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Reactive vs. Strategic or Who Really Cares if Your Company is a Dinosaur?

Mar 26, 2008
It happens in business, it happens in politics, it happens in life. There are those that wait for things to happen and there are those that make things happen.

There are those that are in control and those that are controlled.

There are those that have concluded it is easier and more enlightening to let things go and let things happen as they do. Perhaps secretly they want to become Buddhist monks and pledge a life of poverty.

Clearly fatalistic, their idea is it is better to "wing it" and keep costs and stress down by not worrying about strategy. Or worry about much of anything. And it works, at least in the short term when things are busy and rolling merrily along.

Because in business if you are good at what you do, it's not so difficult to start small and stay small. In fact, in many ways it's easier; lower overhead, fewer headaches, less investment and certainly less risk.

But staying small is not very interesting, does not scale, does not take advantage of opportunities and in the end is only minimally profitable. Many of these small owners would actually be better off working for someone else.

But not so with larger companies. Larger companies cannot exist without a strategy unless they are a first mover or in a new market. The survival of the fittest simply means those larger companies that are less competitive now will evolve into market bottom feeders and have regular cash flow crises later.

This begs the question of is it easier to deal with a series of cash flow crises than develop a strategy that avoids these crises?

This should be clear to anyone that is putting forth the energy and resources to run a company. It should also be clear to anyone that has ever dealt with a company cash flow crisis.

The obvious conclusion is that strategy puts your company in a position to win; simple reaction means that you are doing what everyone else is doing and that makes it almost impossible to win. In business these companies are called 'dinosaurs' and the business landscape is filled with their fossils.

In markets that are increasingly competitive and global, the playing fields have been leveled. No longer is geography or demographics necessarily a key competitive advantage.

In fact, technology has given the advantage to those that use it and that potential exists even in depressed areas. Today, a company can locate almost anywhere and ship to almost anywhere.

Perhaps our resistance comes from our limited psychology making us become defensive about why we simply react. We humans are filled with pettiness and we often obstinately insist on defending our past decisions; a 'spinned' distortion of past reality is a behavioral trait that seems to be almost universal. To 'spin' the vernacular; it is us.

"We have always done well without a strategy and there is no reason to change that now."

So if something falls outside our simple mental framework we often dismiss it as foolish or 'not applicable here'. We wish it away and in fact away it goes. And we pat ourselves on the back for being so clever. Aren't we the smart ones?

"Why take the hard road and strategize when we can simply sit back and let it roll off our backs? Besides, if one is small, it can't make that much difference anyway."

What is surprising is that all this really should be clear to anyone in business today. Strategic planning and positioning brings competitive advantages to those that use these tools but not to those that don't.

As a vertical market or "space" becomes saturated with competitors, most will be doing similar things. Most blend into the competitive background and have little or no chance of standing out, which is not a problem unless supply exceeds demand. When supply exceeds demand, those that react simply get a decreasing piece of the pie.

For many companies there is a good alternative and that is to simply lower expectations by concluding "we aren't good enough to deserve better." If this is your company just be sure to adjust your budget numbers accordingly especially that number in the lower right hand corner.

Actually it should not even be embarrassing because the markets don't care whether your company does well or not. If you don't have an updated strategy there is no need to be embarrassed. Technically there is nothing to be embarrassed about; no worries.

Because if you don't care enough to develop your strategy, why should anyone else care?
About the Author
Jack Deal is the owner of JD Deal Business Consulting, Watsonville and Santa Cruz, CA. Related articles may be found at http://www.jddeal.com/blog/strategy http://www.freeandinquiringmind.typepad.com
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