We live in a global market that offers—and demands—more for less.
This means organizations have to do what they do better, faster and cheaper than ever before. It also means they have to adapt to a myriad of changes with minimal trauma and distraction. Because it is a global market, an organization’s competitors are no longer just around the corner. Competition can come from any corner of the world from any size enterprise.
At the same time, those who work in and with these organizations also want more for less. They want more income, more personal freedom and more challenge and excitement in what they do. And the global market now offers them multiple options for satisfying their needs.
MORE WITH LESS?
Trying to meet everyone’s expectations of “more with less” is no easy feat. Leaders have been trying to do it for some time with very mixed results. Consider this track record:
• Only 30% of companies with Quality programs say they are successful. Most Quality programs last only two or three years.
• Only 20% of those with self-directed teams say they are getting better results.
• The success rates for reengineering and mergers are equally discouraging—ranging between 20-30% success.
• Only 30% of new incentive plans, such as gainsharing, achieve their desired outcomes.
• The effectiveness of downsizing efforts is even more bleak. An American Management Association study of 700 firms who downsized reported that 86% had seen employee morale collapse, 66% saw no improvement in efficiency and only 50% improved their profits even as long as five years after they downsized.
These developments are but the latest data points in a more significant bigger picture. Looking more broadly at the world of organizations, consider what the following organizations all have in common:
• Cambria Steel
• Guggenheim Exploration
• Lehigh and Wilkes-Barre Coal
• Pressed Steel Car
• Intercontinental Rubber
• Schwarzchild and Sulzberger
• Central Leather
Each of these institutions was one of the top 100 U.S. firms in 1909, but none exists today as an independent entity. They are either out of business or a minor player in some larger corporation. Some were quite large in their glory days (Central Leather was number seven on the 1909 list). Unfortunately they were not able to maintain whatever it was that made them successful. In a few management generations they have disappeared. These seven are certainly not unusual: of the top 100 U.S. industrial firms in 1909, only 14 are still in the elite group today. Only 23 are still around at all!
On the other hand, think about what the following corporations have in common:
• U.S. Steel (now USX)
• E. I. Dupont De Nemours
• Eastman Kodak
• Standard Oil (now Exxon)
These companies were also in the Top 100 in 1909 and they (or the organization of which they play a leading role) are still there based on the latest Fortune Magazine list of the top 500 Industrial firms. But even those in today’s top 100 are anything but secure. Each of the five companies listed above has been undergoing serious business shakeups and downsizing in an attempt to remain competitive in the global market. And other giants such as General Motors, IBM, and Sears have experienced severe economic problems in recent years as profits have been down and thousands have lost their jobs. They are straining to do more with less just like everybody else.
The struggle for life isn’t something peculiar to large corporations. What about the small enterprises that enter the global market’s competitive field every day? Research indicates that approximately one million people in the United States start their own business each year. Unfortunately, by the end of the first year at least 40% of them will be out of business. And more than 80% of the small businesses that survive the first five years will fail in the second five. Is this what the global market will be known for: creating countless shooting stars who burst onto the scene and then fade as rapidly as they appear?
These alarming trends aren’t just in businesses either. Budget cutters are trimming whole departments in government. Schools from kindergartens to universities are closing down or scaling back significantly as the educational structure reshuffles.
Why is it that with all our technical advances, with our unparalleled capacity to learn and store knowledge, with the coming of reengineering, balanced scorecards and Quality management—why is it with all this going for us we are unable to build organizations that can hold up over time? This will be discussed in PART 2.