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