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Why Some Businesses Will Not Exist In 10 Years
According to Professor Carlota Perez who has done seminal work on technological revolutions. Each technological revolution changes the underlying socio-economic structure of the organizations.
According to Professor Carlota Perez who has done seminal work on technological revolutions. Each technological revolution changes the underlying socio-economic structure of the organizations. And since most organizations are stuck in inertia hence they face major existential threats. Below I share 4 major reasons research pointing in that direction.
The Dire Need For Transformation Across Industries
According to an Accenture report studying 10,000 businesses across multiple industries concludes that 71% of the businesses need to transform immediately, this call to action is real based on the numbers of how many firms exists in the marketplace and how many of them seize to exist. The 10 years surviving list of the S&P Global 100 is also sobering with only a few companies still existing today from the past 50 years.
Profits Are Shrinking Worldwide
According to the working paper by the Sante Fe Institute based on the business performance figures from World Enterprise Survey (Covering Small-Mid level companies across 100 countries), the average profit of traditional firms is on the decline.
The Low Performing Companies Are Ever More Trapped
Where Are You On The Hockey Stick?
Based on the research done by Mckinsey, the hockey stick research concludes:
We are living in a winner take all world 90% of the Economic Profits are captured by the 10% of the companies in the cohort.
It is getting steeper, in an exponential world the odds of you losing out is more than you are going to win
Because of many economic cyclical hurdles and inertia, you as an organization need to deal with
According to one Mckinsey Report: “In effect, the crisis has accelerated a trend that was already present. Between December 2018 and May 2020, the top quintile of companies grew its total market-implied annual economic profit by $335 billion, while companies in the bottom quintile lost a staggering $303 billion. And while the specific numbers can fluctuate from day to day, the larger trend is unmistakable: a gap is opening up, and it’s rapidly expanding. That’s a pattern that has been evident since 2010. Now, the COVID-19 pandemic is pushing it to entirely new levels.”
The Rise Of Unicorns
It is a fact now that the times we living in are in fact volatile and uncertain. The new dynamics have not only pushed back the life of the traditional S&P company, it has in fact caused it to become slower. On the contrary, the explosive rise in unicorn tech companies is leveraging technology and new organizational structure to work fast and better and hitting the billion-dollar mark way earlier than an S&P company.
If you are facing issues of stalled growth or facing turbulence follow a short assessment I have shared below to gauge your core business.
💫 Strategic Action: 3 Most Crucial Indicators Of Downturn:
Cash cycle: The cash cycle tells you how important you are to the buyers and the suppliers such that they are willing to pay you before everyone else
Revenue: Revenue is a metric that shows our position in the market
Cost: Cost is a metric that shows how much we are in control of our business and if the business can survive in the same market and same stakeholders
Based on these variables the telltale signs that your business is facing existential challenges are.
Increasing Costs, Short Cash Cycle [High Alert]
Increasing Costs & Lower Revenues [High Alert]
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