Cambridge University Press is 487 years old. The company, which was established in 1534, is the world’s oldest publishing house. CUP, as it is popularly known, has published many of the world’s leading writers, thinkers and scientists. The company has been recording mouth-watering successes in its core areas and is currently world’s second largest university press with sales presence, publishing hubs, and offices in more than 40 countries.
CUP seems to get better with age. Its revenue, which is currently in the region of 330million pounds, has been on a steady increase. The company’s market share keeps growing in spite of the intriguing dynamics in the publishing industry. With a wide range of global bestsellers and partnership with a number of organizations from diverse backgrounds, the company’s future appears assured. But that is not the experience of many other companies. Many of the outfits established long after CUP have since become extinct.
Why do some organisations, like mountains, seem to live forever while others have a very short life span? Let’s examine.
Leadership incompetence
Probably the worst tragedy that can befall an organisation is the plague of an incompetent head. Costly as incompetence can be to an organisation, it may still be tolerable in low-cadre officers. But incompetence of the leadership is a disaster because while the influence of a low-ranking officer is restricted and his incompetence has limited impact on the fortune of the organisation, that of the head has a far-reaching effect. The decisions of an incompetent leader take a toll on the organisation and pull it back. More than anything else, leaders are supposed to make decisions that will propel their organisations into prosperity and prepare them for the future. But if the decisions of a leader are wrong on a consistent basis, the only way for the company to go is south.
The major task of a leader is to hand over to his successor an organisation that is more virile and more profitable than the one he inherited. But that is not often the case with incompetent leaders. They weaken the fabric of the organisation and make a minion out of an otherwise strong organisation. Unfortunately, the incompetence of a leader does not come to the fore until the bottom line of the organisation begins to deteriorate.
The tragedy of having an incompetent leader is that he tries to make everyone in the organisation less competent than himself so as to shield his own incompetence from being obvious. This is what Cyril Northcote Parkinson, a management expert, calls injelititis in his book, The Pursuit of Progress, published in 1950. According to Parkinson, injelititis is a situation in which an incompetent leader, in a bid to maintain his hold on the organisation, eases out everyone who is seen as more competent than himself. The implication of this is that the smart people keep their mouths shut to keep their jobs safe, thus leaving the boss to have his way with the running of the business. This will have an adverse impact on the organisation and it will affect its performance.
Leaders often get into the rut of incompetence when they stop developing themselves. The business environment is changing daily and the leader that will be able to lead his organisation through the curve of change is the one who is committed to personal development. Leaders should not be too engrossed with growing their companies that they neglect their personal growth because no leader can take his company to where he has not been. A leader who does not grow on a consistent basis cannot grow his company.
Lack of integrity
The most important attribute of a leader is not being visionary, as critical as it is to the wellbeing of the organisation. Neither is it competence, as important as it is to the leader’s discharge of his duty. It is not even communication or execution as vital as those are. The most important attribute of a leader is integrity. If integrity is lost in leadership, not much is left.
Integrity is important in leadership because every leader does one of two things; he either raises the organisation up to his level or brings it down to his level. Whichever of these he does is a function of where he stands on the integrity scale. Anyone who leads with integrity usually improves the profile of the organisation because he does what is right and encourages the organisation to do what is right as well. He ensures that the organisation complies with the best practices applicable in the industry. Unknown to many, this goes a long way in endearing the market to the company. The importance of this is that for as long as the market can trust the company to work for its interest, it will not lack patronage and for as long as patronage is assured, the organisation’s continuity is guaranteed.
What is important to all stakeholders is trust; they want to have a lasting relationship with organisations they can trust and this is a matter of integrity. Stakeholders are comfortable with organisations that are founded on integrity because they know that such organisations will always have their back. Shareholders want their businesses to be properly managed so that there will be adequate returns on their investment; the best hands want to work for ethically sound companies that they can trust to protect their career interest, the government also appreciates organisations that conduct their businesses with integrity. A company built on integrity enjoys customer preference in a competitive environment because the customers have come to associate the company with quality. The company also reaps value appreciation from financial market. No company can fully realise its potential until it starts conducting its business ethically. Trying to cut corners is being penny wise and pound foolish.
The rise of Enron was phenomenal. But so was its crash. Why did the organisation crash? The leadership lacked integrity; the leadership encouraged cutting corners; the leadership encouraged underhand dealings.
At a time in Nigeria, there was a rash of companies, especially in the financial sector, which seemed to become successful overnight. But when there arose a storm, they were all blown away. The companies could not survive because what kept them strong were the underhand dealings they were involved in. Thus, they went under when the tide changed. What organisations that abhor integrity make on the short run, they lose on the long run.
Denying reality
One other factor that works against the sustainability of organisations is their failure to admit it when things are not going the way they want. Sometimes, because of the volume of resources that has been expended on a project that has failed to fly, an organisation may want to continue putting more money into it hoping for a turnaround. But oftentimes, the project continues to consume money without a commensurate return on investment. This is what is known as the cost sunk fallacy.
Organisations get into the cost sunk fallacy when the leadership is bent on proving to everybody that it was right to take a decision that is obviously wrong. The determinant of the rightness or wrongness of a decision is the result. If the result is not right, the decision is wrong. But when the leadership, either as a result of warped conviction or arrant arrogance, continues to defend a wrong position, it sinks into the cost sunk fallacy. The truth is that the best of leaders sometimes make mistakes. But once they realise this, they do everything to correct it, not bothering about their image. But when a leader is more particular about his image than he is about the cost of sinking resources in a project that is destined for failure, he puts the organisation in serious danger.
When a decision is made in good time to cut loss by stopping a project that fails to meet expectations, the loss to the organisation will be minimised. When an aspect of a company keeps gulping resources without commensurate results, it affects the liquidity of the organisation and may end up bringing down the whole organisation because a chain is only as strong as its weakest link. So, coming to terms early with what works and what does not is a way of saving an organisation from collapse.
Wrong strategy
Strategy is very important to the success of any organisation. Companies are run on visions but strategy is the feet on which visions run. If the strategy is right, the vision will be actualised but when the strategy is wrong, the vision is bound to fail. It has been said that every organisational failure is traceable to wrong strategy. Hence, successful organisations continuously tweak their strategies to ensure that what they are doing is what they need to do to get the kind of result they need.
But sometimes organisations are so enamoured by a strategy that worked in the past that they are unwilling to try something new. But they forget that even strategies have a lifespan. There is a time to do away with a strategy that worked in the past.
For many years, the strategy employed by 7-Up Bottling Company Nigeria Plc to sell products to its distributors was the Direct Sales System. The company expended money on logistics but ended up accumulating debts as many of the distributors declined to pay for products on time. This affected the liquidity of the company until it changed its strategy.
A few years ago, the company adopted a new strategy known as Alternate Sales and Distribution System. With this, the company has deregulated its distribution process. Rather than supplying before getting paid, the company insists on distributors paying before being supplied products. This has improved the liquidity and the efficiency of the company as it gets paid before supplying its distributors and it also knows ahead of production the exact number of products it is going to need. By changing its strategy, 7-Up has changed its experience; it has become more efficient and more profitable. What works for 7-Up will work for other companies.
Being gung ho about a particular strategy to the point of not willing to do away with it when it becomes necessary is not in the interest of any organisation. A company should be willing to change a strategy that fails to deliver the result it expects.
Poor customer service
Research has shown that it costs five times more to get a new customer than to retain the current one. When a company lacks the culture of treating customers well, it positions itself for customer haemorrhage. A company that consistently loses customers is on its way to becoming history.
Customer service is the process of ensuring customer satisfaction with a product or service. This usually takes place during a transaction, which may be in form of an in-person interaction, a phone call or self-service systems.
If properly handled, customer service can result in an increase of the customer base. But research has shown that poor customer service is the major reason for customers calling it quits with a company and its products.
According to the U.S. Small Business Administration, 68 per cent of customers leave because they are upset with the treatment they’ve received. Harvard Business Review also states that 48 per cent of customers who had a negative experience told 10 or more others. That means, not only did the customers leave the company, they took others with them.
In Understanding Customers, Ruby Newell-Legner, the author, says it takes 12 positive experiences to make up for one unresolved negative experience. A report by McKinsey has it that 70 per cent of buying experiences are based on how the customer feels they are being treated. Another report by RightNow says 89 per cent of consumers began doing business with a competitor following a poor customer experience.
So, customer service is critical to keeping a business in business. If customers are not well treated, they seek an alternative which they believe will satisfy their yearnings.
However, so much has been said about customer service. But stripped of the ornaments and getting down to brass tacks, what really is it? Customer service is treating a customer like royalty. It is giving customers an experience that makes them want to repeat the patronage of a service or product. Customer service as a concept is understood but it is not often practiced by customer service staff because they do not understand the Golden Rule principle. If they did, they would treat others as they would want to be treated were roles to be reversed. What makes customer service staff commit to customer service ideal is their imbibing the Golden Rule principle. An employee in an organisation is a customer elsewhere; would that employee want to be treated like filth as a customer? So customer service managers should drill this in to their staff to improve their service. If this is really understood, no employee will want to treat a customer shabbily because he knows that he will also be a customer somewhere else.
Last line
To guard against business failure, getting leadership, strategy and customer service right is non-negotiable.
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