f we look at business strategies, the frequency of some company changes might make us amazed.
Based on thus, we can easily recognize two type of companies:
- companies in constant evolution
- companies that rarely change
At first glance, the problem for companies that are constantly changing or evolving would seem to lie in the minds of managers with not clear ideas about strategies
. And that should be true.
In fact, if you ask managers about the dilemma that afflicts companies today you probably get the feeling that main problem to face off is what to do next, unlike what happened in the past when the main problem was how to do something specific better.
Before being able to judge one or the other organization’s type, we should outline some general points on how a business is born.
First, we need to clarify that a business model life does not depend upon the right model chosen at a given time
That was true at one time. Nowadays we observe that the market cycle (product life cycle, production cycle, sales cycle, etc.) is becoming shorter and somewhat unpredictable and so also the business model life.
When deciding the business nature in which you would like to take part, the three main aspects to evaluate are:
- a prerequisite for the environment (market, company structure, customers and technology)
- a prerequisite for the mission
- the assumption about basic skills
Scenario and market situation needs to be clear to the company that goes to the market.
The main problem companies are faceing today is about changes among those areas; they occur quickly and in turn the framework becomes obsolete very soon.
Companies are usually involved in monitoring the three areas mentioned above. They are well organized in monitoring the first part of the model, the environmental one. Contrariwise, the skills which represent the tools that allow the mission to become operational are more difficult to keep under control.
About the mission:
What is the appropriate time to move towards a new one?
Looking at the way the business was born, when environment change became clear they force the organization to review its skills and sometimes even its mission within both market and society.
When certain market changes occur - cases of joint ventures or mergers, available new technologies, changes in the regulatory framework, just to name a few - companies could be forced to review their entire business to decide whether it is still valid. Since changes occur every day in our age, it is really difficult to understand how companies could remain attached to their business model for a long time.
This is also well known thanks to the competitive ability concept rapresneted by the Porter's 5 Forces Model of Competition,
At this point, we may already venture the idea that being fixed
on a specific business model for a long time cannot really be synonymous with the fact that a company has made the right decision.
Friedrich Nietzsche wrote:
“The truth is that the truth changes”.
But then, why do some companies stay longer than necessary with their original business models? Because they stop thinking and therefore also discussing.
We often observe that in order to quickly be successful, companies forget the hypotheses of their models. They remember the answers, but they forget the questions that originally arose.
Business becomes culture and the risk is that people accept that culture without questioning whether the hypotheses are still valid.
Clear and precise ideas are the most dangerous: nobody dare to change it.
Therefore, it is easy to see companies that insist on outdated products or solutions. The business model is like a sail of a boat. When the wind direction or force suddenly change, we must remodel the sail.