4 reasons why corporate leaders fail in adversities

In the previous post we saw some of the challenges faced by the large firms of today. These challenges are generating constraints within the environment in which large firms operate. These challenges could be used to create the need for innovation of it can cripple the corporate leader’s decision making process. Some of the reasons leaders fail to take advantage of the adversity are mentioned below.

Failing to notice or ignore the early warnings:

Leaders of large firms often fail to notice the shifts in demographic, technology and regulations. Gary Hamel, author of ‘The Future of Management’ notes that many executives don’t pay sufficient attention to the early warning signs. For instance, after the September 11, 2001 terror attacks on the US, the economy saw red. People after that were looking for cheaper cars according to the car manufactures like GM and Ford. They failed to notice that they were not only looking for cheaper cars but also eco friendly and fuel efficient cars. This gave the German and Japanese car manufactures the advantage in the American markets.

Tackling adversity head on, rather than seeking to leverage it: When the corporate leaders face challenges, they try and take it head on and neutralize them, rather than finding a way to use them to their advantage. Like the large western pharmaceutical companies prefer to lobby and patent their drugs to keep foreign companies, rather than spending resources on researching and innovating.

Addressing new problems with old flames of reference: Leaders often find new battles as per the action plans that worked in the past. They fail to realize that the times and circumstances would have changed and deploying the same action plan may not yield the same results. For instance, all consumer goods brands continue to relay on TV advertising, even though it is clear that the consumers want to engage brands in a two way dialogue using social media like Facebook and Twitter.

Thinking small when facing big challenges: Leaders prefer to play safe when facing big challenges. This might not have the required impact to convert the challenge into advantage. The amount of risk that needs to be taken is not taken, keeping the challenge as a challenge and not advantage from it.

It is a fact that adversity can be faced by all levels of companies. Bigger the corporate, bigger would be the challenges and bigger would be the opportunities.