Thanks to Tim Banting for these thoughts.
six major external contexts that become catalysts for failure or transformation:-
1. Customers – customer needs change,
2. Technology – technology advances force a change in direction or add complexities,
3. Competition – competitors forge ahead, e.g., Dell overtaking Gateway or Starbucks vs. Maxwell House, et al,
4. Globalization – expansion into new markets increases complexity,
5. Capital markets – e.g., the dollar or interest rates go up or down, and
6. Regulation – the government deregulates, e.g., aviation, or adds regulations, e.g., securities industries.
Effective leadership is all about anticipating and adjusting to external contexts and events.
10 reasons that good companies fail:
1. Status quo management – senior management doesn’t want to rock the boat. Let’s just do things the way we’ve always done it.
2. Success breeds failure – e.g., management becomes arrogant and complacent and alienates its’ customers or doesn’t understand the changing market demands
3. Neglect of emerging markets
4. Non-traditional competition – e.g., niche players create new markets – Starbucks and the specialty coffee movement
5. Internal conflicts – executive level conflicts adversely affect the ability of the executive team to work effectively together,
6. Cost inefficiencies
7. Regulation barriers
8. Rapid technology advances – e.g., Big Blue (IBM) got left behind in the personal pc revolution
9. Rapid deregulation
10. Unexpected events – e.g. recession