I am sure that the infinite majority of people who are in their right mind would not like to die. If we focus on the economic world, companies are born, grow, reproduce and also die; a process common to all living things.
The final part is, without a doubt, death and to use terms used in forensic science: the causes of a business death can be various. Death can be due to poor strategy, bad management, political issues, corporate issues and lack of competitiveness, among many others. If we focus on the latter, this strikes me as the key concept. The lack of competitiveness, in my opinion, is the greatest cause of business demise.
Using a generalised view, everyone knows that competitiveness is the ability of a company to adapt to the vicissitudes of the economic ecosystem and to ensure its clients pay for a product or service to the detriment of its competitors.
The competitive advantage
As Michael Porter said in his book –The Competitive Advantage: “The competitive advantage grows fundamentally because of the value that a company is capable of generating. The concept of value represents what buyers are willing to pay, and the growth of this value to a higher level is due to its ability to offer lower prices in relation to its competitors for equivalent benefits or to provide unique benefits in the market that can compensate for higher prices. (…) On a general level, we can affirm that the purpose of any company strategy is to generate an additional value for buyers that is higher than the cost used to generate the product. Therefore, instead of costs, we should use the concept of value in our analysis of competitive position “.
According to Porter, there are only two ways to differentiate competition when it comes to business positioning: costs or value. I would add a third that would be business excellence, this would be a compendium of the two, that is, having the best prices because we have done our research and our costs are lower, most probably because of scaled economies. And in addition, the value perceived by the customer is higher than that of our competitors, possibly motivated by the quality of our production process. These two concepts add up to business excellence, which few companies manage to achieve. That is, the added value that the company provides is superior to its competition and strikes the right balance between quality and price.
Within this balance another very important parameter appears that is time. A company cannot invent a product, commercialise it and expect its success to last over time in a perennial way. This product will require readjustments and adaptations that must be compulsory over time, as well as research and development that are inherent to human beings.
The role of technology
Technology holds a preferential position as an antidote to the demise of business. If one does not have an open mind and rejects technological advances in different areas of the company such as production, logistics, finances, etc., this will undoubtedly accelerate the transition towards an unhealthy business life leading to its termination and eventual disappearance.
To get technological means to employ a whole group of measures that must be taken on in a company to adapt it to the passage of time. A famous sports journalist once said that time is that incorruptible judge that gives and removes reason, a quote that in the case of a company seems very appropriate. Technology must be taken on, assumed or adopted, otherwise entrepreneurially, you are dead.
One only has to look at the case of Nokia, that in 2007, when it was the God of mobile telephony, refused to make cell phones without a physical keyboard – as Steve Jobs had predicted with his iPhone – and now it is laid to rest in the cemetery of fallen business heroes.
Finding a correct, sustainable R&D strategy is absolutely essential for the survival of companies and although it sounds apocalyptic, the obligation of all entrepreneurs and managers of companies is not to reject the advance of science and technology, or otherwise the great job of economic engineering that the creation of a company entails will end up in that cemetery of companies that were the be all an end all at a given moment in time but do not exist anymore. You have to get technological or be prepared to die.
Original article by Jose Antonio Ferreira Dapia, Technology Consultant.
Translated by Conchi Fuentes, Linking English.