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strategically guarding against the ills of obsolescence-pt2

averting the ills of obsolescence

By Kenneth Rudich

Part 1 kicked off by encouraging you to regularly question if your business, or some important facet of it, may be at risk of becoming obsolete. 

The rationale for this advice rests with the recognition we now live in a world that is being propelled by a rapid rate of change.  Even a small lapse of attention, the tiniest oversight, can keep a business from establishing a strong market position, or prevent it from maintaining the one it may already hold.

The remainder of part 1 outlined a sort of reconnaissance plan.  It involved taking an inventory of the external factors related to your business and assessing the possible impact they might have on it.  It also stressed the importance of understanding your organizational culture and its capacity for nurturing change.

These two play a pivotal role when choosing a strategy to foster a good match between them.

In Part 2, we explore four strategies a business might consider when making such a match.

The appropriate one for your business will largely hinge on the answer to three questions:

  1. What must your business do in light of the external factors?
  2. What is your organizational culture currently geared to do?
  3. Is there currently a good fit between them or should adjustments be made to the organizational culture? 

four possible response strategies

1. The Maverick Spirit

The Maverick Spirit is grounded in a culture of constant invention and innovation.  It seeks to establish and maintain industry leadership by relentlessly pushing the envelope.  Highly competitive industries typically require an organization to adopt this approach.  In many instances, survival will depend on it.

Companies like Apple and Google have shown a distinct talent for doing this.

In another example, upscale restaurants frequently have a gifted chef – or several of them – that continually delight customers by concocting new recipes or specialty cuisines.   Indeed, all creatively prolific people — like scientists, inventors, novelists, and engineers — fall into this category.

This strategy frequently tends toward being high risk, high reward.  Either the organization itself, or key members within it, must be geared to spearhead a sustainable stream of new products and services.  It also must have the capacity to absorb the cost of failure when new ideas labor and fade.

Perhaps the single biggest concern for this kind of organization lies with the potential for losing key talent or the Midas touch.  Consider the trepidation investors are having with Apple now that Steve Jobs has taken an unexpected leave of absence.

2. Early Follower

The Early Follower trails close behind the Maverick.  This strategy counts on the acuity to recognize a key market trend while in its infancy, and having the business acumen for seeing how to leverage it.

A successful Early Follower draws its share of reward from the seminal work of the Maverick, but without incurring the same level of initial R&D investment.  Frequently regarded as an industry opinion leader, it often helps innovations to gain traction – after all, it’s in its best interest to do so.  It is characterized by a high tolerance for risk, and its survival banks on being agile enough to quickly mobilize the value chain once a decision to move has been made.  While the Maverick fosters change, this kind of organization embraces it. 

The biggest risks revolve around the prospect of always lingering a step behind its Maverick competitor; or losing strategic focus by jumping on every opportunity it sees; or committing a series of missteps or poor choices.  This can result in either being spread too thin, or simply failing to gain the foothold needed for turning a profit. 

3. Late Follower

The Late Follower waits for evidence of a stable consumer demand for a product or service.  The preference is for a low risk proposition with a fairly certain return.  The external factors, along with its business market position, must align in a way that allows it to follow this strategy and remain successful. 

Because change for the Late Follower is slow and methodical, this organization tends to rely on what has brought success in the past, and it will continue with that strategy until there is evidence of it no longer working. 

A potential downside stems from the risk of becoming complacent; or not being able to move fast enough when the external factors change in a manner that forces the need to revamp the value chain.  In Part 1, we identified Blockbuster Video as possibly falling victim to the risk of moving too slowly when the video rental industry experienced significant change. 

4. Build and Bounce

Build and Bounce is characterized by the ability to take a fledgling and/or floundering organization and turn it into a competitive enterprise.  This strategy often focuses on boosting revenue through strict cost containment measures, thereby making for a seriously lean organization.   Once a certain level of success has been achieved, it is sold off at a profit either in whole or in pieces.

Those that thrive in this kind of culture typically re-invest in new projects and repeat the same cycle over again.  Unlike the Maverick, which attempts to sustain the same business in the same industry across time, the B&B may end up getting involved with several different businesses in several different industries.  The focus on creating a competitive stance through cost containment applies to almost any organization that is suffering from having gotten too fat for its own good.

Like the Maverick, this culture requires a distinct talent for continuous success where others either fear to tread or tend to fail.

geared for? 

By now it should be apparent why a business ought to be aware of the relationship between the external factors that affect it, and the organizational culture it possesses — or should possess in order to succeed.

The most critical mistake to avoid is to have a mismatch between the two, whether from the get-go or as a result of circumstances that evolved over time.  The last thing you want is for your business to end up blind-sided by the ills of obsolescence.

The ultimate question is, what should your organization be geared to do in light of what the external factors either demand or will allow?    

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