A good friend of mine runs an IT consulting business.
From the outside, it seems successful. He has solid revenues and marquee clients.
But if you look closely, the business is actually crumbling beneath him.
Because its core fundamental – the “delta” between what competitive pressures allow him to charge his customers and his fixed and variable costs – especially the cost of his W-2 employees – has been shrinking year after year.
Even more ominously, my CEO friend sees this squeeze only being tightened in the years to come by that merciless combination of high customer information plus low switching costs plus competitors willing and able to perform comparable work with lower cost structures and profit expectations and needs.
Now, let’s be clear, entrepreneurs and executives get paid a lot to identify the root of a business problem, its solution, and then to persist, overcome, and win.
And to do so no matter which sacred cows might need to be gored in the process, whether those be an old brand identity, nice office space, long-time employees and of course the all time favorite “the way that things have always been done.”
Alas, my CEO friend, so ambitious, admirable, clear minded and strategically brilliant in so many ways…
…well he sees these swirls of dangerous marketplace and technological change all around him and intellectually understands what he must do yet he does nothing.
This is business stasis, and there’s a strange but solid case to be made that, in spite of how much the speed of business has increased, that it is more of a problem today than ever before.
A first reason for it was outlined by economist Thomas Piketty in his seminal work, Capital In The 21st Century.
Pinketty’s hypothesis was that the affluent now make most of their money not via labor – in the case of business owners, from their company’s operating profits – but from their capital – i.e. their inheritances, stocks, bonds, real estate, and the like.
Thusly too many business owners, like my friend, want to see their businesses perform better, but don’t need them to do so to maintain their comfortable lifestyles.
Combine this economic reality with a certain fatalism that nothing that could be done will make a real difference anyway in the face of the inexorable onslaught of technology and globalization and…
…a certain “deer-in-the-headlights” inertness and inaction that can overtake even the most dynamic and change-oriented among us.
Now, the above is all intellectually interesting, but does not make it excusable, defensible, or right.
Because just as we could not defend a businessperson who purposefully set bags full of $100 bills aflame, nor should a pass be given to those who sit idly by and watch otherwise promising and valuable businesses slowly crumble because of leadership inaction.
No, what these “inert” business owners and executives need is a big bucket of ice water poured over their heads and a firm slap in the face (or several!) to snap them out of it!
And do what they should do – calmly assess the threats facing their businesses now, along with those inexorably rolling down the road.
And get out of their way.
And do something else.
While that “something else” might be different for every business, determining it for a particular business really isn’t that hard.
It is usually as plain as day, and when it isn’t a reasonably astute outsider – a hired consultant or a well-credentialed business friend – in a relatively short amount of Q&A, discussion and then competitive research, can easily surmise the needed business pivots.
From there, it is then up to the owner/executive to do what is their sacred responsibility and charge to do.
To drive change.
The good news is that once the “change snowball” is set in motion, the additional energy needed to keep it rolling down the hill is normally not all that much.
The key is to just get it going. Today. Right now. Without delay.
Because waiting on inexorable fate is no way to live.
Or run a business.
Need to Overcome Stasis in Your Business?
Feeling pricing and margin pressure coming at you from both sides and not sure what to do?
Need a burst of change energy and ideas to get your business unstuck?
If so, we should talk.
And we’ll reach out with our thoughts to help you.