Businesses and New Challenges
The COVID-19 crisis spurred me to write this post. The virus is fatal to the old people more than it is for the young. Likewise; an old business is prone to higher risks than when it was young. Risks include rigidity, increased competition, falling in the trap of the success syndrome, changes in technology and the business environment. This point was re-emphasized by Elena Gabor in her comment on my introductory post “Ageing of Humans and Businesses” on this issue. Elena wrote “Dear Ali Anani that is a great analogy. The point is that the human body is affected by age and by medical conditions and the business is affected by socio-political and financial fluctuations of Economy. We humans can get well by changing the lifestyle or taking a good medical treatment. A tired and unwell business will get well through new, fresh ideas, diversification and a healthy injection of capital. Flexibility and the ability to adjust to change are crucial in business and for the human body. KPIs are subjected to change and adaptability”.
Businesses grow and follow the curve as shown in the image below. As the business grows it forms generates new and expanded activities. These include new suppliers, new customers, new competition, and new entrants with better technologies, changing environments, changing customers’ life style, managerial challenges, new work regulations and the businesses become more complex. The businesses go through the stage of growth and enter the conservation stage in which the businesses try to stabilize the businesses. Consequently, a “rigidity gap” emerges. The businesses then become exposed to the slightest shocks from outside and prone to their devastating effects. The businesses enter the next fast two stages consisting or the release phase and re-organization phase. Most businesses fail to inject new ideas and release their resources to new activities, end up in the darkness of chaos and phasing out.
I want to say that the four phases of growth, conservation, release and self-organization impose different challenges in each phase. The adaptation of businesses to meet those emerging challenges is a must; else, businesses shall phase out.
The introduction of Key Performance indicators (KPIs) was a great idea to monitor the performance of each business. Only, this is valid if the KPIs are relevant to the phase in which a business is experiencing. If not, fitting the wrong KPIs to a mature business is like an old man trying to fit in his adulthood clothes. KPIs then should be called “Key Locked Performance Indicators”, KLPs.
There are other challenges that businesses face in their need to keep talents and hire staff with the right skills for each phase of the business. One example is the image I share below:
Successful businesses grow and mature only if the growth is accompanied by the growth of their wisdom. It is not the age; more it is what we fill it with. @Roberto De la Cruz Utria wrote recently a comment in which he rightly said "Growing wiser every day ... This is the fruit of capacity ;~)
Your thoughts are highly desirable to enrich discussions.
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