Business Model

False Perceptions – A Destructive Force

Strategic plans built on faulty beliefs are sure to fail. Change can occur quickly and the average lifespan of a business model may only be a few years before modifications or a complete restructuring is required. With that said, change does not occur unnoticed overnight — subtle clues (that are easily recognizable in hindsight) can be observed, allowing the organization the much-needed time to adapt.

It takes passion and commitment to grow a company and entrepreneurs must believe in their dream in order to overcome skepticism. Unfortunately, sometimes the same drive and ambition that built the company can cause its destruction. Over time business leaders develop a skewed perception of the company’s capabilities and position in the marketplace. Often this is due to the business leader’s internal fear—they will hold tightly to what worked in the past afraid to change, even if all evidence suggest the need for a new approach.

In 1942 Joseph Schumpeter in his work entitled “Capitalism, Socialism and Democracy” coined the phrase “Creative Destruction” defined as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Once again this concept is gaining popularity and being quoted by economist as they try to explain economic volatility. This resurrection is not due to a belief that innovation or creativity has increased but rather that the rate of destruction has accelerated.

It could be argued that each and every company will someday reach a point where the significant market shifts will no longer support the business model. If adjustments had been made throughout the years, these changes could have been seen as new opportunities rather than threats.

The following questions have been selected based on their ability to discover market shifts. This portion of the strategic thinking process is best performed in a group setting with individuals from different departments, providing the organization an enhanced perspective.

  • What has changed in the marketplace during the last 5-10 years?
  • What is currently changing in the market?
  • Is the industry (and demand for products/services) being affected by:
    • Technology
    • Environmental or political issues
    • Change in taste, behaviors or preferences
    • Economic issues or buying power
    • New Competitors

Successful strategic planning requires rigorous thinking and honest assessment. To avoid false perceptions, historical financial data and past performance is included in the process. People can lie to themselves, but numbers will always tell the truth.

To learn more about how to grow company growth visit www.BusinessSimplyPut.com and look for the eBook titled, “Planning Your Company’s Growth A 10 Step Guide to the Strategic Planning Process”. A FREE Coach Note is also available for download.

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Lori educates and inspires entrepreneurs. Her company Business Simply Put provides information, advice and tools to succeed in business. Whether you are starting a company or growing an existing business, these tools will define your pathway to success. For more information visit www.BusinessSimplyPut.com or send an email to [email protected]. She loves to hear from inspired entrepreneurs!

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