Why Do Businesses Fail Pt 1

As humans, we all are aware (or at least should be) of our frailty and weakness; the challenge is that people make excuses for who they are rather than develop positive innate traits or learn how to transform so-called 'frailties' into beneficial characteristics. I'm referring to business here.

Business, someone once stated, succeeds by luck! INDEED! But the 'luck' referred to is not as if one is throwing stones into a bowl from a distance from the thrower and anticipates that by 'luck' the stone will drop into the bowl. This 'luck' is also not a mere stroke of genius. In this context, this 'luck' occurs through the unifying efforts of these dichotomous elements - Time and Chance – that result from informed decisions and experience. I am guessing people are agreeing (in affirmation) with me. An adage states that "experience is the best teacher" (but it does not necessarily have to be your own) experience. Therefore, to develop a successful business trait, the business owner, strategist, or shareholders will note and identify what works in the business and what does not (work) and proffer answer(s) to the unasked question. The four aspects are requirements in the decision-making framework - what is its importance, or what works, and what does not work, and answer(s) to the unasked question(s) and its usage will be the topic of another article. Jump back to the article "Why do businesses fail?"

It is a fact that most business failure stems from systemic issues, that is, the inability of the various organs of the business organization to properly, adequately, and efficiently contribute its quota.

Let's start by defining a system (taking a cue) from elementary biology. In biology, it states that the unit of life is the living cell, and the collection of cells performing a similar function is called a tissue, and a collection of tissues together makes up an organ. A group of organs performing independently as a unit makes up a system. An example of business organs includes HR, Sales & Marketing, etc. A business, therefore, irrespective of the number of employees engaged, is considered a system. In the way different organs in the body function seamlessly to ensure that the body sustains its everyday life’s function – more like the way various organs in business function. Whenever an organ malfunctions or performs below optimal, it can be said to be failing.

Now, how does the time and chance relationship contribute to either the success or failure of the business? Before we delve into it, let's put forth another concept to strengthen the time and chance phenomena.

Business Identity

What is business identity? The Business Identity is the reason for the business or the business model. It also describes the unique value that only that business can deliver in the industry such that if that business does not exist, the gap will resurface and persist. The uniqueness is the foundation for the strategic delineation of the company.

The book "Executing Your Strategy - How To Break It Down and Get It Done", by Mark Morgan, Raymond E. Levith, and William Malek argues that to execute business strategy effectively, there are several imperatives that must be in place or part of its initial development (part of its strategy). The first of these imperatives was called the ideation imperative. Mr. Mark Morgan and his colleagues further argued that the elements of ideation imperatives represent the foundation of the business's ability to find its true meaning and create and sustain value in the marketplace. To design and communicate the company's strategy, having the ideation imperatives is the first point of call or phase to invest the business' scarce resources - while synthesizing and executing strategy - business-wide.

Having crafted the identity (Ideation) the next step will be to use the elements contained in the ideation imperative to frame the company's guideline(s) necessary to set the tune on the type of choices (or options) for consideration concerning investment portfolio types in the business.

This ideation imperative can be derived by answering the following questions, as stated by Mark Morgan and his colleagues in the book. The questions are as follows;

-??????? Who are you?

-??????? Why are you here?

-??????? Where are you going?

Any business that can provide the appropriate answers to the above questions and communicate these answers throughout the entire business process has established its identity, purpose, and long-range intentions. Put another way, a good understanding of the business ideation imperative enables the business to create its own distinct space (niche) in the marketplace.

To be continued...

Benjamin Marcel Consultants

At Benjamin Marcel Consultants, we provide consulting services to SMEs desirous of developing the required competence to improve their profitability by implementing winning growth strategies capable of making them leading businesses in their respective industries in sub-Saharan Africa.

Product/Service

Business (Market) Research (BMR)

Perform marketing research of the product/service's viability, complements, and competition, and afterwards develop product(s) and service(s) features (and benefits) required by clients' target market.

Furnish clients with excellent product/service knowledge,?life-cycle, possible KSF, and understanding of the complements market.

Good background knowledge of the product/service entry strategy and sustainability

Business (Diagnostic) Analysis (BDA)

The analysis of industry key players and socio-economic factors for the business product(s) or service(s) characteristics in the marketplace; develop case studies, digital books, and articles (newsletters) designed to convey needed information.

The observed gap creates opportunities for innovation and positioning strategies for growth in the market.

Ability to pre-empt industry players' moves and then strategically build a sustainable and profitable winning market strategy rather than be reactive due to market forces and unexpected activities.

Business Performance Management (Monitoring and Evaluation

Design and implement appropriate performance matrix elements that adequately capture product or service performance for evaluation that best measures the KPIs.

SMEs will create appropriate measures and how best to evaluate them

The activities monitored for better decision-making are attained that are devoid of surprises.

Training

Case studies, slides, and digital books will be developed into training packages sold online and onsite to the target market.

Aid clients during strategic or human resources development sections to understand possible unique situations for clients' industries.

Enable clients to learn the skills required to come up with possible options that clients can use to build and sustain business growth and profits.