Sunday, 13 January 2008

“Today’s fast-changing business environment”? – same as it ever was

“Today’s business environment is characterised by increasingly high levels of uncertainty and change” – ever read a business article that starts with a sentence like that? My guess is you have. It seems like every other management article I read starts with such a sentence. And it annoys me. Deeply.

“In today’s fast changing business world…”, “many industries are increasingly characterised by rapid change…”, “high velocity environments”, “increasing hypercompetition”, and so forth and so forth, bla bla, bla bla.

I know, it is slightly pathetic that something like this annoys me but it does. I guess it annoys me because people simply accept it as a given; as the truth. But is the current business environment really so much more turbulent than 15 years ago when the world computerised, or when the Berlin Wall came down, or when electricity was invented? Somehow, I doubt it. But still, people always say that “the world of business is becoming increasingly volatile” (without showing me any evidence).

Fortunately, my fellow strategy professor Gerry McNamara, from Michigan State University, and two of his colleagues were equally annoyed but (in contrast to myself) did something about it. They analysed the financial performance of about 5700 companies over a period of more then two decades, looking at measures such as performance stability, market stability, abnormal business returns, industry dynamism, munificence, etc. And they found the following: Nothing. Absolutely zilch.

Analysing 114,191 observations, starting from the late 1970s, they found that some industries may be turbulent, but no more turbulent than before. Or, as they say, “our results suggest that managers today face markets no more dynamic and opportunities to gain and sustain competitive advantage no more challenging than in the past”.

So please stop telling me that “the world of business is increasingly changing fast”. It is not. It is the same as it ever was.

3 comments:

Sildenafil Citrate said...

today businesses are changing very fast, they have to adapt themselves to the new economy and new worldwide requirements if they want to survive and be successful!

KVM Drawer said...

The internal environment of business can affect strategic planning efforts. New technology is introduced that employees don't yet know how to use. Just as the external environment can shift, causing companies to revisit their planning efforts, so can the internal environment.

Anonymous said...

Yes I have seen that this article was written in 2008, about 6 years ago. The views in it are so basic and shallow. The industry is changing fast and every business person must know this and act fast on decision making, taking action or else in the morning the cheese would have moved.