Wednesday, September 5, 2018

Why do organizations fail?

Over 250,000 businesses in the US failed last year and do you know the common reason?  Well, it’s obvious none of them did. If they had paid attention to what was going on around them they would not be only a statistic today.  We are also on track this year, regardless of a positive economy and economic outlook, to lose thousands of more businesses, clubs, associations and even churches.  Why, well, it’s simple but also complicated.  What makes it simple is what it is.  What makes it complicated are the steps to take to avoid it.

I’ll keep this short and to the point – every organization that fails does so for one primary reason – they lose market relevance.  They stop providing what their customers want, and; how they want them, where they want them and what they are willing to pay for them.

I could give you dozens of examples going back, oh, let's say fifty years.

Howard Johnson’s is gone.  Do we still have restaurants?

Pan Am is gone. Can we still fly to different places?

Blockbuster is gone.  Can we still watch videos?

Oldsmobile is gone. Can we still buy cars?

Toys “R” Us is gone.  Can we still buy toys?

Borders is gone.  Can we still buy books?

Need I go on?

Keep in mind that your; size, history, market, customer base will not prevent failure.  I don’t care if your revenue is in the billions or thousands, if you market is Toledo or the world or you have been in business for a week or a century.  None of these matter when you lose relevance.

So, to summarize, what are a few of the common reasons why organizations lose relevance?

-They are run by an ego driven senior management team or board.

-Management in these organizations is out of touch with market reality.

-The organization is stuck in what it used to make or sell and how it used to sell it.

-There is a serious disconnect between the employees and management in the organization.

-Their sacred cows (policies, procedures, products etc.) are still their driving forces.

-They are not paying attention to trends and changing customer buying patterns.

-They are unwilling to re-invent themselves.

As a global speaker for over 35 years, this topic for the past several years has been my most requested one both domestically and globally.

But, knowing and doing all of the above and even more will not guarantee you do not lose market relevance and fail if you avoid one critical step.  Do you know what that is?

If you don’t permanently change the mindsets of management and employees to one that learns to embrace uncertainty, change and consistent transformation as a positive, consistent  and necessary mental tool and process, sooner or later no matter how much you try, you will lose relevance either from the top down, bottom up or inside (the organization) to outside (the organization).

Don’t believe me? Just consider a few businesses in your industry, geography or market place who have failed or are failing.

Need a proactive speaker for a meeting on this topic?  Contact me.

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