Phil's stomach churned as he flipped through his largest competitor's pre-release press kit. He thought he was going to get sick. The voices of his fellow executive team members droned through his head like a prehistoric horn. While the team had been concerned about Zamwe's R&D, what lay before them was devastating to Acme Corporation. The required investment for Acme to match Zamwe's new technology would probably be two or three times their total annual R&D budget. Phil's mind was numb. All he could think about was, would they be able to survive this onslaught?
How did Acme get into this mess? For years they had been struggling to keep up with their competitors and had done quite well despite the challenges of hiring and keeping talented employees, holding manufacturing and overhead costs, and using their marketing funds wisely.
What Acme had not done was to focus on all aspects of their marketplace to ensure they would remain competitive for the long term. The leaders in every business must ensure they maintain a competitive vigilance in the areas of:
• Evolutionary product technology
• Potential replacement, disruptive products
• Manufacturing
• Distribution & sales
• Marketing
• Support
• New products that are extensions of existing products
• Cultural or global shifts
The corporate graveyard is littered with the bones of businesses failing to keep up. Digital Equipment Corporation (DEC) was a leader in the minicomputer field but failed to embrace the vision of the personal computer. Despite its leading edge processor technology, on its way down it was acquired by Compaq, and then by Hewlett-Packard with its subsequent purchase of Compaq.
The venerable automobile manufacturer Studebaker Corporation reinvented itself several times in the 1800s, only to succumb to market pressure from Ford and General Motors Corporation (GM or GMC) in the 1950s and 1960s. Studebaker supplied wagons and wheelbarrows during the California gold rush and then wagons for the Union army in the United States Civil War. Each time they struggled to remain viable as their markets dwindled, their fate seeming to be cast about on a wisp of national cataclysmic events. The 1920s through the 1950s were the golden years for Studebaker. However, by the early 1960s, the Ford and GM juggernauts had sealed their fate. Studebaker had failed to keep up and adapt to the times, shuttering its last plant in 1966.
Contrast these companies with IBM as it made a fitful transition from a hardware company to one offering hardware, services and complementary offerings from outside its sphere of development. IBM successfully turned its supertanker momentum to align with Internet, Worldwide Web and open source technologies.
The corporate equivalent of a human supercentenarian would be Stora, a Finnish-Swedish company with a recorded history dating back to 1288. Stora began as a mining corporation and evolved through stages of forest products, iron smelting, hydro power and chemicals. Surviving world wars, political upheavals and complete technology shifts, it remains a viable corporation to this day.
The renowned corporate survival guru Arie de Deus outlines four factors for corporate longevity based upon his research:
1) Sensitivity to the environment and external world
2) A strong sense of corporate identity
3) Tolerance of those inside the company pushing the envelope of new possibilities
4) Conservative financing
These are points to consider as you lead your company forward. Are you open to the outside world - not just your marketplace, but the broader perspective
of the global environment? What is
your corporate identity? What are your
core competencies, your fundamental technologies, your strengths? What is your corporate culture? Do you reward or punish those who take risks, especially if they fail? How do you handle dissent or conflict in meetings? Do your team members feel safe in bringing up opposing viewpoints? Does anyone ever play "devil's advocate?" Do you ever create project teams to examine alternatives? How quickly do you adopt new processes or product technologies?
And finally, what is your financial approach? Are you taking the appropriate amount of risk? Too much risk can swiftly pierce your corporate heart, bringing a precipitous decline in a matter of weeks or months, as we have seen with the recent demise of Bear Stearns. Too little risk can be just as deadly. As in our example at the outset, without making the risky investments, you may miss discontinuities or pivot points in the marketplace and find yourself left in the dust of your competitor's new trajectory.
What can you be doing as a leader in your organization? Many resources, techniques, and tools are available for you to remain competitive in your marketplace:
• Industry analysts
• Scenario development
• War games
• A corporate culture of open dissent and creative thought
• Promoting leaders with superior team development skills
• A distinct corporate vision and strategy
• Empowered employees
It may be wise to use the current economic slowdown as a time for reflection and strategic thinking. Bring together the brain trust of your organization, including individuals of all levels. Take a defensive as well as offensive viewpoint. You may want to examine areas of your business that are taking a beating as well as thoughtfully considering new market opportunities you could expand into. Use this time wisely to review your business from A to Z so that you may emerge stronger than your competitors and poised to leap forward once the economy regroups and continues its forward momentum.
Joel DiGirolamo heads the firm Turbocharged Leadership and has over 30 years of staff and management experience. in Fortune 500 companies. You can contact Joel at joel@jdigirolamo.com.