Why Businesses Underperform

In the past, most SMEs have accepted underlying issues within their organisation, despite knowing they are holding the business back. In essence, the business has struggled through and generally got away with it even if it meant that they failed to reach their full potential.

Going forward, in a more transparent, demanding and competitive AI-driven world, the consequences of carrying an under-performing organisation are likely to be more severe.

People’s expectations and desires will be much greater and their patience threshold lower because they too will be under pressure to compete.

There are many reasons why SMEs under-perform and we illustrate some common flaws. These can all be resolved by building and maintaining a modern and healthy organisation.

As a consequence, operating teams start to struggle with the goals they are being set and start to see that;

  • the left-hand side of the business is no longer communicating with the right

  • creativity and productivity stagnate and people lose their motivation

  • the shifting mindset is noticed by the customer through, initially, the quality of communication and then the operating performance.

In an AI-driven world the customer and your key talent will react to the deteriorating working environment four or five times more quickly because they too are under pressure to compete and progress their own careers and, in a much more transparent world, your competitors will be constantly knocking on their door.

Here are some of the reasons why SMEs underperform:

  • Short term fixes: Against a backdrop of extremely busy executive schedules, few businesses take the time to review and modernise their structure, instead preferring a series of short-term fixes rather than tackling the root cause. In these circumstances, short-time fixes are often emotionally easier to implement than deeper, more structural solutions.
  • Fragmentation: These short-term fixes are implemented piecemeal at the function/department level and whilst they provide some short-term improvement in productivity at that level, they increase the fragmentation within the organisation, creating a series of miscommunications that grow into quite destructive and silos.
  • More short-term fixes: Without the right processes, it is difficult to objectively identify and tackle the real source of the issues holding the business back, and so business leaders end up tackling the symptoms – the result is more short-term fix.
  • A deteriorating customer experience: Many SMEs lack a strong, well formulated customer strategy that sets out a detailed customer journey, understood by everyone in the business. As the organisation fragments, the coherence of the customer journey and their experience for working with your teams deteriorates. As a result, they start to seek alternative.

We all have busy schedules. Consequently, few businesses have installed a structure that enables the leadership team to readily measure, monitor, manage and motivate performance throughout the organisation and, in doing so, develop a great and enduring culture that can readily identify and deal with issues long before they are allowed to develop into problems.

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