If you don't like your situation, move: you're not a tree!

Planning vs. Reaction

A tree is only static in appearance. In reality, it is constantly renewing leaves, sharing resources with neighboring trees, putting out new roots, and putting out pollen to increase its domain. If the tree didn't do these things, the competition with its neighbors for immediate resources would leave it barren in a short period of time. In fact, trees have many strategies to continually update, compete, and stay alive. The more active a species is in seeking out resources, the stronger it becomes and the faster it spreads. In nature, passivity condemns.

You must ask yourself: Is your business more static than a tree?

Many businesses incorporate some element that, at the time, made them competitive. Nonetheless, now this advantage has disappeared or has been assimilated by the environment. Last year’s added-value element has been added to the pile and therefore, clients are willing to pay less money for it (or to reject increases in price, although your production may have become more costly) and are doubtless in search of substitutes.

Often, businesses do not really know where their competitive advantage comes from. They thus do not know how to feed it or renew it. Mistakenly, they think that it will continue to exist ad infinitum. However, they have not realized that any competitive advantage is a limited strategy that lasts until the next substitute or improvement cycle in the sector. So, this previously-competitive company becomes a traditional business. This is just a euphemism to say an outdated or old-fashioned company. Remember that a company is not only obsolete for missing the train of innovation or technology. It also happens if a company does not renew or reconsider the management factor or service focus or pay attention to what really matters.

With a business model that is competitively out-of-date, complicated business crises can arise from an increasingly competitive environment, sectoral disruption, an economic slump, or the burnout of key people. If something causes such situations, it is the disappearance of resources for reinvention and renewal.

If you start with a business model that is out-of-date in competitivity, or unfamiliar with cyclical threats or the current factors for competitivity in the sector, you start from an inferior and subordinate position. What should be a competitive update of your company will become a business crisis.

In the same way that it takes much longer to die of starvation than from a binge, the effects of a loss of competitivity are slow and difficult to reverse. However, they are easy to determine if one takes an exhaustive, unbiased analysis of the situation. Although the effects of a lack of competitivity are slow and allow you to seek excuses by blaming others, an entrepreneur should always seek help when they detect that their environment is becoming dry and opportunities are increasingly difficult to find. Know that excuses and blame have never brought a tree back to life.

Marck Madí — Senior Manager, Strategic Management Division (Spain)