Richard Martin says businesses need Corporate Robustness
October 31, 2011
The Canadian dollar descended below parity with the US dollar over the last few weeks. Now its back above parity (at least as I write this). The US has moved to impose a travellers tax for people entering the country. The Bank of Canada and the Federal Reserve may or may not raise interest rates. Steve Jobs passed away and we dont know how Apple will fare under new leadership.
These are pretty tame events compared to others. Turkey just had an earthquake. European government finances have been in turmoil for over two years. Muammar Kaddafi has apparently been executed after months of civil war in Libya. Chinese companies are ripping off the ideas of Western companies who set up production facilities there. We live in turbulent world and this is why we all need to be as resilient and robust as possible.
Ive been saying this for years now, but it bears repeating: No one can predict what will happen next. However, the solution isnt to try to create more certainty, because that doesnt exist. The only solution is to build what Im now calling Corporate Robustness. Corporate Robustness goes beyond simple resiliency, which is the ability to recover from mistakes and disruptions. Corporate Robustness is the ability to survive and even thrive in turbulent environments, absorbing shocks, and steering through the fog and ice floes to get to the desired destination.
Here are some elements of corporate robustness:
Use debt intelligently to invest in building business, not to create an empire that feeds the egos of senior management and owners.
Maintain cash reserves to weather downturns and to invest in short-term opportunities.
Surround yourself with the best people you can.
Be wary of the competition while putting your true focus on serving existing and potential customers.
Periodically review your processes and inputs so youre as efficient and effective as possible.
Remember that Rome wasnt built in a day. While the media and the occasional lucky break lend credence to the idea of instant success, in reality most raging successes are built one brick at a time through disciplined application of a few core practices and principles.
In battle, you always have to set up a secure base from which to operate while sending out scouting parties. Maintain the integrity of your core business while experimenting with new markets, products, technologies, resources, etc. This allows you to experiment while managing risks.
You can try to imitate your competition, but lasting success accrues to those who can bypass the competition by redefining products and markets. Think of how Apple didnt try to create an imitation Blackberry, with the same security features, but instead recombined existing hardware and software to create the iPhone, really a miniature handheld computer that leverages the tremendous power of the Internet and also happens to be a phone.
Stay continually at least one tactical bound ahead of the competition by continually upgrading your market leading products and penetrating deeper into the customer segments you already occupy and control.
Maintain an offensive mindset. No one ever won a battle or a war by hunkering down and adopting a bunker mentality. An offensive mindset doesnt necessarily mean youre always attacking. Rather, its about gaining and maintaining the initiative. If you dont have it, fight for it. If you have it, work to keep it at all costs.
These are just a few elements of what it entails to be a robust business, to adopt a Corporate Robustness mindset. Ill be elaborating more on this in the months to come. In the meantime, look at your own situation to see how you compare with these principles, both as individuals and as organizations.
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