The Trap: ”Business Is Going Well”
Let’s imagine a company like this;
- That is one of the three companies, which are industry leading in total sales,
- Whose stocks and purchase costs are under the control,
- Its efficiency during production is satisfying,
- That fulfils profitability goals,
- Where the job applications increase consistently,
- Its technological infrastructure is sufficient,
- That places in the tax ranking,
- That has started to implement new investment decisions,
- Where financial institutions visit frequently,
- That requests partnership & purchase for the company.
And there can be more than these…
Who would not like to be a top manager or part owner of such a company?
And again, when we take a peek in the sector, in which the company is; in the turnover ranking, the rival firm that stands in front of the above-mentioned company has taken investment of world’s giant, and the signatures are new put to that. It has transferred the technology through this agreement. There is not much to draw the attention for the first. Another company following the ranking has set to a new marketing campaign. And the other is on the way of a new assertive product launch, still the other one has successfully completed the digital transformation investments that it has been pressed ahead with for 3-4 years, etc.
When we look at the country- and world-wide general macroeconomic equilibrium; because of the pandemic, there are contractions, however in some countries, serious potentials are in question for products…
After a while, a technological innovation for the efficiency, which can significantly reduce product costs, has been sold by one of the global competitors in the sector.
However, in our company is in good form! -careless about recent developments-
On the other hand, senior management meetings have become monotonous for so long, and the decisions for daily work seems almost like being on autopilot.
Essentially issues concerning the past and present; such as planning of new matters, steady growth of the company, employment, social responsibility projects, determination of credits terms by the financial institutions by bargaining, competitors that are in a difficult situation, actions for increasing of prices and salaries…
As an expert, my diagnosis is ‘management blindness’… I do not know what you think! It is unavoidable that the company’s performance worsens day by day in the medium or long run.
Jeff Bezos, founder of Amazon, answers the question about the steady-increasing performance of Amazon shares in the market in an interview as follows;
”Wall Street analysts evaluated positively our past and current financial statements. That is why our stock market performance is very good; However, I only talk about the future and plan it with my managers. We prepare the financial statements of the next two or three periods and then put it into practice.”
Researches show that some countries have fallen into the trap of “median in national income.” It shows also that companies have fallen into similar situation, because of some strategic decisions, which are not taken for the future, or are taken wrongly, when things are going well.
In this way, companies first go into a period of stagnation and then regression… The solution of this circumstance is to identify and build a new future that will be based on the establishment, energy, and desires of the company. Fast and flexible decision mechanisms, renewed business model for sustainable growth and thereafter updated financial model, cash flow management, digital operational structure based on advanced technology, corporate intelligence, and best senior management performance…
Technology is always alive even competitors slow down…
Head of Consultancy, TDG Global