Pitfalls and Threats to Business Leadership

In 2000, Fortune Magazine did a survey of American CEOs and business leaders who were forced out. Top reasons were:

• Bad earnings (Poor return on investments, faulty investment decisions)
• People problems (failure to get on with owners and other executives)
• Lifer syndrome (creativity drought resulting from being too long on the job)
• Decision gridlock (lacking influence and political clout to implement ideas)

The critical challenges facing business leaders today are:

1. Globalization (Balancing Pankaj Ghemawat’s 3As i.e.)

• Arbitrage: has to do with exploiting the variations in the availability and cost of accessing critical resources. For instance, situating your production facility in China may provide you with opportunities for significant cost-reduction with respect to labour as against erecting your facility in Western Europe or the United States. (you can ask BMW why they decided to move some of their operations overseas!)
  
• Adaptation: entails tailoring your products to suite target markets. HSBC’s slogan, ‘the world’s local bank” is a pointer to the fact that they package their products to suite their target markets. Standardization may not always prove effective depending on the nature of products and services being offered.
  
• Aggregation: aims at strategically centralising some aspects of your operations or implementing some form of shared services. The leverage point here is scale. With careful case analysis, multinationals can aggregate aspects of their operations for better coordination, increased throughput and overall effectiveness.

2.Technological change

Any business that isn’t internet enabled would simply be unqualified to be called a business in the nano-second world of today. Deployment of business automation systems and e-solutions including business to business and customer to business applications are basic pre-requisites for conducting any sort of business today. Service providers, finance and consulting firms and companies where knowledge and information management constitute core aspects of their business have significantly higher technological investment obligations including Document Management Systems, Information Security and Availability, Business Continuity Planning and host of others.

In our fast changing world, successful companies (by implication companies with sound leadership and management) focus on a few simple rules:

• How to rules -- There are standard methodologies and approach to problem solving.
• Boundary rules -- A niche has been carved out. This forces you to focus on your target market and ignore almost everything else outside your strategic framework.
• Priority rules -- First things first. Resources ought to be allocated on the basis of the projected estimated value derivable from such resource commitment.
• Timing rules -- There’s a time and season for everything. If you would agree with me, we are past the period of mega-bucks profits from computer hardware sales. It’s critical to discern the right moment for a product offering, but this does not in any way negate the fact that a company must be able to pro-actively articulate the needs of consumers and hit them with a solution they never knew they needed!
• Exit rules – There’s a time to be born and a time to die. One of the most critical issues investors face today is pin-pointing to divest, exit or liquidate an investment. A twenty-hour delay in liquidating an investment could have implications in the realm of billions of dollars in losses for global corporations.

Warren Bennis remarked that the new leader is one who commits people to action, converts followers into leaders, and converts leaders into change agents.
Today’s leaders ought to think globally and act globally (not just locally)!

Disruptive Forces: Technology (the internet) and People

The disruptive technology is simply what I call the world’s internet. A few years back, the internet was basically viewed as just another tool for business, communication and entertainment. Most organizations probably just put up a website that displayed minimal corporate information. The internet was perceived to hold so much potential but most did not attach extraordinary importance to maximising its potential at that time.

Today, the internet has truly become the world’s internet. The 21st century is right here and the world has become a totally different place. Globalization (amongst other forces) has now distinguished the internet as the unrivalled platform for conducting any sort of business activity ranging from those of SMEs to multinationals.
The virtual world is fast adopting all the characteristics of the traditional real world and in a few decades, what is referred to as the virtual world at present may hold more significance than the traditional real world. The Matrix after all may prove to be more than just an imaginary concept and a figment of the wachowski brothers’ imagination.

Second Life is a rapidly expanding virtual community that provides an online society within a 3D world, where users can explore, build, socialize and participate in their own economy. A downloadable client program called the Second Life Viewer enables its users, called "Residents", to interact with each other through motional avatars, providing an advanced level of a social network service. Residents can explore, meet other Residents, socialize, participate in individual and group activities, create and trade items (virtual property) and services from one another. Second Life's virtual currency is the Linden Dollar (Linden, or L$) and is exchangeable for US Dollars in a marketplace consisting of residents, Linden Lab and real life companies.

For businesses of whatever size, technology has become an absolutely indispensable tool. In-fact, a comprehensive IT strategy that makes adequate provisions for enterprise-wide knowledge management, performance improvement, process abstractions amongst others is imperative for corporations today and is viewed as a pre-requisite for survival in today’s acutely competitive global business environment. Peter Cohan (one of the world’s top technology strategists) said ‘the few firms that persist and ultimately achieve integrated transactions are more likely to enjoy a sustainable advantage over those that give up’.

Facebook, Google, Yahoo, MySpace and Microsoft are living examples of multi-million, perhaps billion dollar companies whose focus has been on people and Technology. The Foreign Exchange Market is another example of an industry that has so expanded as a result of these twin concepts. Current global daily transactions are upwards of $4 trillion daily!…providing market liquidity and accessibility levels never before experienced. Companies like Currenex have made this possible by connecting over 70 global banks to their state-of-the-art currency exchange engine. This has made Currency speculation a business the average citizen can engage in (though Peter Bain, a foremost trading tutor warns that forex-trading isn’t for the faint at heart but involves serious study, commitment, perseverance and development of a personal trading strategy).

Technology by itself is incapable of repositioning most organizations for high profitability. We live in times of knowledge proliferation and corporations are increasingly recognising the indispensability of the human resource. Warren Bennis remarked in Business Minds that “intellectual capital has supplanted capital as the critical success factor”.
The wealth of today’s organization is resident in its people. The expectations from today’s leaders are therefore totally different from what they used to be.

For those that want to remain relevant, and perhaps maintain relevance, recognition of and exploitation of these core duo resources (i'm not talking about intel processors here) remain central. People and Technology constitute the initial steps to achieving sustainable success, and realizing market dominance in the case of businesses.

It's no more an option for businesses, institutions, governments or individuals. You've got to embrace People and Technology now!