Like extramarital sex, an organisation?s flirtations with unrelated diversification, superficial repositioning and flavour-of-the-season diversifications provide only fleeting enjoyment. And trouble thereafter. Business needs a conjugal relationship. It has to strengthen itself with constant care to always remain exciting and fulfilling. This is vital space, a concept I?ve developed to sensitise organisations to their regular cash cow business.
Vital space is about the base requirement. If an Indian is not satisfied with rice or roti, he will never be able to appreciate soup. When the body?s vital need of blood is contaminated beyond repair, a person will not survive. The body?s natural urge is to rejuvenate its blood. As soon as blood does not flow, a clot forms. The vital space in business has the same characteristics like the fluidity of blood in the body. It is a real need that society nurtures. Just as man has to fulfill hunger before dreaming of sex, your business cannot graduate to the next pleasurable layer unless your current cash cow is renovated. This is your vital space, a combination of the survival and need layers of your business.
Very often business houses are impatient to enter the luxury layer of business without solidifying their survival factor. Here?s your typical scenario as a businessman: you?ve grown your base business year after year, but perhaps low profit demoralises you now. Next door, an emerging business is witnessing high profit. That?s the temptation. You may enter that business to earn higher profit in a shorter span of time than your current business. But wait! Before relegating your current business to the backburner, did you check whether it could deliver better if an alternative best practice is applied?
Perhaps your offer has to be radically renovated.
If your customers have shifted away, it means you lack proactiveness. You have to understand the interplay of your business in the competitive environment. To revive an unprofitable business, you certainly need mental strength and a ?creative business strategy.? Business has borrowed the war term Strategy, but it?s not compatible. Wars are fought over a limited time. But sustaining business is your most important factor. In traditional business strategy, you are being generic; not practising anything better than your competitor. But the difference in creative business strategy is that the stratagem is known only to the top brass. It?s a macro gambit to win the war at the critical moment.
Creative business strategy differentiates you from run-of-the-mill strategy planning. Bringing creativity into business supersedes benchmarking with the best, where quantitative data specifies how a comparable company became successful under similar market conditions. It?s dangerous to follow such an analogous path because your data may not be as comprehensive.
Build your own ingredients and create your own weapons to analyse your company?s strengths, and assess your environment. You can consolidate your business by refining your ?vital space,? your existing market offer. This accounts for 40 to 60 % of annual revenue, perhaps even 70%. This valuable business source is connected to the market, trade and partners and customers. This vital space can become so mechanical that companies often remember just to milk it, not nurture it.
In hungering for topline growth, organisations indulge in superficial repositioning, diversifications that are either flavour-of-the-season or unrelated to its vital space. Such unreal growth just cannibalises and compresses the vital space. A shrinking vital space weakens core competence. Essentially it creates roadblocks to profit, growth and intellectual goodwill to expand. Investor confidence subsequently reduces, and a crisis erupts to acquire high quality professional talent to manage the show. New people often get into new ventures that eat into the vital space, and contaminate it. Creative business strategy primarily concentrates on how to continuously address and visibly grow the vital space, that comfort zone that hypnotises employees to perform.
Vital space activities invariably become everyday routine habits in the organisation?s lifecycle. You may not want to disturb the vital space for fear of upsetting the apple-cart on its way to market. But by not touching it, you really can?t gauge how far back you are stepping. Your offer will soon be attacked by low price products or unpredictable competition driven by modern technology. In business, vital space is the existing customers? foothold. Without its continuous, meticulous observation and nurturing, you will never really know your customers went away to other offers.
Indian companies appear reluctant to create self struggle for reviving their existing business. Have they really comprehended the vast difference in being an assembler or trader, versus being an aspirational, core competence-driven, customer sensitive manufacturing company? A company?s strength sustains on its existing people, products, their relation to the market, from retail animation to the product reaching the customer?s home. Harness the skill of your employees. Your organisational delivery will flow smoothly to maintain what?s vital in your business.
Shombit Sengupta is an international creative business strategy consultant to top managements. Reach him at http://www.shiningconsulting.com