The competitiveness problem – conclusions

In the first chapter of this book I expressed the generally accepted view that the most serious problem facing management today is the absolute need to achieve and maintain competitiveness in everything the organization does. Although few people would now doubt the importance of maintaining competitiveness, I fully appreciate that this claim will appear slightly odd to many people because a manager’s performance is not normally compared against relevant functions in competing organizations. In time, benchmarking techniques may develop to the extent where it is possible to make such comparisons, but they certainly don’t exist today. Instead, most organizations still rate individual managers by the tried and tested method of setting an annual budgeted target and then measuring actual performance against that target. The main exception to the ’match the budgeted target’ rule occurs when major projects are set up and individuals can then be set specific tasks both in terms of time and budget. However, even then there is normally no way of knowing if the targets set are truly competitive.

The lack of measurable targets inevitably means that the importance of maintaining competitiveness is largely ignored. Given this situation, it becomes vitally important to constantly remind managers what is involved if they are to strive to be competitive.

Achieving competitiveness requires re-engineering each service in some way to secure an ideal mix of key benefits. These benefits include ensuring that continuous improvement to the service takes place, making sure the image created is one of quality, maximizing speed of performance and finally, cost reduction. In other words, it is necessary to perform each group of processes as efficiently as possible given the constraints of the marketplace and available resources. Simply to aim for cost reduction is unlikely to achieve the desired goals.

The importance of being competitive is not new, but advances in technology and the resultant globalization of business make the problem far more acute than it once was. To some extent, the problem and the effectiveness of current solutions are all confused by the rapidly accelerating rate of change. The confusion was there before the creation of the internet in the mid 1990s but will become increasingly marked as time goes by.

We therefore have a situation where competitiveness is becoming increasingly important but we usually have no clear idea of how we are performing when compared to other competing organizations. In such circumstances how can any functional head really be judged on a competitive performance basis?

Lack of competitive knowledge is a prime reason for involving external specialists in the business. A leading external specialist is much more likely to be aware of competitive developments than any individual client organization.