Why Global Businesses Fail

By M. Isi Eromosele


In the globally connected world we live in today, marketplace environments are constantly changing and evolving. Global companies must resolve to adapt to the changes going on in their respective marketplaces in order to continue to grow.


When successful companies face big changes in their market environment, they often fail to respond effectively. The result is that their businesses often fail as they are unable to compete with more nimble rivals who bring new strategies, products and technologies into the market.


They watch as their stock evaluations decline, their best staff leave and their market shares as well as stock valuations decline. Some of these global companies manage to recover, but many fail and go under.


Why do good companies fail?


Besieged by new challenges in their business environment, many global companies do respond early enough. However, overwhelmingly, many more respond with inappropriate actions.


Active inertia is an organization’s tendency to follow established patterns of behavior, even in response to dramatic and new business environmental shifts. Stuck in the modes of thinking and working in the now outmoded ways that brought them success in the past, these companies simply refuse to face new realties.


To understand why successful companies fail, it is necessary to examine the origins of their success. Many global companies owe their success to a unique combination of strategies, processes and values they devised that originally differentiated them from their competitors.


As the success continued, it emboldened them to refocus their energies on refining their winning systems, rather than innovate to discover new ideas that would enable them to realign their strategies towards being able to adapt to changes within their respective marketplaces.


As the years go by, the fresh thinking that originally propelled these companies to success is replaced by rigid devotion to maintaining the status quo which they already know and are comfortable with.


As changes occur in their respective markets, the old strategies that had brought them success now result in failure.


One or combinations of four things happen:


Strategic frames become blinders. Strategic frames are the mental models that mold how companies see their marketplaces. These business frames provide the answers to key strategic questions such as:


What business are we in? How do we create value? Who are our competitors? Which customers are crucial, and which can we safely ignore?


Transitionary processes harden into permanent routines. Companies lock themselves into a chosen way of implementing strategies and refuse to look at alternatives. Established processes often take on a life of their own.


They cease to be means to an end and become ends in themselves.


Relationships grow into being shackles. Many companies let their relationships turn into shackles, limiting their flexibility and leading them into active inertia.


The need to maintain existing relationships with customers can hinder companies in developing new products or refocusing on new markets.


Values harden into dogmas. A company’s values are the set of deeply held beliefs that unify and inspire its people. Values define how employees see both themselves and their employers.


As companies mature, however, their values often harden into rigid rules and regulations that have legitimacy simply because they’re enshrined in precedent.


Success breeds active inertia, and active inertia breeds failure. But is failure an inevitable consequence of success? In business, the answer is No.


Active inertia exists because the pull of the past is so strong. Trying to break that pull through a radical act of organizational revolution leaves people disoriented and disenfranchised, cut off from the past but unprepared to enter the future.


Companies should build on the foundations of the past even as they teach employees that old strategic frames, processes, relationships and values need to be recast to meet new challenges.


M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance


Copyright Control © 2011 Oseme Group

0 comments:

Copyright 2010 - 2013 Oseme Consulting