By Clement Chirenje
Change is a fundamental character of all economic models. As the world become more volatile, unpredictable and unmanageable, it is imperative that decision makers do not go defensive, retreat behind closed “glass doors” and underplay problems. Infact,there is need for decision makers to go on an all out offensive by building their businesses’s capabilities for recognizing and responding to challenges, making trade-offs and finding solutions.
The fallacy that if x is good then more of x is better must be revised with the urgency it deserves.The tendency to push one’s strength to it’s limit transforms the same strength into a powerful destructive weakness.
It very important for decision makers to understand that the art of playing the game successfully,changes the game itself.One can ask any soccer teams,with quickest names to come to mind being Manchester United, Barcelona and Real Madrid.
Failure to recognize and appreciate the consequences of an organisation’s success and tenacity in playing the good old game are what create tragedies in the world of commerce.
Histrory is the best teacher in this regard .
Henry Ford is widely known for his success of dissolving a production problem by implementing a mass production machine in the car manufacturing industry.
.Unfortunately, the solution created another problem- market concern, which now required an ability to manage diversity and growth. His refusal to appreciate the implication of his own success together with his unwillingness to play the new game gave Alfred Sloan( of GM) an opportunity to dominate the automative industry.Not only Ford was the casualty of the unforgiving terrain of commerce.We can come up with a whole library of casualties books from back then till today.
Decision makers should accept the world as it really is, adapt to the world as it changes by activating their corporate navigation asernal.
There is greater need to pause and reflect on the mission and objectives of a business along the journey. These two’s life expectancies have been drastically reduced in today’s global village of commerce. The questions like, what is their business, must be frequently asked both at board and executive committee levels. In addition, decision makers need to ask the following:
What will their business be?
What does the competition landscape look like?
What change can invalidate their assumptions?
What are the purchasing trends of customers and any other socio-eco and demographic factors that can invalidate their assumptions?
Which of the consumer’s wants are insufficiently satisfied by today’s offering ? This last one is the major source of disruptions. Many established businesses tend to ignore the lower end markets while racing for the higher ones where stacks are high leaving exploitable gaps behind. However research has it that disruptors sneek through gaps like these and change the landscape forever. Incumbent businesses will be on the receiving end from then onwards.
The ability to ask these questions and to correctly answer and act on them in time makes the difference between a growth company and one that depends for it’s development on the rising tide of the industry or economy.
They should also be in a position to dectect and even project the likey changes that may have high impact on mission and objectives and act on them well before their materialisation.This is called risk risk management.By the way risk is the greatest source of waste in the commerce industry.Great companies are filing for bankruptcy at relentless speed .Great minds are becoming casualties by the click of a clock.Millions of jobs are being lost, poverty is skyrocketing and economic growth is taking a back foot.
All these gravitate to the need to make continuous reflections, corrections and adjustments to business model(s) and strategy now more than before for an organization to be in a position to see the light of tomorrow.
Failure to reflect along the business journey can be a highway to extinction.
_Clement Chirenje is a GARP certified Financial Risk Manager (FRM)and has experience in the banking industry.He is a risk and research associate at Entire Risk Research.