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10 Signs Your Organization Failed to Leverage Competitive Intelligence

When organizations resist change and fail to adapt to the ever-evolving marketplace, as predicted through competitive intelligence, they're doomed to fail. If you can catch the symptoms early enough, your CEO and others in leadership positions may have a chance, with the help of CI, to turn things around and save the patient.

Profit margins are declining

Declining profit margins are an early warning sign that an organization has encountered strategic misalignment, which is a fancy way of saying that the organization's operations aren't in sync with its goals. Strategic misalignment usually triggers a downward spiral that goes something like this:

1. Strategic misalignment inhibits the organization's ability to compete as aggressively and successfully as its competitors.
2. Profit margins begin to decline as the organization attempts to compete on price alone.
3. Entrepreneurial behavior and creativity are replaced by an inwardly focused bureaucracy.
4. A crisis occurs that threatens the future of the organization.

Declining profit margins indicate a need to look outside the organization for new opportunities. Avoid the temptation to turn inward.

Focus shifts from performance to politics

Organizations that focus on performance pay special attention to future opportunities, technological shifts, new product creation, and innovation — all performance drivers.

Organizations that focus on politics allow personal power and ego to make critical decisions. In most cases, when politics take precedence over performance, the ability of the firm to engage in continual reinvention approaches zero.

Egos are killing initiatives

Egos stifle creativity and innovation, blind executives to opportunities and threats, and bully anyone who tries to speak up. They cost your organization customers, vendors, employees, and reputation. How sensitive can someone be to a customer's needs if she's already certain that the organization is doing its best to meet those needs?

The most successful companies have corporate humility. From the topmost executive down to the part-time worker bee, employees of successful companies have a commitment to "no ego trips allowed." When you see big egos driving an organization, it's usually headed for the cliff.

You have to fight with your boss to do the right thing

If you and others in your company have to fight the boss to do what's best for your company, the organization is probably in trouble. The working stiffs who deal with customers, suppliers, distributors, and competitors on a daily basis often have keen insight into what the organization can do to improve and what it must do to remain competitive.

When bosses don't encourage their underlings or don't listen to their ideas and solutions, at some point that rejection becomes institutionalized, and moving important information up the corporate ladder becomes nearly impossible.

Top talent starts leaving the company

If the most talented people start to leave the organization, sound the sirens for three reasons:

  • Talent drives the innovation that's required for the organization to remain competitive.

  • One of the main reasons why talented individuals leave organizations is because they believe that the organization is going in the wrong direction and they have no power to make it change course.

  • Your talent may be heading straight to your competitors.

The most talented individuals are usually only the first to leave because they're the most capable of finding a new job. Others will follow as the wheels start to come off the company.

Engage your top talent in CI and listen to what they have to say about the direction in which the organization is headed.

Few or no new, high-growth, high-profit products are in the works

Stall-warning horns keep aircraft pilots from making major mistakes by blaring when the angle of attack and airspeed of the aircraft are nearing a stall — when the airplane stops flying and can go into a spin and crash.

The stall-warning horn for companies should sound when the number of new high-growth, high-profit products drops off or disappears. After all, new products are the lifeblood of a company's future.

Leadership starts focusing more internally than externally

Company leadership can develop internal focus. When frame-breaking change or overwhelming competition hits a market, turning attention toward internal operations is often much easier and more comfortable than looking at external threats and opportunities.

However, losing focus on external realities is predictably deadly for companies. The key is to never lose sight of the firm's emerging context.

The company adopts downsizing as a strategy

One of the most flawed yet still popular "solutions" to increasing earnings has been an approach called downsizing — generally, cutting 10 to 20 percent of the firm's overhead (usually by laying off employees) to increase profits. Research has demonstrated that downsizing is at best a momentary or short-term fix because it only serves to cover up the real problem until it rears its ugly head again within a few quarters.

"Too many people" usually isn't the real problem plaguing companies that go the downsizing route. And when those companies downsize, often they're laying off the people who didn't cause the problem in order to keep the people who did.

Senior management forgets that the people make the profit

When senior management forgets that their people make the profit, that attitude ultimately goes straight to the customer . . . on its way to the bottom line.

No one focuses on creativity and discovering the next big thing

At the root of the other nine signs that your organization is in trouble is a lack of focus on creativity and innovation. The absence of creativity usually results in the company's demise.

Help your company maintain an atmosphere of creativity by encouraging the adoption of the ten values of high-performing companies. Successful companies use these values to get on top — and then stay there. Just think of 3M, where employees are expected to spend a percentage of their time thinking about new concepts and products (doing so is actually in their job description).

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