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7 Deadly Sins of Business Strategy

        posted by , April 08, 2013

Will your business play a part in the future?

Sustainable competitive advantage is the ability of a business to survive into the future. It's a strategy a firm embraces to endure for the long term.

When a business suddenly implodes in a dramatic failure or fades away in a long painful decline — it's most often the result of a failure to build a sustainable competitive advantage.

Definition: Sustainable Competitive Advantage

A sustainable competitive advantage is a superior business capability that endures.


There are two primary reasons that businesses strategies fail:

1. Excessive prioritization of short term goals.
2. Failure to adapt to change.

These basic strategy failures appear as 7 primary symptoms. Businesses that show these symptoms may be destined for failure:


1. Losing Your Best People

Much of a firm's competitive advantage is in the tacit knowledge of its employees.

When a firm's best employees start leaving, it's a bad sign for the long term survival of the business.

A negative corporate culture is the primary reason that good people leave. This might include corporate habits such as keeping people in the dark, overworking employees (unsustainable workload) and tolerance of toxic behavior.


2. Excessive Financial Risk

Failure to apply risk management to investments to ensure that investment risk doesn't threaten the survival of a business.


3. Failure to Innovate

Competitive advantage quickly fades without innovation.

External change such as competition, technology, customer preferences and regulations force a business to continuously innovate to maintain competitive advantage.

Businesses that fail to innovation are most likely to fail.


4. Failure to Improve Quality

Quality is the value of your products and efficiency of your processes. When quality isn't continuously improved it has a tendency to decline. Drops in quality are the hallmark of business failure.


5. Neglect of Reputation

The reputation of your business is a key asset that ensures your survival into the future. Programs such as corporate social responsibility, ethics and compliance can help to protect and grow your reputation.


6. Detachment From Reality

Strategy formation is a painful process that stretches the creative abilities of everyone involved. There are intense late night sessions. People build on each other's ideas. At the end the strategy is acceptable to everyone involved in the formation process. This doesn't mean it makes an sense in the context of reality.

As with any creative work product, strategies are sometimes disconnected with business realities. It's important to validate and assess strategies in a realistic manner.


7. Unsustainable Business Practices

Environmental sustainability is the ability of the planet itself to endure.

It's increasingly common for customers, partners, employees and regulators to demand environmental sustainability from businesses.

Environmental sustainability is linked to the sustainability of the global financial system and nations. These systems tend to react when threatened. It's likely that the future will provide great financial incentives for businesses that have a neutral or positive impact on the environment.

If your business model and practices are unsustainable — you won't likely be part of the future.


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