Firms being Leap Frogs or Boil Frogs matters with Attitude

We happened to read one of the BCG’s recent article on “Turning around the Successful Company” and found to be so thoughtful. Though the relevance is predominantly for large organizations, we still see the connect for Small and Medium Enterprises as they are also increasingly subjected to the dynamics of change happening across the world. 

Many companies are reactive to the problems and thus they take the painful process of transformation which becomes expensive in terms of time, energy and resources. Sometimes the dynamics of the problem are such, the delayed process of corrective action fail to get the desired results leaving the firm to have its natural death. 

When it comes to Small and medium entities their natural disadvantage of being less professional, adds up to the injury.  We see that many companies are often hampered by internal complexity making them lack adaptability, which makes change difficult. 

The factors which make these enterprises struggle are:

·         Lack of Bi-focal goals: Too much focus on near term revenues makes entities vulnerable to changes. Organizations fail to have parallel strategies for both near term and long term sustainability and thus suffer or succumb. 

·         Boiling Frog Trap: Be led by individuals who are stronger at executing within existing models than at building new ones. Wait too long—until evidence of the necessity for change becomes definitive—to act

·         Internal Complexity: Want to change but find that it is trapped by ongoing structures, processes, and initiatives that are complex and difficult to alter

As BCG rightly points out: Waiting until performance is already declining, however, not only increases the magnitude of the required adjustment and the organizational difficulty of realizing it but also puts companies in a reactive  position, causing them to miss opportunities for preemption, experience building, leadership, and, ultimately, competitive advantage.

Then what differentiates the Outperformers?

 

·         Firms which focuses more on delivering Value to Customer outperforms than those who focus on revenues thus creating long term sustainability

·         Firms which creates culture within, to adapt to changes, often finds themselves seamless in being competitive in any dynamic environment

·         Anticipation and Preemptive strategies makes companies less prone to economic shocks and thus enable them to acclimatize to any kind of disruptions. 

 

Though outperformers fall in to two critical categories namely “Reactive and Preemptive – It is the preemptive organization which achieves successful transformation without much of pain 

Small and medium entities should not ignore these factors. The complex business environment will not differentiate the size and thus SME’s are also exposed to the dynamics of change. Increasingly these enterprises will be subjected to bigger challenges and competitiveness will be tested. 

The owners have to become proactive in their approach towards business, customer, competition and people and continuous adaptability should become the survival mantra. 

Exponential growth can happen even in disruptive environment if the entities adopt shakers and movers approach which can change the way the game is played. 

For the SME’s, practicing small units of change, at the least, matters a lot for their survival and sustainability

T Margabandhu

M/s Marggo India