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The big, bad bear Featured

9:42am EDT July 22, 2002

You’ve heard the tale: Two hikers were walking through the woods when they came upon a huge, hungry bear that was about to charge them. One hiker immediately put down his pack, took off his heavy hiking boots and started to put on his lightweight running shoes.

“What are you doing? You can’t possibly outrun that hungry bear!” his companion said.

The first hiker finished tying his shoes and looked up at his friend.

“I don’t have to outrun that bear,” he said calmly. “I just have to outrun you.”

Many executives seem paralyzed with fear, believing that the tasks facing them are impossible. They fear the bear when they need not. All they need to do is outperform their closest competitor.

This month’s column is about reducing, even eliminating the fear of the bear. In this continuing exploration of the strategic planning process, examine your operating environment to understand the real threats, which enables you to ignore imagined ones and make sound, reality-based business decisions.

Let’s look at four facets that constitute your immediate operating environment: competitors, suppliers, creditors and labor.

1. Competitors — Imagine that you systematically investigate, track and maintain records on your competitors, but they don’t monitor your firm or mutual competitors. This information lets you take advantage of many opportunities. Imagine you are trying to grow through horizontal diversification (buying competitors), and one of your sales reps discovers a competitor has a serious cash-flow problem.

This information gives you a significant advantage in timing and negotiating this acquisition. Gathering data can range from a full-fledged corporate espionage unit to simply having folders for information which members of your organization discover. As Sun Tzu once said, “If you know yourself and you know the enemy, you need not fear the results of a hundred battles.”

2. Suppliers — Knowledge of your suppliers is critical. ISO 9000 certification is simply an institutionalization of such knowledge. Your ability to discern which suppliers can deliver needed components based on the strengths of each supplier (time, cost, quality, etc.) is a competitive weapon. As long as you maintain better relationships than your competitors, you need not fear the bear. Vendor certification programs are tools that enhance this advantage.

3. Creditors — In your business, your relationship with your banker, angel investor, venture capitalist or creditors may dominate everything. However, some executives obsess needlessly, questioning whether they have maintained adequate control of their firms. Accurate knowledge lets owners sleep at night. Your proper worry is your “relative” cost of capital, not whether it’s available — an imagined bear.

4. Labor — If you are unionized, understanding your relationship with labor can make or break your business. Putting into place a plan to improve that relationship may be the most important thing you do. But if you remain ignorant of your workers’ unified concerns, you can do irreversible harm — quickly.

Absent a union, you face a different, but no less important, set of issues. Building a corporate culture to recruit and retain the very best people is imperative. It’s one thing to instruct subordinates to perform tasks and quite another to inspire them to excellence. Only by really understanding their motivations, fears and hopes can you anticipate and respond appropriately.

Too often we fear being eaten by the proverbial bear. In a thoughtfully planned world, the real concerns are competition, suppliers, creditors and employees. If you do better in the latter three categories, and understand your competition, you need never fear the bear.

Lance Kurke, Ph.D, is president of Kurke & Associates Inc., a Pittsburgh-based strategic planning firm. He is president of the CEO Club of Pittsburgh, serves on the faculty at Duquesne University, and is an adjunct at Carnegie Mellon University. Reach him at (412) 281-2930 or at kurke@msn.com.