How to Bounce Your Business Off the Bottom

Businesses can decline over the years until they no longer have enough working capital to maintain their current course of action. Without drastic change, the business will either be sold or liquidated in bankruptcy court. Change requires a new way of thinking about things, taking risks and making better strategic choices that lead to higher outcomes.

Organizations operate on processes & procedures. The culture of an organization will determine its overall communication and work patterns. When processes & procedures and culture are aligned to market needs it becomes more likely that the business will be able to pull out of its current predicament.

Consider a company that produces a single product that once brought in a lot of money but over the years alternative products have been developed by competitors that are eating away at a shrinking market. Continuing to do the same thing over and over without adjusting course is likely to end in a complete disaster.

Companies usually wait too long to make changes like many of us wait too long to adjust a bad habit. It is a human problem that we avoid change until it is necessary. By being proactive and watching for trends and opportunities it is possible to make smaller and easier to handle changes to keep a company focused on market relevancy.

If your company’s market is dwindling, competition is increasing, and your adjustment capital is dwindling consider a few helpful hints in developing a more sustainable business. Bounce your business off the bottom by answering a few questions…

1. Are you in the right market? Take a hard look at your capacities and market need to ensure your business is still relevant.

2. Are your processes & procedures focused on outcomes? Adjusting processes & procedures can create better outcomes, at lower cost, and more efficiency.

3. Do you have the right people? Ensure you have the right intellectual and skilled capital to transform your company.

4. Are there new markets? It is a global world out there. Companies can open up new markets and reach more customers.

5. Are you giving your customers what they want? Make sure that your business is focused on what the customers need and want.

6. Can you find more value? Take a look at your products/services and see if you can enhance their value.

7. Should you diversify? There are times when it is necessary to add new products and services to ensure that you are not overcapitalized into a single risk.

8. Should you Collaborate? Your product/service might match well with another product/service from another company that can raise the value of both.

Considering Culture in Your Strategic Road Map

A strategy is a roadmap that guides organizations to higher levels of performance that encourages productive growth. Executives can develop excellent business strategies that take into consideration market projection, resource allocation, human capital, and financial streams. To their own detriment, many CEOs do not factor in organizational culture into their strategies and how it impacts organizational goal attainment.

Culture should support business strategy (Eaton & Kilby, 2015). The values and semantics contained within culture should enhance business strategy through proper orientation of people's expectations. If there are contrary elements within a culture, the values should be adjusted to ensure they realign to meet organizational needs.

Consider an example of how culture can support or detract from organizational objectives. Two companies seek to become market leaders, but one company promotes employees based on patronage and the other from performance. These values become embedded into the culture of the organization and create a way of thinking that impacts daily operations.

Over time, poor values will cost the company their productivity and put them into market irrelevance and bankruptcy. Companies thrive off of their intellectual capital and when this is traded for patronage and personal gain the innovative and productive spirit dissipates.

Building a strong culture supports the achievement of organizational objectives by creating a way of thinking. An organization based in service quality should consider a culture that has focused values. Likewise, a company that relies on lean manufacturing promote efficiency.

Culture is a collective pattern of thinking that leads to action. As a whole organization, the actions of individual workers will determine whether or not a company will be successful. Developing the right culture will create social pressure to recruit, promote and perform at certain standards that helps the organization become stronger. A comprehensive strategy must include the soft cultural skills that support goal attainment.

Eaton, D & Kilby G. (2015). Does your organizational culture support your business strategy? Journal of Quality & Participation, 37 (1).

Opening Communication Lines for Better Decision Making

Charles Dickens said in the Tail of Two Cities, “A wonderful fact to reflect upon, that every human creature is constituted to be that profound secret and mystery to every other.” Communication is a process sharing information from one person to the next that lowers this mystery. Problems arise in organizations when communication is not accurate or reflective of actual events. Ensuring lines of communication are open is essential for creating more functional companies through better decision making.

Poor communication wastes intangible assets and creates inefficiencies among resources (Mazzei & Ravazzani, 2015; Hola & Pikhart, 2014). Intangible assets form the nucleus of the company and include relationships, intellectual capital, and decision making. What makes one company different from the next are the internal soft mechanics often ignored because they are not easy to define.

Misinformation can be intentional or unintentional. For example most of us have been subject to rumor or conjecture at one point in our careers. Despite lacking substance, false information can create havoc in our lives and damage work relationships. A corporate culture of rumor mongering is a sure way to destroy productivity in a company quickly.

An inability to solicit and respect multiple perspectives is a sign of short-sighted strategic development. It is easy to make decisions when you have no competing information; try sticking your fingers in your ears next time you don't want to hear something. The problem is that those decisions are based on skewed information and alternatives have not afforded proper weight. Managers expand their channels to ensure they are receiving all of the information needed to make appropriate decisions.

Information is the lifeblood of solid decision making and those who keep their communication lines open are better able to capitalize on that information. Organizations that seek to create productive communication among organizational members find that decisions are well rounded and more holistic in their approach. Short-sighted and self-seeking decisions are a sure way to limit the growth potential of any organization. Open information lines keeps your sonar active and your mind sharp.

Short-term versus Long-Term Strategic Thinking

Strategic thinking is a major component of business planning that sets the course of action that leads to either business success or business failure. Short-term thinking can be problematic as resources are wasted fixing potholes and gaining immediate results without considering long-term solutions. Executives that focus exclusively on short-term results sometimes leave their organizations in worse shape.

A great portion of our day is engaged in crisis management where new problems arise and we must deal with them immediately before the they spread. This process can be effective in the short run but can damage the company in the long-term when the root of the problem is not addressed. The crisis situations will continue to spread and grow as the underlying issues spread.

A strategy should focus on limiting the damage caused by crisis problems while ensuring the root problem is still being addressed. Executives who think short-term will see immediate results but will often damage long-term organizational performance. Jumping from fire to fire is a reactive strategy.

Long-term thinking can save the company money in the future by increasing competitiveness. When the company doesn’t have the ability to implement a long-term strategy, plenty of resources are wasted on counter-productive activities.

For example, a business many continue facing shut-downs due to dilapidated infrastructure. The production line breaks down frequently and requires heavy maintenance to keep going. It has a poor design and raises per product cost leaving a company slowly but surely less competitive by the year.

A long-term thinking will assess the long-term goals of the company and the strategy to get there to determine how to handle this problem. Instead of hiring new maintenance workers and dumping more money into a poor system the long-term thinker invests in a cutting-edge system that affords more adaptability to the production system.

Short-term and long-term strategy can work together. Short-term strategies can fix or minimize immediate problems through proper crisis management but will not ignore the needs of deeper problems. Short-term goals can build into long-term goals that lead to a stronger competitive stance.

Executives should ensure that short-term solutions do not supplant the long-term needs of the company. Even though solving immediate problems is attractive, it is the resolution of long-term issues that separates the exceptional executives from the rest of the herd. Developing a stronger strategy helps to reduce the frequency of short-term distractions by fixing fundamental competitive problems.

CEO Career Breadth Creates Novel Strategies

Companies thrive or die off their ability to find the right type of leadership to manage their daily operations. Investors would be wise to consider the background and depth of experience when hiring their next CEO. A study of CEOs at 250 Fortune companies found that CEO career variety is positively associated with firm-level novelty that offers strategic dynamism and strategic distinctiveness that can help firms change and grow (Crossland, et. al. 2014). 

Strategic novelty is the ability of CEOs to think out of the box and beyond the medium of traditional strategies of those firms within their field. Instead of using only the same strategies, as other firms, they often seek out alternative strategies that could potentially have more lucrative outcomes. Novelty can make the difference between a market leader and market follower.

Career breadth is the multiple industries and places that people have worked over their careers. A CEO who worked in a single industry throughout their career will naturally be indoctrinated into those beliefs and have difficulty thinking about new ways of doing things. A person with wider experience has the ability to think creatively that leads to different results. 

Such CEOs are more likely to seek out experimentation and change as a method of managing the business. As problems arise they aren’t stuck with the status quo and often try and find new ways of doing things. This can help organizations find a way to transform themselves when market difficulties arise. 

The advantages of hiring the right CEO can make a huge difference in the growth potential of a business. Businesses naturally face internal and external challenges that can hamper their growth. CEOs that have a wider breadth of knowledge can put their mind to work on solving these challenges in new ways and hence lead their company to a new level of performance. 

Crossland, C., et. al. (2014). CEO career variety: effects on firm-level strategic and social novelty. Academy of Management Journal, 57 (3).

Service Logic That Solves Customer Problems

The process of developing a better service logic approach requires more than wishful thinking and running the same process over and over in hopes of doing something new. Organizations that focus on integrating their service concept throughout their operations will be rewarded through greater market relevance and customer support. It is helpful to encourage customers to be co-creators and then developing operations around their needs to ensure focus.

Integrated service frameworks relies on taking customers suggestions based on their problems, using their input to develop a salable solution, and then integrating the information throughout operations. The lens of understanding requires the company to think through customer problems and service solutions to successfully move to the next level.

Jobs-to-be-done (JTBD) offers insight into organizational needs to solve customers problems while service-dominant logic (SDL) focuses efforts on the customers needs. Using jobs-to-be-done with service-dominant logic in the viewing of firm marketing programs offers a much higher customer oriented outcome (Bettencourt, et. al. 2014). The design of the operations and marketing process should be based in solving problems.

This provides a much stronger framework for seeing how operational designs do not often coordinate well to a final product or solution. Customers don’t concern themselves with the internal mechanisms of the company but do become acutely aware when a service mistake costs them time, money, or a good time. Upset customers don’t often come back but they are often willing to share information to either the company or other customers.

Understanding customers and drawing them into finding solutions that help the organization to better align its offerings to solving marketing problems is better than shooting blindly at a market opening. The customer provides a gentle hand and will tell you what they are looking for and how to market to them. Organizations must only adjust their data gathering and strategic processes to the customer's needs.

Once the information and product is obtained from the customer it is beneficial to revisit the operations for improvement and better focus on customer needs. It is a feedback process that helps companies take in information, analyze that information, and then adjust operations to meet the market needs and improve sales. Living and breathing organizations that adjust to market problems will outlive their more stagnant cousins through greater market relevancy.

Bettencourt, L., et. al. (2014). A service lens on value creation: marketing’s role in achieving strategic advantage. California Management Review, 57 (1).

Breaking Strategy Into Measurable Employee Actions

All organizations have strategies that help them define their approach to competing on the market. In the corporate world the development of strategy is one important aspect of executive management while successful implementation of that strategy is a second. Solid strategies, that can compete on the market, should be implemented throughout the organization creating deep alignment and competitive advantages. Breaking strategies into executive, managerial, and employee functions helps in finding an improvement blueprint.

The far majority of strategies don't fail at actual design but fail during the implementation process. As strategies are implemented throughout the organization they do not move deep enough to ensure that actions are integrated with operations. Understanding the activities needed at each level of the organization has its benefits for implementation and management.

The process of breaking down strategy into definable actions helps companies convert employee action into measurable outcomes. It provides a larger framework for understanding how each employee either contributes to or detracts from the organization. Likewise, it also offers a better understanding how departmental actions contribute to financial success.

Executive Level

High level corporate strategies are developed to define the needs of the organization and what major functions fulfill those needs. These corporate strategies help in directing departments on their major functions and goals.

Example: The fastest seating and service within the local dining market.

Managerial Level

Each department will have their own goals and functions. Managers break these goals into daily activities and actions. Managers oversea these processes to ensure that everyone is working according to the definitions of the department and the strategies that guide the department. 

Example: Employees should seat and provide drinks for customers within ten minutes of entry.

Employee Level

Employees are trained on very specific functions that might include taking customers orders, refilling machines, or greeting customers. The definition of these functions is finite and offers the ability of the employee to understand their position. 

Example: Greet the customer within two minutes by saying "hello", "welcome", or "good day".

Each level (executive, managerial, and employee) have functions that correspond to their designed spheres of influence. Each of these functions are under the control of the appropriate position. Executives offer higher level strategies, managers provide daily actionable direction to employees, and employees complete specific functions. The level of flexibility is dependent on the actual position itself.

Having a working definition of the functions and objectives of each department and position helps in managing the entire process. It becomes much easier to see how an adjustment in one area can impact the entire chain. For example, adjusting from the fastest service to the friendliest service in the local market will create corresponding adjustments at the departmental and employee levels.

Part of the strategic planning should be to understand how each individual piece fits within the large pie. It is possible to review the market and find where competitive advantages are likely to be found and then break them down throughout the organization until you get to individual actions. Such analysis and planning affords an opportunity to better align actions to strategies that produce higher results.

Guarding the Mind for Better Business Strategy

Strategic decision making is not easy and comes with a number of fallacies that blind us to the actuality of the world around us. Executives should be aware of their bias and how this impacts their strategic decision-making. Using a few critical thinking tools helps to guard the mind from bias and ensure that decisions are more likely to be successful and have the largest impact.

Executives are faced with all types of different types of pressures that range from investors to employees. Each person comes with their own influence and opinion. At times a presiding opinion forms and this puts pressure on everyone else to accept the premises of those opinions without providing critical thought. When you are at the top and your decisions impact a large group of people you don't have the luxury of making momentous mistakes. 

The mind is seen as a manufacturing unit that results in the product of thoughts. These thoughts help us to reach conclusions about varying topics, beliefs, debates, and strategies. Like a factory your mind has inputs that come through the senses, previous understandings, and others opinions that make their way into the production process. 

Strategic decisions are well thought out and often tested conclusions about how a business should proceed. The best business decisions are something more than opinion and based upon a level of fact that reflects the environment in which the business succeeds. Executives are required to provide the rationale and then the supporting evidence to their decisions. 

From a philosophical vantage point few people can step outside themselves to formulate a true opinion based upon actual observation and fact. The same process applies in many ways to forming a strategic opinion without the bias of ones past. Nietzsche once said, 

"The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. But no price is too high to pay for the privilege of owning yourself."
  
The mind is full of fallacies that we pick up from the world around us and social networks in which we exist. Our thoughts are constructed from previous thoughts and ideas based in our childhood experiences, parents beliefs, friends, family and social networks. We are embedded in our social world around us. 

Strategic decisions should free itself from these biases as much as possible. This is where the concept of guardians of the mind come into play. By using a few tips it is possible to help avoid disastrous mistakes that cost companies millions of dollars in poor decision making and strategy implementation. Before making an important decision try and consider the following guardians:

-Scientific Management: Use literature, science, and the scientific method to help make your decisions. Look at what has been discovered and what other studies have concluded before finalizing your decision. Basing your decision on sound scientific findings helps to ensure a higher likelihood of success. 

-Listen to Your Stakeholders: To be successful a strategy will need a wide group of supporters. This means understanding stakeholders opinions will be important to ensuring that the strategy is designed in a way that is most likely to lead to a successful outcome. The more you listen the more you can create win-win situations. 

-Review Your Bias: It is important for the executive to understand the bias he/she has and ensure that those bias are not making their way into the decision-making process. Every person has some level bias based on their background and it is important to ensure the strategy isn't damaged by limited thinking. 

-Avoid Group Think: The worst decisions are often made from group think where people in the same social group reaffirm each others beliefs even though these beliefs are no longer rational. Step outside your social group and look for alternative opinions to make sure you are not simply just pleasing your friends and colleagues. 

-Rearrange the Data: Sound decisions are based upon data. However, people often take data and jam it together in a way that confirms their pr-existing beliefs. Rearrange the data to find alternative explanations and explore those explanations to ensure they are not more logical and sound.

-Create Feedback Loops: Once a strategy has been implemented it is important to have feedback loops to ensure it is fulfilling its objectives. Feedback loops will help adjust and change the strategy before major damage is sustained. Most strategies will need to be changed at some point.

Call for Papers: Globalization of Capital Markets: Implications for Firm Strategies

The increasing integration of global capital markets now makes it easier for firms to access capital outside of their home countries. Firms access international capital markets through a variety of means such as initial public offerings (IPO), seasoned equity offerings (SEO), cross-listings, depository receipts, special purpose acquisition companies (SPACS), shelf offerings, private equity and other informal equity capital channels. Firms can also access debt resources outside their market through bank loans, and foreign bond issues. Finally, cross border flows of venture capital (VC) continue to increase rapidly. The objective of this Special Issue will be to explore the challenges firms face in capital markets beyond their domestic boundaries, be it equity, debt, or VC markets.

SUBMISSION INSTRUCTIONS

The deadline for manuscript submission is May 15, 2015. Manuscripts should be prepared in accordance with Journal of International Management’s Style Guide for Authors:

http://www.elsevier.com/journals/journal-of-international-management/1075-4253/guide-for-authors and submitted through the Journal’s submission website.
To ensure that all manuscripts are correctly identified for consideration for this Special Issue, it is important that authors select ‘SI: Globalization Cap Markets’ when they reach the “Article Type” step in the submission process.

A paper development workshop will be held at the 2015 Academy of Management conference in Vancouver. Final Drafts are due February 28, 2016. Please direct any questions regarding the Special Issue to Igor Filatotchev (Igor.Filatotchev@city.ac.uk), Greg Bell (gbell@udallas.edu) and Abdul Rasheed (abdul@uta.edu).

http://www.journals.elsevier.com/journal-of-international-management/call-for-papers/globalization-of-capital-markets-implications-for-firm-strat/

Poem: The Course Bearing Ship

The Benefits of Environmental Scanning for Business Decision Making

All executives must make decisions from time to time and these are based on the ability to understand the environment in which a company exists. Strategy should naturally follow an environmental scan. Only once a company understands the market, their resources, and their competitors should they formulate a strategy. A proper scan can encourage futures thinking, systems practice, scenario narratives and risk assessment that help companies meet their environmental challenges (Clemens, 2009). 

An environmental scan affords organizations an opportunity to examine their internal and external environment to make better decisions. The scan generally requires the investigation of the internal environment, task environment, and the societal/global environment (Vesper, 1996). Using the three frameworks it is possible to put decisions through a larger decision making filter. They are as follows:

Internal Environment: The internal abilities of the organization to meet new demands. It the ability of management to come to new conclusions, put their abilities to use and focus their resources on mastering challenges. This arena includes human capital, financial resources, and much more.

Task Environment: The tasks and goals that need to be achieved in the local competitive environment. Organizations will need to ensure that they can achieve the purpose and marketing. This environment contains direct competitors to the business.

Societal/Global Environment: The larger environment in which the organization competes. Each industry is pressured by larger global and societal trends that impact its ability to succeed. This may be governmental, sociological, and global pricing. 

Executives that work within difficult environments often scan their environment than those who don’t. For example, hotel executives scan their environment to a greater extent when they experience change, a dynamic environment, and complexity in the task allocation (Jorgaratnam & Wong, 2009). They do this to ensure that they understand the environment and make appropriate strategic changes to best that market. 

Certain types of personalities are more likely scan more than others. For example, a study of 201 hotel executives found that entrepreneurial personalities scanned their environment more than those who are not (Jogaratnam, 2005). They scanned their environment to determine their next moves in order to ensure that their decisions exist within a larger context. 

The environmental scan is not a loose cannon approach. It is a system that affords one the opportunity to judge decisions by various frameworks. This includes the ability to judge organizational resources, with the competitive environment and the global environment to ensure the company is ready to meet these challenges. Without this scan there is a higher likelihood that decisions will be made short-sighted, poorly designed, or short-lived thereby pushing a company down the wrong developmental path.

Clemens, r. (2009). Environmental scanning and scenario planning: a 12-month perspective on applying the viable systems model to developing public sector foresight. Systematic Practice & Action Research, 22 (4).

Jogaratnam, G. (2005). Management style and environmental scanning in the search for business opportunities and challenges. International Journal of Hospitality & Tourism Administration, 6 (1).

Jogaratnam, G. & Wong, K. (2009). Environmental uncertainty and scanning behavior: an assessment of top-level hotel executives. International Journal of Hospitality & Tourism Administration, 10 (1).

Murphy, P. (2008). The Business of Resort Management. Elsevier, San Diego

Vesper, K. (1996). New Venture Experience. Seattle: Vector Books