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Master your future now to prevent regrets later

You can hardly pick up the paper or watch the news today without hearing someone complain about the downsizing going on in the corporate world. But perhaps some of the downsizing may be necessary. After all, if an organization suddenly finds itself losing ground against competitors that are able to produce products and services much more efficiently, the fastest path to higher operating efficiency is to reduce costs.
Certainly, a downsizing is preferable to the slow death of an organization because of its inability to be competitive. However, it’s unlikely that massive head-count reductions will provide any long-term answers to a company’s inability to compete. And there is ample evidence that these types of restructurings are destructive to future competitiveness.
The preferred route to higher competitive efficiency (which can be defined as revenue divided by the costs to produce the revenue) is increasing revenues. But it takes more time to reliably grow revenues than it does to reduce costs. It also takes foresight and consistent actions that don’t necessarily produce any revenue this year. So you could say that if the senior managers responsible for downsizing today had directed the company more effectively in the past, they would have found ways to grow revenue and avoid the undeniable social and business consequences of a downsizing. No matter which way you slice it, the only reason for a large downsizing is inadequate anticipation of the future sometime in the past.
But before we start throwing rocks, understand that foreseeing the future is no easy task. In fact, given the rapid rate of change in the business world, it is probably senior management’s most difficult task. Yet some companies obviously do it well enough to become industry leaders. So what’s their secret?
You could say that the companies that have managed to succeed despite the amazing rate of change in the business world are creating their futures with actions they are taking now. Senior executives in these companies have developed strategies and practices that allow the organization to compete in the arena of the future. They are also dedicating corporate resources to getting other people in the organization to understand that future, the opportunities for the organization and what’s necessary now in order to compete successfully in the future.
For example, Motorola Inc. has dedicated itself to personal portable communication. For at least the last 10 years it has been in the process of planning for and building a global personal-communication satellite system that will allow you to be called anywhere in the world on a communication device small enough to wear on your wrist.
Did the technology, laws or markets exist 10 years ago to make this product a reality? No, but that didn’t stop Motorola from starting to develop the capabilities to build it, market it and distribute it in anticipation of the market moving in that direction, and given the company’s commitment to influencing the market.
Most companies, however, haven’t developed the ability to operate with this kind of future focus. All too often, senior management gets caught in the trap of spending a significant majority of its time on today’s operations and how those operations need to change in order to meet this year’s, or at best next year’s, performance goals.
The most this way of managing ever allows for is incremental improvement over today’s performance. Certainly an improvement on what you can do today counts in the business world (as evidenced by Wall Street reactions to downsizing). But it is insufficient to ensure the ability to be competitive in the businesses of five to 10 years down the road.
Gary Hamel and C.K. Prahaled in their seminal work, “Competing for the Future,” estimate that senior managers in large corporations spend less than 12 percent of their time focused on the future three or more years out, and less than 3 percent of their time developing an aligned view about that future within the organization. Given the rapid rates of change in the business world, it’s no wonder then that most larger organizations spend much of their time and resources playing catch-up or trying to buy and absorb other, usually smaller, organizations whose management has focused on gaining market leadership in the future.
However, all the evidence shows that playing the catch-up game, either internally or via acquisition, dooms a company to being a follower in the marketplace. Activities like benchmarking industry leaders, while valuable and even necessary, do not put a company out in front. And issues that you can read about in any business periodical, such as quality or re-engineering, are simply a price of entry into the marketplace today. Any senior management team still putting a majority of focus on such issues is trying to compete on yesterday’s battleground, and is unlikely to become an industry leader anytime soon.
It’s also true that buying other companies that are market leaders seldom leads to market leadership for the company doing the buying. It seems that something invaluable gets lost when leadership from the absorbed company invariably goes its own way and the survivors get absorbed into the buyer’s culture.
A focus on improving today’s results or discovering how today’s market leaders achieved their success won’t allow you to compete against competitors–known and unknown–who are in the process of inventing new marketplaces or reinventing current markets. Instead it takes an ability to create intentions, strategies and actions that allow an organization to start creating a new future now. Industry leadership calls for making something happen that wasn’t going to happen anyway. Effective competition is about making sure that it is your organization that makes it happen in your industry.
Whether you are small, medium, Fortune 500, for-profit or non-profit makes little difference. The new battlegrounds for markets of the future are foresight, creating breakthroughs with current resources and speed of change. The organizations that put a focus on creating the future are the ones that will reap the most benefits and ensure their competitiveness into the future.
(Paul Fraser is president of PDF Associates, an organizational-development and management-consulting firm specializing in accelerating change for organizations.)

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