Over the last few weeks we’ve been discussing the Stages of Industry Growth, outlining the three potential final stages, and explaining that every company – yes every company – will eventually pass through one of these three:
- Transformative: Fueled by Innovation
- Continuous Improvement: Fueled by Desire for Profits and Growth
- Survival: Fueled by Need to Stay Afloat
How do you know which stage, either A, B, or C, is your company’s destiny? Well, that depends upon company leadership decision making, and even more often, when the leadership makes that decision. If you are like 99% of the companies operating in mature markets, for you, the clock is ticking.
Most company’s leadership will profess the desire (and the budgetary support) for option A: Transformation. Every year billions upon billions of dollars are poured into R&D, new product launches, new business models/“pivots,” all in the search for that “Transformative path,” and for some those investment yields spectacular results. As we noted in a past post, it is the rare company that successfully pulls off the Transformative path. We can all “hope” for brilliance, yet hope is not a strategy. Instead we must plan for the much more likely alternative paths of Continuous Improvement or Survival.
Making a decision too late, or even worse, not making a decision at all, inevitably puts a company on a path to Survival, a path accompanied by radical, and often debilitating, Cost-Cutting Measures.
As a result, most companies are best served by anticipating and proactively planning for Continuous Improvement. In order to effectively pursue Continuous Improvement, company leadership needs to recognize the need to improve processes and products in order to regain, maintain or widen their lead over competitors. This path, while requiring a concerted effort over an extended period of time, is less stressful on company culture and employees than attempting to transform the company or radically re-engineer the company. Even so, creating a culture of Continuous Improvement and ultimately seeing substantial change will be the work of months if not years. This is because the process is evolutionary, as opposed to revolutionary (although occasionally well-conceived evolutions result in dynamic revolutions).
Abandon the Notion of Reactive “Cost-Cutting” and Proactively Embrace “Continuous Improvement”
In order for it to be successful, Continuous Improvement requires a willingness to critically examine nearly everything that a company does, looking for opportunities for incremental improvement. This can be difficult as it is hard for us to look in the mirror and critically evaluate current processes, some of which are the result of decades of experience. Critically addressing those long term ways of doing things is hard, because some practices become so ingrained that companies cannot imagine parting with them. Yet, becoming aware of these “Sacred Cows,” and determining how to let them go in favor of something better, is key to the success of the endeavor.
In our next blog we will explore how companies can begin addressing the challenges associated with beginning the process of Continuous Improvement. and help you to avoid outdated and unnecessary Cost-Cutting measures in the meantime.