In the environment where 627,000 new businesses open and 595,000 businesses shut down each year, sustaining the value of a business is becoming increasingly challenging. Many companies are trying radical approaches to become more agile as they realized they have to achieve the same speed of growth as its startup competition despite the added layers of complexities.
70% of businesses fail during the first 10 years of establishment, according to the Bureau of Labor Statistics. It is hard to start something new but it is even harder to retain your presence even if you make it through the first phase. For those lucky few who have a business on its path to glory, you need to be careful about how you scale. The types and magnitudes of the risks your business deals with evolving as your company matures.
1. Risk Management and Future Proofing
Any enterprise will always operate in an environment where threats are constant. Even if it stays in one industry serving one customer segment, there is no guaranteed safety or certainty. No Goliath is ever impervious. The bigger a business gets, the bigger the unforeseen risks. Thus, it is crucial that risk management and placing guardrails become part of the day-to-day operation.
We live in a litigious society. Competitors, customers, employees, and partners can make legal claims that could result in devastating financial loss. Even scarier, the government can come knocking on your door to seize your assets or otherwise critically debilitate your operations.
According to Oberheiden P.C., a corporate investigations legal team with 100 years of FBI experience, the most important thing to do is “avoid the number one mistake of crisis management, to panic.” And succumbing to panic will be inevitable if you don’t prepare for the worst-case scenarios before any of them occurs. Strengthening the legal department and ensuring their input in how you manage your daily operations is how you can best minimize these vulnerabilities.
2. Digital Inside and Out
Going digital is now simply part of our everyday life. Even a traveling food truck has a digital presence to attract and engage with customers. We have big data and more information inflows than we can ever consume. Despite this, about 30% of business costs come from poor data and the decisions made based on them.
Thanks to big data, we have solved the problem of obtaining data points at every touchpoint in the company’s internal and external workflows. The next level issue many companies struggle with is dissecting and analyzing the data instantaneously and accurately. Investing in data analytics is key and automating data gathering and analysis as much as possible would be pivotal in gaining competitive advantage.
In addition, many companies neglect to invest in tools that help automate and enhance employee workflows. Relying on manual processes or asking people to deliver machine-like efficiency and results without providing the necessary tools is how a business can struggle to remain profitable even with high growth.
3. Intentional Org and Culture Design
Talent and people management were voted the number one concern by CEOs in 2019. Millennials change jobs much more frequently, defying the generational traditions of preferring to stay put in one place and building a long-term career path. The new waves of the workforce are not afraid to ditch their jobs if the culture does not fit. They know that they have options in this global gig economy.
A new approach is needed. Companies like Google applied radically different approaches to people such as allowing up to 20% of the employees’ time to be spent on outside-of-work passion projects. There is no one universal method that works for all organizations. However, without a thoughtful design of culture, no company will have sustainable value.