A recent Dun & Bradsheet analysis (1) reports on the alarming rate of small business failure over the last 12 months. The report states that Australian business failures have trended steadily upwards since 2008, with the greatest increase in the last three years. Clearly, the economic and tight credit conditions are significant contributors.
A key finding of the D&B report (2)states that these failures place Australia in the same risk category as a number of countries being impacted by the euro-zone debt crisis, such as Portugal, Spain and Italy!
But a further analysis of these failures reveals something more alarming. The more in-depth analysis of this situation by the Australian Securities and Investment Commission (3) (ASIC) reveals that the "poor strategic management" of these businesses was a much higher contributor to failure than the poor economic and trading conditions. And this applies to medium and larger businesses as well!
I am concerned by the view expressed by several leaders and commentators that strategy is "unimportant" or "irrelevant" in these uncertain and complex times. I believe it reveals a knee-jerk reaction and superficial understanding of the concept of strategy. Moreover, it often encourages ad-hoc and poorly conceived responses to a very challenging operating environment.
A recent Dun & Bradsheet analysis (1) reports on the alarming rate of small business failure over the last 12 months. The report states that Australian business failures have trended steadily upwards since 2008, with the greatest increase in the last three years. Clearly, the economic and tight credit conditions are significant contributors.
A key finding of the D&B report (2)states that these failures place Australia in the same risk category as a number of countries being impacted by the euro-zone debt crisis, such as Portugal, Spain and Italy!
But a further analysis of these failures reveals something more alarming. The more in-depth analysis of this situation by the Australian Securities and Investment Commission (3) (ASIC) reveals that the "poor strategic management" of these businesses was a much higher contributor to failure than the poor economic and trading conditions. And this applies to medium and larger businesses as well!
I am concerned by the view expressed by several leaders and commentators that strategy is "unimportant" or "irrelevant" in these uncertain and complex times. I believe it reveals a knee-jerk reaction and superficial understanding of the concept of strategy. Moreover, it often encourages ad-hoc and poorly conceived responses to a very challenging operating environment.
Dr Norman Chorn is a highly experienced business strategist helping organisations and individuals be resilient and adaptive for an uncertain future. Well known to many as the ‘business doctor’!
By integrating the principles of neuroscience with strategy and economics Norman achieves innovative approaches to achieve peak performance within organisations. He specialises in creating strategy for the rapidly changing and uncertain future and can help you and your organisation.
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