluating the capabilities of their current human capital, or their marketing and sales activities. Other firms have been down roads similar (consultants have probably been there too) to the one the company's on. There is much to be learned from that experience, but managers can't be taught experience, they can only experience. That is why companies should look outside themselves for 'knowledgeable objectivity' support.

Objectivity can be acquired from consultants, from partners, or from enabled members of the management team who are not emotionally involved in a team's objectives. These individuals could be company representatives building the company's Social Capital. Their external activities in association with knowledgeable members of their industrial community can provide objective perspectives.

Companies need an unbiased strategic focus; they must have the flexibility to deal with environmental and marketing ambiguities. Most of these problems (and opportunities) are not anticipated; despite attempts to forecast them. The rigidity of thought and action creates paradoxically complex opportunistic situations for them. Companies must create a path to flexibility, learning and constant improvement! They must become aware of inbuilt rigidities and develop counteractive processes. Companies must look outside of themselves to develop self correcting perspectives.

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Article Tags: ambiguities, business managers, core beliefs, core values, decision makers, economic capital, environmental requirements, growth targets, learned behavior, management processes, management team, management teams, market share, market strategies, new businesses, product managers, rigidity, strategic flexibility, thought and action, time management



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Corporations Are Built Not Brought - People look at big Corporations in awe, wishing they had the money to start such a business and reap the huge profits, but lacking the funds they shelve their ideas and instead look at the myriad of startups offerring instant riches or fast cash. This attitude that unless you have a fistful of dollars to invest in a business venture your going to fail is very wrong and holds back a lot of potential advances in technology, this attitude is very wrong and couldn't be further from the truth. All the worlds largest and most stable corporations started with very little cash and no workforce apart from one or two people that shared a common idea, these people didn't wait until they could raise millions of dollars to implement their ideas they rolled up their shirt sleeves and got stuck into turning their dream into reality. Money is not the key to building a mega million dollar corporation, the secret is "Elbow Grease" and "Passion", these are the key ingredients to building a business that can stand the test of time and economy, survive the stock market crashes and leap over every road block placed in their path. Unless you build a business from the ground up and have a deep inset passion to succeed you can't really understand what makes any business tick, you need to know every process in your business intimately if you are to run the business efficiently and build stability and longevity into it, you can't get this knowledge sitting behind a desk in your office you need to go to the shop floor roll up those sleeves and get stuck in. You can study all the business courses on this planet but they will not help you create a corporation that can stand the test of time unless you have a deep seated passion for the products or services your company is going to offer. Donald Trump once summed up business with a statement "In order to Sell you first have to Love your products" he then went on to explain that it's not enough to just like what they do you have to understand every stage of their creation, you have to have intimate and deep knowledge of each product and it's capabilities, knowledge you can't get from a brochure or a tech manual information that is only available by actually being involved in the whole product creation process from raw materials through to finished product then taking that product and using it yourself everyday until you understand what makes it good and where it fails. Building a business is much like that product you need to understand your business in the same way it doesn't require money it requires hard work and a burning desire to turn a raw idea into a successful business venture, money comes in much later when you have created your prototype business and thoroughly tested it's capabilities and your ready to launch it into the market place. Even then you don't need masses of money especially if your business is built on solid principles and ethics, still today the most effective advertising is free, yes i am talking about word of mouth. The key to word of mouth advertising is supplying above average service and support to everyone that comes though your businesses doors, the higher the level of service you provide those first few early clients the faster word will spread about your business. So if you have an idea for a business but are holding back because you lack the funds or think you lack the money to make it worthwhile think again roll up your sleeves and apply a little elbow grease who knows you might just have started the next Google or Facebook.


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