The Weaknesses of the Strong

Global organizations (MNC), as compared to small-medium enterprise (SME) counterparts, have depth in resources, both financially and talents. However, many innovations from the SME were beyond the imaginations of these global MNCs. SME were also more nimble and responsive to the needs of their target market while they, however, lacked the resources to pursue perfection. This may be a blessing in disguise for the smaller ventures. Then, were the Strong truly strong?

Here are my lists of frustration which may give hints to why the Strong sometimes fails to act on opportunities.

1. MNCs were usually run by professional managers where they strategies were strongly in place to grow their businesses. These were also the same set of strategies that made them successful and, thus, managers defended them with their “power” ignoring the flaws of the strategies in the changing environment and dismissing potential opportunity (but could be industry game changer) as “not their priority”.

2. Most MNCs adopted matrix management that required clearance from multiple managers of as many functions to clear before an investment can be made. Many of these managers had varying agenda and priorities. In many cases, an immediate opportunity to one may not be important to another. The “due diligence” process on many occasions killed good opportunities or made a good innovation mediocre.

3. Depending on the DNA of the organization, it was common that matrix managers maintain neutral stance on the presented case. They questioned to delay a decision for fear of making a decision contrary to their supervisor or the management. Many opportunities and/or innovation died on its vine.

4. MNCs, unlike SMEs, found many opportunities, especially those strategic in nature, not attractive in their Return on Investment compared to their tried and tested opportunities. These resulted in many MNCs losing market share that they never were able to regain.

5. As most MNCs employed the best strategists and statisticians, the best laid plans were mainly based on historical data. Many were caught in today pace of change where projection from historical data could not provide the long term vision that they used to be able. In addition, with the global nature of these organizations, they failed to listen and translate quickly the “noises” from the ground.

6. The inflexibility and lack of urgency of major organizations, as a result of the multiple hierarchical structure and decision matrix, to response to the changing needs of the customers and operating environments had cause many to be irritated by “fleas” rather then their traditional competitions or the big elephants.

7. Many MNC also adopted the 20-80 rules where they focus on the top 20% of their existing markets which gave them their 80% of the business. Many had neglected the fast emergence of the smaller markets which by demographics and potential will overtake the incumbent markets.

8. Most successful and cash-rich organization forgot how to fight in critical markets where they did not have a huge lead. The hunger and that extra bit of winning mentality were usually found missing as the organization expanded. Some resorted to acquiring their smaller competitions but, even such, failed to integrate and win. SMEs had to fight as they need to win to survive.

9. As an organization grew and expanded beyond their originating shores, the ego became big and the organization became focus on serving the needs of their ego rather than that of their customers. Organization defined their success measurement and remained successful as long as they meet what they had defined and, many occasion, delivered shareholders values.

10. Last, but not least, these global giants, maybe due to their physical and cost structure, did not have the ability to execute small initiative and/or markets.

Many successful organizations would not agree to the above points claiming that they were known facts and had been addressed. Many also claimed that they organizations remained successful remained as market leader and those would not applied to them. Well, maybe they were right until their business performance proved them wrong.