If there ever were any talks that sustainability is something that can be taken for granted, they would have been all but torn apart after the recent events. Lehman Brothers and Merrill Lynch, with more than 200 years of history between them, were hastily wiped off from the Wall Street following a bad turn in the economy. One cannot help but wonder- what really is sustainability if even the largest firms can fail following a few bad decisions?
Sustainability as you see it? More like a case of “Now you see it, now you may not.”
All firms exist to create value, and while there are some that rely on fads to make quick profits and exits, most businesses operate with the intention to be sustainable and profitable in the long run. Sustainability and growth are therefore dependent concepts. Businesses cannot possibly be sustainable if they fail to grow, nor can growth be achieved in the long run without having sustainability in mind. In a survival for the fittest contest, sustainability is also relative. A firm’s success may inevitably result in another’s failure.
While successful firms may adopt different business strategies, a common trait among them is in having a favourable internal environment as a sound foundation for business progress. In this era of information explosion where successful business models can be easily copied and replicated, having a capable management team, a positive corporate culture, and good control systems are no longer a competitive advantage but that of a necessity to attaining sustainability.
The importance of having an acute understanding of the external environment is something that simply cannot be understated. Firm’s ability to identify trends, opportunities and threats are often a deciding factor to determine who can remain in competition. Conversely, with the shrinking effect brought by rapid globalisation, some markets have transformed into a nexus of large companies where the survival of one hedges on another’s- a grim characteristic of the collapsing U.S. Financial market. Being sustainable may well depend on the sustainability of your nearest competitor.
Lastly, sustainability is the testament of a business’ ability to make the hard decisions. The natural cycle of the economy means that it is not a realistic notion for any company to remain on top forever. Inevitably, there will be a stage where a firm needs to make difficult changes, a result of their undoing, or simply a matter of the changing external environment. Dell Computers, in establishing its first physical store, took the unpopular step back from its core competency that made it so successful in the first place. But the perfect example may as well be that of Lehman Brothers’ and Merrill Lynch’s approaches. The former refused to sell its business when it had the chance to, while the latter could not have done it sooner.
Whether John Thain’s (Merrill Lynch CEO) decision is the right one remains to be seen, but at least he is left standing.
Filed under: Commentary
October 4, 2009 • 9:02 pm 1
Taming the 3 Lions
To what makes competition desirable (to consumers) are 2 main reasons. First, better pricing. And second, better quality and/or variety. It is therefore amusing to see Singtel’s repeated assurance to the public that their foray in the Paid TV territory should be celebrated. This is despite their inability to satisfy any of the aforementioned.
While the statement “Content is king” is true to most businesses (and perhaps more so for the Media Industry), the bidding war between Starhub and Singtel for exclusive screening rights for the English Premier League football matches is at best cannibalising. Cannibalising the public, that is.
It would serve the Media Development of Singapore good to realise as soon as possible that sports content, in particular, football matches are a different animal to tame altogether. A little good-natured and well thought out regulation is never too much, nor late for anyone.
Filed under: Business, Commentary, Sports