Things change. How ready is your organisation when they do? Gary Hamel and C.K. Prahalad, two business academics, came up with the idea of core competence in the 1990s – the collection of resources and skills that set you apart from the rest.
Writing in the Harvard Business Review, they asked which companies will survive the changes that come along and argued that it would depend on whose view of the future was driving things.
Will that be us or our competitors?
As managers or leaders in organisations we can usually list who our customers are right now, what capabilities we have and who we are competing against.
Can we say the same about the future?
How will our customer mix change, what capabilities will we have and how will the competition morph and transform?
If we don’t have answers to the questions about the future, or we think the future will be the same as it is today, the writers argue, we’re can’t expect to stay a market leader.
There are two strategies we reach for when trying to improve performance – cut costs and grow revenue.
The first is getting harder to do. The second even harder.
The challenge organisations have in the West, particularly in the UK and U.S. is that they are very good at taking out costs.
For 30 years, they have cut headcount and improved the accounting performance of organisations, so now there is very little that can be saved from operating costs.
Yet, managers spend 97% of their time thinking about the urgent things they have to deal with, and a tiny amount of time building a collective view about the future.
If we want to grow market share, we have to take business away from the competition or create new markets.
The hardest thing in business is to overcome inertia – the reluctance of customers to move from an existing, tried and tested solution.
At the same time, customers are eager for new thinking and capability that will help them get ahead.
The primary goal for many organisations, therefore, should be not just to improve productivity and quality but to create new products and businesses.
Thinking in 10 year phases may be a good idea – 2 to learn about the new way and 8 to execute and build a customer base.
That way, we will always be able to do something relevant when the future arrives.