Acting Like The Market

Few companies have managed to successfully implement change. Fewer companies have sustained change initiatives long enough to reap the rewards.

Change is difficult for many corporations to achieve and reinventions are rare. Once established, a corporation grows in size and sits comfortably within its business-zone achieving 0% innovation for several years. Little wonder, some companies that make it to the top of their industry ratings drop out after a few years.

The Dynamics of Markets

The market is composed of customers and businesses whose wants are to be satisfied by competing corporations. Markets have remained agile and resilient, and have dictated to players.

The market has a lot to teach corporations. Having no mental models, it hardly experiences immobility. Its actions are speedy and movements are rapid. It doesn’t reward all its participants. Its rewards are reserved only for those playing on top of the game.

Markets are hard to bind by rules but markets have the power to subdue its players. The market don’t always act on the basis of fairplay. Without strict rules and not having a fixed hierarchy, players can reach swift decisions to alter the status quo.

Markets do not experience the bursts of desperation, depression, denial, and hope that corporations face. The market has no lingering memories or remorse. The market does not fear cannibalization, customer channel conflict, or dilution.

The Woes of Corporations

Corporations have suffered woes which have plagued them like locusts on an open field. Unfortunately, many have not realized the source of their non-performance and slow-dying state. Change initiatives are often the solution. Change is neither elusive nor impossible Change as I’ve earlier defined suggests transformation in whatever respect. In the business context, it is transformation to suit the market and a constant redefinition of what the market requires.

Three internal factors contribute to corporate woes – rules, secrets and hierarchies.

  • Rules: Many corporations are bound by too many rules (control systems). These rules stifle innovative endeavors, create mental blocks for employees and lead to the death of new ideas. Some companies have created rules to assist them in defining new offerings. However, because such control systems are programmed for specific results, such results are hardly better than average.
  • Secrets: How many firms open their books to their employees? How many employees are schooled on how to read financial statements? One company in Brazil teaches secretaries and assistants how to read the numbers and form better judgement of the company. During downturn periods, they are challenged to think up improvements. These might include bottom-line impact ideas or identifying offerings for uncontested markets.
  • Hierarchies: Good as they hierarchies are, they either lead to slow change or no change. Consider for instance, purchasing new IT systems for better operations and, enhanced value-delivery. If decisions take 6-18 months to implement, new technology would have overtaken such decisions. Meanwhile, the quicker decision makers would have gained value from implementing the change. Hierarchies can also stifle innovation and change. Getting top executives to sit and agree strategic directions can be time consuming. Google comes to mind here. The company has thousands of employees, yet ideas that will generate millions of dollars can take from a few days to a couple weeks to implement.  How could such a feat be achieved? By running a flat organization that the reality of the “flat” is in tune with the mental model of the idea.

Mimicking the Market

Although corporations have their emotional sides, they can also hasten decision making. This is possible when bridges of hierarchy are burnt and fewer approval points are required. One possibility is to have funds that are more easily accessible and will require few executives to approve.

Corporations need to gather intelligence as required and lead the market with innovative products. Such corporations are the industry leaders – always dictating the pace in the market.  Apple is an example of a pacesetter. On several occasions it has redefined its industry, altered consumer tastes and forced competitors to rethink their own models.

Creative Clubs

Only by redefining itself can a company stay ahead of an ever-changing market. Achieving this will require reshaping control, breaking silos and disrupting barriers to innovation. Corporate leaders also need to think ahead and absorb as much automation as possible while rewarding for performance.

Lastly, companies should constantly think of themselves creative clubs, where all employees are creators and innovators for their world.

About Alex Okoh

Alex is the Managing Partner of Ashford & McGuire Consulting. His over 22 years experience in the banking industry has involved responsibilities in general management, leadership and organizational development. He has functioned in a variety of roles including corporate banking, operations and treasury, often leading projects and initiating and designing processes.

Comments

  1. Akinade Olatunde says:

    The lesser the complicacies in organizational structure, the easier it is for innovation to birth change. Quite insightful sir!

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