Engaging in strategic planning that allows you to imagine what will be next in your industry is paramount for business survival.
Evanston, Il (Vocus/PRWEB) April 13, 2011
Firms large and small may be surprised to learn that staying in business for more than 50 years is becoming an anomaly. According to research done by Richard A. Morris, principal of ROI Consulting in Evanston, Ill., only 13% of the companies on the Fortune 500 list in 1955 remained there in 2010. The long-term survival odds are equally poor for small businesses, with the Family Firm Institute reporting that less than 13% of family businesses successfully make it into the third generation. “Most business owners do not think of their company as having a lifespan. But like people and other living things, a business has only so many years before it gets old and tired, and predators – competitors – challenge it for domination,” Morris says.
Blockbuster, which declared bankruptcy in September 2010, is just one example of a business model that lasted for a short time – less than 30 years. “They stuck too long to a successful brick-and-mortar format. As an industry leader, why didn’t they come up with the competition-crushing idea of sending discs by mail and vending them on every street corner?” questions Morris. “They failed to look beyond their company and industry practices.”
To avoid this pitfall, Morris encourages business leaders and his students at Lake Forest Graduate School of Management to engage in strategic thinking that looks outside their industry to identify both opportunities and threats. He points out that technology has made the world smaller, allowing competition to crop up quickly from new, often unexpected sources. “Threats are not a physical place like China -- they are ideas that come from outside your industry. The largest threat to a business may be to continue to do what has always worked in the past,” Morris observes. “Engaging in strategic planning that allows you to imagine what will be next in your industry is paramount for business survival.”
To be one of those 13% of businesses that thrive into the future, companies also need to involve all stakeholders -- including the board, managers, and key employees -- in the strategic planning process. “Everyone needs a voice in the process, and all valid ideas should be considered,” Morris advises. “Equally important, everyone has to leave the strategic planning session willing to support the ideas that will most likely lead to success. This means leaving behind the other suggestions and sometimes the very differentiation that has made the business successful in the past.”
Richard Morris is principal of Evanston-based ROI (Resource for Ownership Intelligence) Consulting which helps family owners expand and pass down their business to subsequent generations. He also provides family business education, consulting and strategic planning for cooperatives, franchises and associations, and is an adjunct professor at the Lake Forest Graduate School of Management. Previously, he managed marketing and acquisitions for his family's 80-year-old privately held company, Fel-Pro Incorporated, and served on its Board of Directors until the sale of the business in 1998. Morris also co-authored the book “Kids, Wealth and Consequences: Ensuring a Responsible Financial Future for the Next Generation” (Bloomberg Press).