5 Threats To You and Your Business

July 17th, 2009

by John R. Sedivy

As I had mentioned some time ago, I have a background in systems engineering. The great thing about systems engineering is that it not only applies to engineering, but to project management, and to business in general. The philosophies and methodologies can apply to big business, small business, or even individuals. For some the identified concepts are a way of life.

I just started reading “Systems Thinking: Managing Chaos and Complexity” by Jamshid Gharajedaghi and came across a concept in the opening chapter about the five forces that have the potential to erode competitive advantage or simply turn a success into failure. Most individuals and businesses are success oriented, and rightly so – as what you focus on expands. However, once you achieve success it is important to know what to look out for to ensure your success is not short lived. Here are five threats to your success as outlined in “Systems Thinking”:

1. Imitation
2. Inertia
3. Suboptimization
4. Change Of Game
5. Shift of Paradigm

I will address each in greater detail in the following sections.

Imitation
People and businesses imitate successful people and businesses – they just can’t help themselves. If you create something new and it becomes a wild success – it is nearly guaranteed that other individuals and businesses will spring up and attempt to imitate your success. Some will fail, some will succeed, and some may even do it better than you, although in a different manner. What staves off failure from imitation is having a distinct personality. If two things are equal, what would make your product or service worth seeking out compared to the competition. Generally in my experience a distinct style and personality wins.

Let’s use social media as an example. Websites such as Facebook are wildly popular – in fact, at the time of this writing, Facebook is the number four website in terms of traffic as ranked by Alexa. As a result there are a number of copycats that have been created in attempt to dethrone, or at least capture some of this traffic, and therefore revenue. But these websites are not receiving nearly the traffic or publicity as Facebook. This is because Facebook offers a unique character that the competitors have not seemed to get quite right.

Inertia
According to the author of “Systems Thinking,” “the more success an organization has with a particular technology, the higher is its resistance to the prospect of change.” The momentum that is built up from success of a break-through technology can make you a sitting duck for another business to disrupt your position by implementing another disruptive technology. Spectacular success and accompanying success can make one a sitting duck for such disruption. Just because a technology or process achieved great success for you in the past does not mean it will continue to do so in the future.

Once your success has been achieved, you have changed the rules of the game – and you need to begin looking for the next best thing – slight improvements to a product or service are not likely the answer either, a complete overhaul may be in order. Consider a redesign in lieu of simple patchwork.

Suboptimization
If one action leads to your success as an individual or business, it makes sense to continue performing the same action more often, or adding more of the same ingredient. Or does it? Not necessarily. More of a once successful action or ingredient does not necessarily equal more success. In fact, adding more of the same may be self-destructive when the situation does not call for it. Here’s why.

When you originally made a given decision, performed an activity, or developed a product, it occurred in one moment in time with a specific set of circumstances. The world – and circumstances with it, are constantly in a state of change. Using a “one size fits all approach” is rarely effective, because as you are staying the same, the world and environment in general, is changing. Continuing down this path leads to suboptimization and actually lessens your returns or progress over time.

Change Of Game
Hand-in-hand with suboptimization is change of game. Your success ultimately changes the rules of the game. Changing rules require changing solutions. For example, if as a business you invent a computer that is twice as powerful as existing computers, and it is successful in the marketplace – you have changed the game. You (and your competitors) will need to work harder to surpass the new standard. As the saying goes: Be careful what you ask for!

Shift Of Paradigm
The effects of the preceding four threats compound over time and may force a shift of paradigm. This is the ultimate threat to your success in that the existing rules no longer apply. Conventional wisdom is questioned by a few and everything that has seemed to work in the past no longer has the desired effect. The few who questioned the original paradigm generally drive the change as others gradually come on board. The longer it takes for you to recognize and adopt the new paradigm, the more potentially devastating the effects.

The five threats outlined in this article can have a devastating effect on your individual or business success if ignored. But as discussed in this article there are ways around these threats. Threat of imitation can be countered by having a distinct personality. The threat of inertia may be overcome by lessening your resistance to change. The threat of suboptimization may be countered by not being afraid to sometimes disregard your previous work and start from scratch with a new design.

The change of game threat may be minimized by revisiting the solutions to your problems and periodically asking yourself if the same solutions still apply or if the rules have changed. Finally, as an individual or business you should be ever watchful of paradigm shifts. This can be accomplished by reading the latest literature in your field, monitoring others in your industry, and above all change the rules yourself – by achieving previously unparalleled success. These solutions are not one size fits all, but should be used as a starting point to consider your unique situation.

-John R. Sedivy of Cape Cod Branding