BUSINESS CHALLENGES 2008 SURVEY

Executives surveyed report concern about strategic direction and the management process for getting there

We conducted a survey of business executives (in August 2008) about the current health of their businesses, their business challenges and management challenges. Though this was not a large enough survey to draw conclusions about the general business climate (and it was conducted before the financial industry’s meltdown), we wanted to share with you the results, to give you an idea of what challenges other business leaders are seeing and working on.

About the Surveyed Group

Several dozen business owners and executives were surveyed. The companies ranged in size from a small real estate development firm to a 23,000 telecommunications company. The average size firm was 2,543 people. The respondents were predominately involved in professional service firms.

CURRENT STATE OF THE BUSINESS

To start, we asked respondents how their companies were doing.

• 36% of respondents reported that their companies were currently achieving high growth and profitability
• A full 45% reported that their companies were experiencing no or stagnant growth and weak profitability, and
• 18% reported their companies in a state of declining revenues and/or profits.

The Challenge of Sustaining High Growth

All of the high growth companies reported that they expected their growth to continue. When asked, however, whether they were concerned about how to sustain that growth:

• Only 25% said they were not concerned, while
• 75% said they were concerned or somewhat concerned.

Several mentioned specific concerns, including:

• "There is a generational change going on in our company, and those of us who are retiring are concerned that our customers will not receive the same service levels they have come to expect."
• "We believe we have found and developed a niche that offers promise in the world of environmental and energy concerns. The challenge is to create an organizational model of growth - and to set realistic goals for growth."

The Challenge of Revitalizing a Stagnant Company

All of the stagnant companies reported that they had strategies for revitalizing their companies. That’s only a start, because

• Only 43% said that their strategies were being implemented, while
• 57% said that their strategies were either not or only somewhat being implemented

Furthermore, when asked if they were confident whether the implementation of their strategies would be enough to improve performance,

• Only 40% reported confidence, while
• 60% said they were not confident or unsure

The Challenge of Turning Around a Declining Company

All the companies reporting that their revenues and/or profits were declining said that they had developed a turnaround plan – and that it was showing signs of working, though as one respondent put it,

• "Our business has had many external factors to deal with, including that our industry as a whole is in decline. It is still very early but, indications are that we should be in a good position."

SPECIFIC BUSINESS CHALLENGES – both External and Internal

We asked respondents what their first, second and third specific business challenges were.

As we looked at the responses, it was clear that the type of challenge they mentioned seemed to fall into two categories:

1. External challenges, i.e., what is going on in the industry that we have to react to and hopefully even capitalize on. These we have no control over.
   
   
2. Internal challenges, i.e., what is going on within our company that is hampering us. These challenges we do – or should have control over.

More of the external challenges showed up on the list of respondents’ #1 Challenge. Then most of the internal challenges showed up more in challenges #2 and #3.

For example, here are some of the outside challenges that respondents reported:

• Health of the banking community (and this was before the meltdown!)
• Global supply of product
• Industry consolidation
• Unfavorable market trend
• Weak economy
• Rising raw material and transportation costs
• A difficult economy and declining consumer sentiment

Here are some of the internal challenges they reported:

• Defining goals for growth
• Defining the parameters to achieve growth goals
• Getting the right people in the right place
• Improving our sales process
• Organizational change to positively impact the culture for driving necessary progress
• Encouraging team efforts to develop business
• Lean staffing
• Unmotivated employees
• Execution
• An inefficient cost structure that will require much difficult change to work through and correct
• Instilling a "customer service" ethic in a new generation of employees
• Developing the next generation of leaders
• Nobody dares to "rock the boat"
• Understanding and managing the financial considerations involved

Note that some of the Internal Challenges have to do with business processes (e.g., the "sales process" as mentioned about), but even more have to do with the human side of business, i.e., the organization, motivation, the sense of team, and even one remote mention of leadership.

FIVE MAJOR LEADERSHIP CHALLENGES

We also asked respondents to identify what problems they face on five specific aspects of running a company, including: business direction, people, leadership, culture, strategic management. Here’s how our respondents came out on these five challenges.

#1 Challenge: Business Direction

Sixty percent of respondents cited this challenge, which made it the number one challenge. We posed three possible conditions, all of which got roughly the same number of "votes."

• We lack a clear and/or smart business strategy and direction.
• We lack a good plan for creating growth.

And reflecting on the challenge of implementing strategy,

• We have a Mission and Business Strategy, but we’re not achieving it.

Observation: Business direction is always important, but in these times of huge change, it is even more critical to business success. Put positively, it gives a business a great opportunity to seize the moment and chart a course that will put it into the industry leader position.

#2 Challenge: Strategic Management Problems

Fifty percent of respondents cited this challenge – a close second to Business Direction. Of the questions we asked, respondents cited two top problems:

• Organizational Alignment: Our organization is not aligned around our strategy and most important priorities.
• The Management Team: Members of the top management team do not collaborate together to address challenges that cross functional lines.

Followed by these other problems:

• Strategic Performance Measurements: We don’t have a good sense of the key measures of our business – and where we stand on them.
• Business Processes: We’re not as good as competitors in the key processes of our business – and don’t have a process for improving them.

Observation: We were surprised that Strategic Management was recognized as a problem. It is often just tolerated, while management in many companies get more concerned about people or process problems. But those people and process problems often manifest when there is not a good strategic management system.

#3 Challenge: Leadership Problems

Thirty percent of respondents cited leadership as a problem. Reflecting primarily on their own leadership, the most common problem cited was:

• My communication is not inspiring people to greater performance.

Other leadership problems acknowledged by a few were:

• I’m not passionate about the company – or my role as its leader.
• I don’t delegate well and thus hold people and the company back.
• I’m fearful of making mistakes – and thus don’t take prudent risks.

One person added to the list: "We need to bring on stronger leaders. Our strategy change requires different people."

Observation: It is healthy that a good percent of the respondents were willing to look at their own leadership and acknowledge that their leadership could be part of the challenge – and thus be part of the answer to their company’s problems.

#4 Challenge: Culture Problems

Thirty percent of respondents also cited culture as a problem. By far and away the most frequently checked complaint was:

• There’s no sense of "team" spirit.

Also cited were:

• People are cynical – and resistant to change.
• Inattention to results.

Observation: The power of a team spirit is immense. It is often what separates great performing companies from also-rans. And, especially now in today’s tough economy, where fear is rampant, having a great, positive team is a huge competitive advantage. All of the other dimensions addressed earlier, i.e., a clear business direction, a strong strategic management system and good leadership are actually powerful ingredients in fostering that sense of team – and capitalizing on it.

#5 Challenge: People Problems

Twenty percent of respondents cited people problems. The primary complaint was:

• No one seems to care or be passionate about our mission and strategy.

Also cited were:

• We have trouble attracting and keeping good staff.
• A new generation of employees...a new level of entitlement expectations!

Observation: People problems continually seem to stand in the way of good performance – and thus are frequently cited as the problem keeping us from succeeding. Good for this group of respondents that the vast majority of them did not see their people dimension as a problem! They must have great people and great ways of working with those people.

SUMMARY

Every once in a while, it can be helpful to step back from the normal agenda, and take stock of these five leadership challenges. Often hidden within them are great opportunities for revitalizing companies, awakening even greater commitment, enthusiasm and commitment of people, and organizing their efforts for even greater impact – all to grow revenues and increase the bottom line.

Thank you for taking the time to participate in the survey. I hope you have found this summary of the results informative and useful.

Dar Gillett
President, Noble Business Solutions

For your information:

• CEO Insights: Want to read an interview with a CEO who faced all (and more) of the challenges identified above in a failing company, which he and his top team turned into an industry leader? In this interview (from our leadership newsletter), he shares what he learned about revitalizing companies. You may be surprised by what he considers the main causes of the turnaround and his resulting leadership advice.
  
  
• New book: NOBLE ENTERPRISE: The Commonsense Guide to Uplifting People and Profits provides insights and practical steps for addressing the challenges that survey respondents cited. It also includes the story of how the management team of one failing company revitalized its people and profits. For more info or to order, go to www.noblebusinesssolutions.com/NobleEnterpriseBook.html.
  
  
• Leadership Newsletter: If you are not yet a subscriber to our Leadership in a New Light newsletter, you can subscribe right here.