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Identifying and understanding organizational challenges

Understanding organization challenges is at the heart of successful strategic plans. There are challenges everywhere both with in and out side the organizational boundaries. Clarity of challenges enables an organization to assess probability of achieving goals, and formulating plans to remove the road blocks on the way, identifying latent opportunities in the challenges – challenges are a pack of hidden opportunities. Organization challenges when addressed proactively provide a company with opportunity for creating future or else can spell a disaster. Strategic plans are the means of addressing these organizational challenges and making the most of the the opportunities that accompany the challenges. Complacency can un-sight the challenges around the corner and in turn may deprive a company of great opportunity.

Beat complacence
There are times when organizations are quite relaxed, when they are the monopolies in their markets or when there is buoyancy in the market place or a great strategy in the previous iteration that ensured higher switching costs for customers or unique inimitable differentiation in products and services. These are the times when organizations are complacent about their leadership position in the industry. History is replete with instances of such complacency. Take IBM for instance, which surprisingly could not sense the drastic changes occurring in the marketplace, where there was a distinct shift in technology from mainframes to client server technology and customer preference to use personal computers instead of terminals. These changes were much so transparent yet IBM could not see them coming through. Organizations must always push themselves deliberately to unearth the challenges which were right there but never mattered in today’s scenario but might prove decisive in slightly different competitive landscape.

Companies must question the basic premises of the way they do business even when they are doing well. How to stimulate further growth, how to eliminate bureaucracy, what drives customer satisfaction etc. are some of the questions, answers to which may reveal some of the challenges that organization faces and there-in may lie the real opportunity for future growth. When at GE, specific teams were formed to generate ideas to make GE a $100b company by the end of the century, the company was deliberately trying to unearth a challenge that would fuel its future growth. As it turned out their strategy of being No.1 or 2 was limiting their growth as the business leaders were intelligent enough to define their narrowly and were complacent with their market leadership position. Upon realizing this fact the company redefined its markets in such a way that businesses had market share close to about 10%. The result – company discovered a new challenge and opportunity to expand its market share and drive the growth – in five years from 1995 to 2000 GE’s top line grew from $70b to $130b.

Knowledge of strengths, vulnerabilities, opportunities and threats in the industry is absolutely necessary for identifying organizational challenges for any company.

Understanding and comparison of critical success factors for competition like cost, market position, relationships with customers and suppliers etc. with competitors provides an insight on competitive priorities and challenges for the company.

Monitoring external environment for emerging disruptive technologies that have the potential of changing the basis of competition as it happened with IBM, can help a company in identifying the most probable of the challenges as IT is revolutionizing the way business is conducted today. In this age of information, emerging technology has been a major challenge over the last couple of decades when one saw markets for typewriters being wiped away by PCs, cellular phones threatening the market space for traditional telephones and pagers, and miniaturized digital cameras dominating the markets at the expense of traditional cameras with films being some of the examples.

Never accepting the status quo as business reality is the most common trait for companies that are good at proactively identifying and addressing challenges. A dig at any measurable aspect of the business like operating efficiency, inventory turns, profitability or any other measure for that matter is a likely stimulant for identifying an organizational challenge.

Above all cultural aspects like sharing, learning and collaboration are being considered biggest assets for sustained competitive advantage in industry today. Transforming culture and changing the organizational mindset is undoubtedly the greatest organizational challenge in today’s environment of constant change.

Related articles:
Agile organization
Role of critical success factors in strategic planning
Identifying critical success factors

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