In the turnaround space, we are often required to deal with a business’s circumstances, where it has continued to operate without change in an ever changing environment. Now there are certainly aspects of all businesses that must always be obeyed. These are the fundamental foundation stones on which a business must be built, in order to be successful. To many of us, these are basic and obvious, but regrettably to others, they are less so.
To provide some degree of understanding such blocks are ‘selling items at a price that is greater than the cost of the item,’ ‘ensuring predicted turnover is sufficient to cover the fixed costs associated with operating the business,’ ‘ensuring appropriate registrations, licences, etc. are in place when necessary,’ and so on. One can write a book on this topic alone.
With certain businesses, it is actually possible to build into these foundation rules, many additional “fixed determinants” because you can. The most obvious area where such behaviour can be the norm is where a monopoly exists. In such instances, almost anything can be fundamental and unchangeable because the customer either cops it or simply goes without. The more necessary the product or service, the more likely that the sale will be guaranteed, regardless of the quality or service that the customer experiences.
A monopoly that panders exceedingly to its clients’ needs in all areas( quality, service, timeliness, etc.), will in fact most likely continue forever and there would be no one that could easily compete with the organisation. Regrettably it simply appears to be human nature that when you have this level of control, that you do not work hard to achieve satisfaction, but simply create an atmosphere of mistrust and distaste.
In instances where monopolies (or oligopolies) exist the transition from one to a more competitive environment can be quick, such as in the case of a deregulation, or it may be slow as people who are offended by the monopolists (or oligopolist’s) behaviours continually seek alternate solutions to what is becoming an increasingly painful relationship.
Recently there has been much hype over the future potential lack of a need for central power providers because of household electricity generation and storage. There are similar forces acting as a result of Airbnb and Uber, and it is the later that caught my attention.
Recently myself and a colleague, travelled to Penrith by train after a function in the City. At Penrith, I was seeking a cab to take me approximately 20 kilometres to the north whilst my associate was seeking a cab to take him approximately 10 kilometres to the west. He was promptly advised that he would have to pay the return fare as he would be crossing “the mystical bridge” over the river, I notwithstanding the fact that the trip was longer was not required to do so. He then stepped back and booked a driver with Uber, and paid less once!
You would think that with the advancing of a major threat that a business would go out of its way to rethink its model so that it became more relevant and more desired by its customers, but alas so often business drive forward (pun intended) oblivious to the predictable collapse that it will encounter. However, I must concede that without blind determination there would not be anywhere the level of turnaround work and insolvency for us to deal with!
Always remember, fight change with change.