Survival: executing performance

Summary: Most companies tend to focus on the short-term only. But those that perform well don’t last very long; if they survive time, performance is mediocre.

Most companies, like most people, tend to shift focus from long-term to short-term as they age.

Life expectancy

They prefer to concentrate on executing activities directly related to revenue flow that brings the sense of achievement.

However, while the life expectancy of people seems to be on the rise, that of business isn’t quite so.

For example, of the original Forbes 100 companies, in 1917, only thirteen have survived independently to the present day.

Trade off?

Researchers conclude that short-term performers execute very well – until the environment changes. Their competitive advantage declines, which few of them can re-create. Hence as a corporate entity they soon die.

Companies that survive time are adaptable. They withstand the ups and downs of economic, political, market and technological change. However, with a few rare exceptions, they return relatively mediocre or poor performances.

Business demands

Any business faces 2 basic demands:

• Executing current activities to survive today’s challenges
• Adapting those activities to survive tomorrow’s.
  

Both these demands compete for the same resources – money, people, time and performance.

Reactive controls

Theorists say available resources actually define and limit explorations. In fact, lack of resources constrains the company’s exploiting new opportunities. Tomorrow’s possibilities are also checked by the company’s need to execute today.

Familiar surroundings help performance. People can ‘read’ the conditions, anticipate minor changes, coordinate skills sets and consistently fulfil requirements.

But then they tend to become reactive, and prefer to control environments, events and people, so high performance (and revenue) may be sustained. And eventually they may attempt to prevent change.

Expect the unexpected

But continuity isn’t guaranteed in reality. The phenomenon of change is constant and uncontrollable; it will happen whether one wants it, or not.

There’s exposure to new places, new people, new processes and new realities. As a result, past behaviours must change. We need to prepare for the future, and to factor in the unexpected now.

Reciprocal relationships

To create the best product in the business today, tomorrow or whenever, the ability to be in synergy with change is crucial. We need to develop the willingness to learn to change with change to adapt to it.

In the process, anticipating change, getting used to increasingly unfamiliar surroundings, and incorporating innovations is important.

Reactivity fails in the long run because the system’s longevity depends crucially on this ability to adapt. The environment ultimately plays a significant role in any performance.

Cont’d 2… adapting for the future