How Secure is Your Organisations Future?

It was Jim Collins who said “every institution is vulnerable, no matter how great. No matter how much you’ve achieved, no matter how far you’ve gone, no matter how much power you’ve garnered, you are vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do,” (p.8).

There is a danger that as organisations ‘work’ their way out of the recession, that they may start to relax and take their eye off the ball. It’s not unrealistic as 2012 has been a tough year for many organisations and employees have had to work hard to keep their company’s afloat. It’s at times like these that people at all levels, can relax a bit, feeling the hard work has been done, that the ‘storm’ is over and that the company looks well set for the future.

Jim Collins reminds us, from empirical research that a company can indeed look like the picture of health on the outside yet already be in decline – and that’s what makes the process of decline so terrifying; it can sneak up on you, and then – seemingly all of a sudden – you’re in big trouble.

In tough times it’s very possible, in fact likely, that key benchmarks and drivers will change, where organisations are looking at survival (short-term) compared to the ‘perceived luxury’ of sustainable growth and continuous improvement (long-term). The concept is fine as long as you constantly reassess the variables you are benchmarking yourself against, and make the transition to a longer term view at the right time. If you simply stay in ‘survival’ mode you are much more likely to miss longer term opportunities, which may have already been picked up by your competition, leading to a real false sense of security in your present business environment. This will mean that you are not aware or prepared to compete in the forthcoming market space, which is currently being influenced by competitors and, possibly, new entrants (organisations that diversified in the recession).

Jim Collins believed that if there was one rule, above all others, to use as a warning sign of potential decline, “it would be a declining proportion of the seats filled with the right people. Twenty-four hours a day, 365 days a year, you should be able to answer the following questions: What are the key seats in your organisation? What percentage of those seats can you say with confidence are filled with the right people? What are your plans for increasing that percentage? What are your backup plans in the event that a right person leaves a key seat?” (p.57).

Making sure that your organisation isn’t taking ‘strategic’ shortcuts to stay afloat is vital. This means that your approach to strategic review, development and implementation is pivotal in identifying and optimising future opportunities. Even in a recession opportunities are out there for the taking and you’ll only spot them if you are taking a detailed longer term strategic view – since it’s the depth and integrity of the inputs that truly define the outputs.

Jim Collins believed that “great leaders understood that rebuilding greatness requires a series of intelligent, well executed actions that add up one on top of another. Some decisions are bigger than others, but even the biggest decisions account for only a small fraction of the total outcome that makes a great company. Most ‘overnight success’ stories are about twenty years in the making,” (p.94).

Businesses and markets are evolving all the time, and moving through a global recession is no different. This December some organisations will be patting themselves on the back, acknowledging how well they have done to outrun the effects of the recession. But be wary and don’t lose sight of the longer term view, assessing competitor developments in your market space and reassuring yourself that you are well placed to take the lead in 2013.

For those organisations that are still struggling, Jim Collins warns us to be careful, “when we find ourselves in trouble, when we find ourselves on the cusp of falling, our survival instinct – and our fear – can evoke lurching, reactive behaviour absolutely contrary to survival. The very moment when we need to take calm, deliberate action, we run the risk of doing the exact opposite and bringing about the very outcomes we most fear,” (p.96).

References

Collins, J. (2009). How the Mighty Fall and Why Some Companies Never Give In.  Random House Business Books:London