In the seventies Marks and Spencers was the icon of the retail industry. Everyone used M&S as a benchmark by which they measured their performance and aspired to achieve. National Westminster Bank was the biggest bank in the UK and the bank that handled the Bank of England. British Airways was the major airline in the world and a company that other airlines looked up to.
There were similar organisations in North America as well and other parts of the world. Then the world changed. In the 80’s the world shifted gear. The icons were found to be set in their traditional ways. In fact all three of these companies were challenged to the level that they nearly disappeared. As the icons were bought and sold, broken up and merged, businesses started to re-invent themselves. At the same time this happened, the world opened up in other ways. Technology arrived and provided opportunities that had been science fiction in the past. In addition the world opened up and markets became available that previously were out of reach. It was exciting, great new businesses developed and business was suddenly carried out in new ways. Organisations looked for niche markets that they could operate in, and the icons were organisations that had not necessarily existed fifteen years previously, Google being a prime example. However, in this new age there was one fundamental difference. There was no end game any more. Previously if you were the dominant force in your industry, then you were at the top and others aspired to be like you. It was relatively easy once at the top to maintain that position. In this new age, you may rise to dominate your industry but you can lose that status very quickly. If you want an example of how whole industry sectors are feeling threatened, look at newspapers and television which are concerned about their future in the digital age. Look at telephone companies who are trying to figure out how they will make money when voice over the internet (VOIP) is free. Car companies are faced with trying to figure out how to provide transportation without harming the environment. Every industry is having to raise its game in some way. As one CEO said to me, “We are the best in our industry, we are leading the market and the most profitable. The trouble is, our managers think we have arrived. Our people think we are at the top of the tree.” Then he leans forward and says, “I need them to understand that we are only at a level. Yes, that level is higher than everyone else but it is still only a stepping stone to something greater. No, I don’t know what it looks like but I know that there is a place higher than where we are, and if we don’t find it our competitors will.” So the new age arrived and changed the way we did business. In the past we had the industrial age and then we had the technology age. Now we are in the creativity age. So now businesses seek to re-invent themselves and generate new businesses. It is no longer about having a plan and sticking to it, it is about setting off in a direction and then steering a path or as my Father would have said, “making it up as you go”. But now we find out that “creativity” has gone in the wrong direction. Banks have been creative in areas that have actually destroyed the economy. Re-inventing our business has been taken too literally and greed has clouded good judgement. Many good businesses have re-invented themselves successfully but some have not. A recession is not a bad thing. There were a lot of businesses that should not have been trading and were living on borrowed time due to a boom. A recession gives businesses a reality check and makes them take stock and re-consider their offering and how well geared they are to deliver on it. The real problem is the toxic debts generated by bad policies and practices in the banking sector. Going forward we need creativity to be balanced with good policies and prudent judgement. That means we need to be focused NOW on how we are going to do that. Let us learn from the mistakes and act quickly. Two things are needed:
So I am asking you to consider:
Are our people engaged in the value of the systems, controls, processes and methods we use to govern the business. Do they understand the importance they play in ensuring a sustainable business? Do we encourage creativity but apply good judgement as a test of its sustainability? Can our people contribute to the reality check without feeling threatened? In the current circumstances, use the time wisely to engage people and train them in the value of standards, processes, systems and good governance. Their engagement will be a help in keeping the business focused and grounded.