Competitiveness in times of crisis

Competitiveness in times of crisis

In these times of crisis, which present the economies of our American countries, entrepreneurs are continually asking what to do ?, to, first, survive and secondly, to obtain results that allow them to grow. Of course, the first thing is first, that’s why they need to survive first. It is known, therefore, that to survive we need to be competitive. If we can not do it, we will not survive.

That is why we make competition and competitive strategy the fundamental weapon to face the crisis. This is a truth, which has been demonstrated by the fundamental classics of this theory, especially by Michael Porter, but as long as we have clear that it is competition. Survival is so necessary for the company, that entrepreneurs make it their goal central. The paradox is that you must be competitive to survive, but if you plan on just surviving, you will eventually be out of business. Only the companies that plan for success will survive.
When a company plans to survive, it fixes its fundamental attention on the visible aspects of its organization, what the accountants and financial analyst provide in its Balances. But this only means 10% of the sources of value of an organization. This makes that the managers of the companies use 90% of their time, focusing their attention on 10% of their asset base that appears in their balance sheets. profit and loss reports.
In general they do not use anything or almost nothing in what really constitutes the true sources of their competitiveness, which is given by their intellectual capital. This may sound very categorical and some do not share this statement with me, but observing the behavior of Bolivian companies, in these times of crisis, shows me even more. Where is the look of the managers in these times ?.
Constantly looking and observing your income and profit accounts. In order to increase the first, the actions they undertake are “competition” while to obtain profits, it is “cost reduction”. If we observe these two actions can be contradictory, especially when it is not clearly defined what competition and where to reduce costs. It is for that reason, that entrepreneurs are in a crazy race against time, looking inside the organization and trying to produce a cost reduction at all costs, obtaining it, Fundamentally, in the dismissal of the personnel, this sometimes leads to a disinvestment of the companies that produce losses everywhere and as a consequence will cause, in the long run, a loss of competitiveness. This is important and necessary, but it is not enough.
Maybe you take an aspirin when you have a headache, but you can not survive constantly from aspirin. So, what to do? How to get out of this crossroads? I do not really intend to present “magic recipes”, I just want to share some concepts that can help you find your own way. We have almost always seen competitors as enemies, this is a very limited vision. Actually the existence of competition is what prints life in the organization, is what allows to find the way to deliver to the client, what the client needs and what he is willing to pay for.
The more competition there is, the more possibilities we have to develop the capacity for innovation and creativity of our organization, but for that we have then to focus our attention on the other 90% of the iceberg, which we normally forget. When a client is not available to pay the price of our product or service, the natural tendency is to lower the price, in case the margin allows it, or lower costs. But very rarely do we think about how to increase the value of our product or service, so that the price is in correspondence with what the client is willing to pay. The future success of the company depends on its ability to create values.
It is the thesis that I would like to analyze jointly with you. For a long time it has been said that we are in the “age of knowledge”, if this is true, the possibility of registering in a traditional balance, our assets – a very reliable thing in the “industrial age” – becomes very difficult in the new Times. This is what it does, that the General Balances and the States of conventional Loss and Gain, do not reflect the true value and potential of the company. Therefore, not only a new Balance is needed, but also a new way of think of the managers, so that they put their attention in the main capacities they have for the creation of value and competitive advantages unique to the company.
Some of these fundamental components are: first, human capital, Secondly, the loyalty of its customers and third, the innovative infrastructure of the company. The human resources available to a company are its most precious resource. The participatory management of personnel, the reduction of hierarchical levels, motivation and leadership are part of the elements, which for many years we have been listening to in relation to the new way of managing human resources.
The employees of an organization are their main source of value creation, therefore, when we dismiss personnel, without a strategy that accompanies it, with the sole purpose of reducing costs, we are in the presence of a “boomerang” effect, since there will be a “decapitalization” that will be equal to a “divestment” and therefore, not being able to produce or generate the values ​​that customers are willing to pay for. The second element of intellectual capital is customer loyalty. But, how in a competitive world can achieve that loyalty. Again, during the last years we have been looking inward.
The companies have embraced the concepts of Total Quality, seeking to raise the quality but from the point of view of what they consider and not from the point of view of the client. Quality has at this moment a new focus, which is what can lead to achieve that loyalty and is not in how should I produce the quality that the client wants ?, if not in how do I contribute to the quality of my client ?. It looks like a play on words, but it’s not the same. The first is an inward focus of the organization and the second is a focus on the organization of the client. To achieve this, our client has to be a partner, a strategic ally, not only the one who buys me something or represents a simple figure in the Sales Income account of my Balances.
I need to enrich my client and to the extent that I enrich my client, I will also participate in their growth together. And finally I need an innovative infrastructure. How will the level of innovation and creativity of the organization be measured? This is not something that can easily be expressed in figures, but in the results obtained. One of the paradigm shifts in competition in the world today is not to be continually playing with the competition rules of its competitors. That is what many of our companies do and why they can not on many occasions, “match”, as if we were in a roulette and we were following the same game as our rivals. We need to invent our own rules of the game, create a new competitive space. Instead of running the same race as your competitors, you must create your own.
This is not new either, it has been a long time since the management literature is talking about defining the distinctive competences, those that make the difference with respect to their competence and also the one that makes the client prefer it over the competition. Current is, that the gap that exists between the distinctive competences, that we currently have and the time in which the competition can reach it, is often shortened. This has been the case, because normally we have focused on the tangible elements, those that are physical objects that the client receives and not on the intangible, which is the way the client receives it. The innovative infrastructure has to be continually in search of intangibility, that where is the source of realization of my client. The current business world, is therefore a world of Services. That is why it is said that regardless of what your company is dedicated to, “You are in the services business”. The tangible is imitable, the intangible, characteristic of services, costs much more time to imitate.
The innovative infrastructure must concentrate its energies not only on making the tangible part of the business more attractive, but also on creating more value for the client, increasing the intangible aspects offered by your company. The ideas expressed here do not constitute any contribution to administrative science, they are just reflections that I wanted to share, with the main objective of contributing to the paradigm shift in Latin American companies. As long as a company If it is well constructed and managed, it will be determined which part will be able to become the Financial Capital that financial analysts, accountants and managers look for with such care. The ability of the company to generate real and sustained value is based on the ability to create synergy between the three aspects expressed and will therefore become the true source of its competitive advantage. they are just reflections that I wanted to share, with the main objective of contributing to the paradigm shift in Latin American companies.
As long as a company is well built and managed, it will be determined which part will be able to become the Financial Capital that financial analysts , accountants and managers look with such care. The ability of the company to generate real and sustained value is based on the ability to create synergy between the three aspects expressed and will therefore become the true source of its competitive advantage. they are just reflections that I wanted to share, with the main objective of contributing to the paradigm shift in Latin American companies. As long as a company is well built and managed, it will be determined which part will be able to become the Financial Capital that financial analysts , accountants and managers look with such care. The ability of the company to generate real and sustained value is based on the ability to create synergy between the three aspects expressed and will therefore become the true source of its competitive advantage.
It will be determined which part will be able to become the Financial Capital that financial analysts, accountants and managers look for with such care. The ability of the company to generate real and sustained value is based on the ability to create synergy between the three aspects expressed and will therefore become the true source of its competitive advantage. it will be determined which part will be able to become the Financial Capital that financial analysts, accountants and managers look for with such care. The ability of the company to generate real and sustained value is based on the ability to create synergy between the three aspects expressed and will therefore become the true source of its competitive advantage.

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