Top Eight Problems Business Face and Ways to Avoid ThemReading Time: 5 minutes
Developing an enterprise is always a challenge. Luckily, the difficulty of this challenge can be mitigated to a degree by qualified management and knowing where the pitfalls lie. If you’re reading this piece, we believe you have the former and are looking to learn about the latter. Without further ado, we present to you top 8 problems that businesses face on a regular basis, along with some tips on avoiding them!
- Problem 1. Uncertainty
- Problem 2. Globalization
- Problem 3. Innovation
- Problem 4. Government Regulation and Policy
- Problem 5. Technology
- Problem 6. Diversity
- Problem 7. Complexity
- Problem 8. Problem Solving & Strategic Thinking
Problem 1. Uncertainty
Business leaders, like most human beings, find uncertainty highly discomforting. And in entrepreneurship, there are many a source of uncertainty, including, but not limited to:
- global economy
- credit markets
- new regulations that will affect business
- competitors actions
- new technology that will affect business
Besides obvious repercussions like financial loss or failing to meet set goals, uncertainty can lead to a short-term focus by the management. Organizations start shying away from long-term planning, using uncertainty as an excuse to concentrate on short-term results.
Now, for the record, achieving short-term results IS vital. But if a business doesn’t plan strategically, as in at least five years into the future, this can easily end up destroying its value.
Solution. How to fight uncertainty?
How to solve this? First of all, you must find balance between a more reactive, short-term focus, and informed, long-term strategies. Second, don’t rely on non-professional methods and tools. For instance, it’s no more sufficient to use excel sheets or paper stickers for strategy planning and building roadmaps – better use dedicated and specialized tools (such as Roadmap Planner).
Problem 2. Globalization
In a recent research, seven of ten Fortune 500 CEOs named globalization to be their main concern. Namely, understanding foreign cultures is vital. It is essential to business for many reasons, from designing services and products for new customers, to penetrating new markets with existing services and products, to recognizing new, disruptive competitors that weren’t even known months earlier.
Solution. How to keep up with globalization?
To better understand different cultures and international markets, businesses need to focus on better information gathering and learn to analyze and interpret it properly. But keep in mind that government intervention in local economies might increase uncertainty and make your organization’s international operations ever harder to manage.
Problem 3. Innovation
Interestingly, many companies cite innovation as a source of challenges and anxiety. The bigger the organization, the less prone it is to creating innovative cultures and processes. However, innovation is vital for any business’ survival and growth! Besides, it seems that most CEOs and managers do acknowledge this fact, but are either afraid they’d be fixing what’s not broken, or their innovation ideas face strong bottom-up resistance from employees.
Solution. How to facilitate innovation in business?
The trick here is to find ways to become more innovative while maintaining control over the organization. Also, be sure to communicate your innovative ideas to stakeholders like lower to middle management and employees, not just present them with a fait accompli.
Problem 4. Government Regulation and Policy
Volatile regulatory environment is a concern in many industries, but this is not the only governmental factor. Uncertain financial, energy, and environmental policy also contribute to confusion and difficulty of the decision making for businesses. This is often the case when operating in the home country, let alone when entering foreign markets. Some examples of the government regulation & policy factors include:
- Demand from shareholders or customers to make production more “green” and nature-friendly
- New carbon taxes causing increased costs
- Constant changes to corporate tax rates
- Healthcare mandates for businesses
Solution. How to factor government policy in your business processes?
First of all, business owners need to understand the government regulation and policy in their industry, what they mean for the industry and the implications for their business. With this knowledge, they should come up with strategies that take these factors into consideration (or, ideally, mitigate them), and develop in their C-level management the skills necessary to operate in such environment.
Problem 5. Technology
For several decades, technology has been improving at an ever-increasing pace, and today this is more evident than ever. Which makes it more and more difficult for businesses to invest enough resources in technology. Some owners doubt the need to make capital investments when a competitor might simply decide to wait for the next-gen technology to arrive and then achieve an advantage with it.
Solution. How to keep abreast of technology?
Luckily for any forward-minded leader, the wait-it-out strategy can be equally risky. It’s better to implement new technologies after all, but do it in a smart way – that is, to stay informed about emerging technologies, while also mastering the business’ existing ones. Thus, you’ll develop your long-term strategy around familiar technologies, while staying flexible enough to take advantage of any new breakthroughs.
Problem 6. Diversity
Human capital planning often finds diversity to bring many challenges. Among other things, diversity means that people are more likely to express disagreement, which makes running a business very difficult.
On the other hand, lack of diversity is obviously a drawback too – it leads to a narrow and biased view of a diverse and ever-changing and world in company leadership teams. This contributes to groupthink, a tendency to try maintain the status quo for too long, and stale culture.
Solution. How to bring diversity in your business?
To do this, first define what diversity really means in your company (you know, so it’s not just an attempt to satisfy government statisticians). After that, foster the expansion of differing viewpoints and ideas in your organization, while also ensuring that this doesn’t disrupt a cohesive environment and doesn’t hurt your ability to get things done.
Problem 7. Complexity
Business and life itself are getting ever more complex, even though some activities and tasks have become easier thanks to new technologies. Still, the pace of change is quickening. With the global economy becoming more and more intertwined, it creates a much more diverse population of suppliers and customers.
Manufacturing and services are targeted at increasingly smaller, specialized markets because of the flexibility that information technology provides in these areas. For a perfect example, think the 3D printing revolution.
Solution. How to accommodate yourself to complexity?
First of all, here’s a comforting thought: from our knowledge of the evolution patterns, it’s clear that as systems evolve, they usually become more complex before they become simplified again. In the meantime, the only thing a business can actively do to embrace this challenge is remove unnecessary complexity from their own business models, processes, and products.
Problem 8. Problem Solving & Strategic Thinking
Many organizations lack sophisticated approaches to acquiring and analyzing information. They have a hard time developing unique insight, leaving themselves at a disadvantage. Such organizations jump from one strategy to the next instead of having a long-term strategic imperative.
It doesn’t help that some leaders have insufficient everyday problem-solving competencies as well, which reduces their chances to deal with arising problems. Corporate managers often jump from one fire to another, instead of figuring out what in the fast-changing business environment (or in their business processes) ignites these fires in the first place.
Solution. How to think and work strategically?
First of all, companies must resolve and acknowledge that problem solving and strategic thinking are key to successful business. After that, they need to develop robust capabilities and use relevant tools (e.g. for planning it’s Roadmap Planner) at all levels.