Late Frost Kills Weak Plants

That is no surprise to any gardener.

The process of Evolution has, over many centuries (but sometimes faster with some careful selective breeding), sorted the highly adaptable from the less adaptable. The flowers and vegetables we enjoy now are either “Hardy” or not. Some highly exotic breeds are so fragile they can only prosper in a sheltered environment.

So what does the Banking Industry look like right now on Good Friday after the ice storms of the credit crunch? And, with an Easter Weekend weather forecast of frost and snow threatening the health of our gardens, and more economic “accidents” in train, what will the Bankers look like on Easter Tuesday?

The parallels are there for all to see. The “exotics”, the financial engineers, hedge fund adventurers, “leverage” experts and such, are shrivelling in the sudden chill of a simple reality – you cannot lend that which you do not have, you cannot borrow what you cannot repay, you cannot have something for nothing (as Heather Mills has just been told by a High Court Judge).

The High Street Bankers, the daffodils, violets, cabbages and turnips of the Industry, retail and business Bankers, are shivering but look likely to survive. Most of those struggling had fallen into the temptation to try to be “exotic” – to have something for nothing – the most healthy now seem to be those who least yielded to temptation. Even so, they are asking their own “Great Gardener”, the Bank of England, to have the greenhouse warm and ready, just in case.

The Competitive Strength point of view is not surprised to see this happening. It looks for real economic value in companies, not for the gloss that frothy financial reporting, and super-simplistic investment analysis so often delivers. As the next few weeks bring harsh and testing stresses to every corner of the business community, look out for those businesses that are asking for “Special Protective Measures” – they will be the low Competitive Strength organisations we call “Comfortable” and may even include some of the less weak “Excellent” (but too complacent?).

There are two other levels of Competitive Strength condition – what of them? The weakest, we call “Constrained”, will be contracting, laying off staff, selling off anything they can, looking for a buyer, seeking extra finance – or closing down. The strongest, the very few with the Competitive Strength “Free” condition, will not be unaffected, but they will not be blown off course, they will calmly manage the reality of their new situation, and they will seize every new opportunity presented by the collapse of their competitors.

Competitive Strength is made up of two components:

• How capable a business is compared with those that want to beat it
  and
• How capable it is of mitigating the impact of those forces out there that can cause it to be beaten

It is this second component that is the predominate determinant of survivability – and that Competitive Strength Report analysis does not miss out, unlike so many numerical approaches.

We have said for a considerable time that -

“Being a bit Better than Average” is now a strictly TEMPORARY and very PRECARIOUS position

Now this is becoming very very visible.

The Competitive Strength Report Process is a rapid tool that allows a company leadership to understand where they are positioned, in comparison to the very best, where their main threats lie, what the implications are and helps them decide very clearly and collectively what they need to do. There is nothing else as fast, as accessible or as affordable.

If you would like to know more about the Competitive Strength Report & Process, please look at the website – or contact us via the ChangeWORLD website

The Competitive Strength Meaning of Freedom

The last few weeks have been peppered with dismal press releases from a very wide variety of Retailers. Their tales of woe have been accompanied by commentaries from financial analysts and other pundits - all telling us what we all know but somehow think will "only affect someone else" - times are hard and getting harder - only the really successful will cope. But the long list of those who are not "coping" include so many names that only last summer were being hailed as exemplars.

Twenty twenty hindsight is not always attractive - even when there are real lessons to be learned. We cannot escape this from time to time. We are frustrated that so many of those that seek to advise and influence the leading investors in our fragile economy, and sit in judgement on our business leaderships, do not seem to learn from the failure of their predictions.

Today, it is reported that
John Lewis, the department store group, is expected to unveil staff bonuses (for their 69,000 partners) of more than £2,000 alongside full-year pre-tax profits that are forecast to climb by about 25 per cent to £400 million.

The Competitive Strength Report identifies objectively and concisely how a business compares with the very best in the world. It reports this in terms of the comparative Competitive Strength level, or condition, of the business. At the highest, above the condition called Excellence, we have the level we call Free. Only a tiny percentage of businesses achieve this condition where they are able to do the things that others cannot - because they can. So John Lewis awarding its staff when all around others are cutting costs and discounting stock as fast as they can go is an excellent example. And we told you so in this blog on 29 August 2007

At the lower end of the Competitive Strength spectrum we find the conditions of Comfortable, where the majority are likely to be found, and below that the Constrained level. Here there is no "freedom", indeed the nature of this latter condition just above the point of failure we call The Abyss, means that there is insufficient perceived resource for anything other than one form or other of survival management, business sale or merger or, sadly now so common*, "financial engineering" to disguise the situation.

* Financial engineering - the most notorious recent example was Enron where complicated "vehicles" were created to "move liabilities off the Balance Sheet". Those financial heroes (well they were celebrated as such for quite some time by the experts) are now in prison. But what hope do we have when our country's financial management, the Chancellor led by the Prime Minister, use exactly the same ethically corrupt strategems to misrepresent the state of the nation's finances?

Today it also reported that Taylor Wimpey reported a pre-tax loss of £19.5m in 2007, against profits of £405.6m a year earlier, after it took a near £300m write-down on land and property. The company does not expect the US to improve significantly in 2008, and while UK profits were up in 2007 it expects tough trading this year.

Again we commented about this business in this blog on November 1 2007, asking what the combination of a Comfortable operation with a Constrained one was likely to be? It looks as though Constrained may be the answer - we have to wonder how close they are to The Abyss?

The Competitive Strength point of view shows that the deep seated managerial and behavioural values and competences of a business are the main differentiator of whether over time they will substantially outperform their competitors and successfully withstand unpleasant surprises.

The Competitive Strength Report Process is a rapid tool that allows a company leadership to understand where they are positioned, in comparison to the very best, where their main threats lie, what the implications are and helps them decide very clearly and collectively what they need to do. There is nothing else as fast, as acessible or as affordable.

If you would like to know more about the Competitive Strength Report and Process, please look at the website – or contact us via the ChangeWORLD website