This is an excerpt from a recent article. Please visit articles to read the full article:
As we say farewell to 2007, just over 16,000 UK companies did not plan a Christmas party. Instead, an insolvency practitioner was surgically extracting every pound of value for beleaguered creditors of these failed companies. According to the latest BDO Stoy Hayward Industry Watch report, UK corporate failures will rise by 7% in 2008 and by more than 10% in the leisure sector. So why do they fail? According to The Insolvency Service, the three key reasons for corporate failure are loss of market, failure to deal with tax affairs and ‘other management failures’. Loss of market was cited in just over half of all UK compulsory liquidations. Loss of market is a ‘catch-all’ term that really means that customers were mis-treated, mis-sold, ignored and taken for granted. How should we feel about these corporate fatalities? Undoubtedly, many people’s lives (normally committed staff) will be profoundly affected by their demise, but in the majority of cases, will their customers miss these companies? Probably not and the reason is that most were extraordinarily ordinary, offering mediocre, poor-value goods and services to under-whelmed customers (e.g. undifferentiated food propositions, web sites that nobody needs, unscrupulous home improvement companies and a raft of unnecessary business-to-business intermediaries). Why did these companies exist in the first place? What was their compelling purpose? What did they stand for? Perhaps, not very much which explains why most will not be missed.
Choice, choice and more choice
It can be hard being a consumer. So much choice and so little time to choose. Presently, I am in the market for a new laptop, but can never find the right moment to cease all further research and just buy one. I was in the market for a laptop last year and I will probably still be in the same market next year. The sheer choice is traumatising. Sony presently has eleven different laptop ranges and thousands of different product configurations. Sony is a great company, but I still struggle to choose one of its laptops. What chance then for the plethora of less remarkable laptop companies?
Companies bordering on the irrelevant
Wander down your local high street and be amazed at the oh-so-last-century retailers such as; video rental stores; general stationers; estate agents; travel agents; camera and photo processing shops; and the ubiquitous off-licenses.
The stores may look great and the staff well trained, but in an era of on-line price comparison search engines, millions of consumer-generated product reviews, one-click to buy and next day delivery, do these retailers provide any meaningful value?
So many ordinary businesses to choose from
Today, we are awash with choice, but bereft of companies that leave a lasting positive impression. Mediocre and forgettable businesses, with neither a heart nor soul, peddling ordinary products and services, abound. Sometimes, companies even struggle to deliver average. Recently, I took my family to a well-known cinema chain for a weekend film and was surprised that it was not cleaned between screenings. Perhaps, the company believed that because customers found their seats in their dark, that the litter mountain would go unnoticed. Home cinema just became even more appealing. It seems that aiming for mediocrity is as far as many companies aspire. ‘The mediocre are always at their best’, is how the saying goes.
So what does your business stand for?
It sounds like such an innocent question, but scratch deeper and it reveals some fundamental truths about a company’s strategy and prosperity. ‘Stand for something or fall for anything’ was how Malcolm X, the civil rights activist would rouse his followers. CEO’s should ask themselves what their companies stand for at least twice a year, because a compelling corporate purpose drives profit.