For more than 70-years we have been told to cut costs.  Frugal misers are portrayed as astute, but are they successful and wise in understanding?

I believe they are Pirates and not Leaders.  By the time it comes to scraping rum from the bottom of the barrel, your business is already on the rocks.  The early warning signals were there; ignored by still having the emergency option to cut costs.

There is of course the right way of staying clear of the rocks, building a healthy business and maintaining sustainable revenue streams.  The condition hinges on your ability not to follow traditional traps.  So we all studied the infamous Michael Porter’s books and overload of articles on Strategy and Competitive Advantage to the n^th degree.  But was the guru correct?  How can Activity and more brainstormed Ideas be the highway to a unique and valuable position?  If so, why do 85% of businesses, visions and innovations end up in the life-cycle chasm before reaching their early acceptance phase?

The answer is simple.

Strategy, so it has become, is not what the classic authors imagined it to be.  What should be in place by now is a deep Understanding (architecture) of how customers view our bouquet of offerings; an Approach (models) which can fulfil unmet customer needs within our value constellation; and a Strategy (tools) to satisfy under- and overserved market segments which will lead to success, survival and sustained income streams.

The moment we substitute a systemic architecture with quick-fix survival tools (such as cutting costs or high-performance indexing), we populate structural foundations with inadequate methodology, technology, procedures and systems to correct an effect that should not be present at all.  As a result, under any stress and longevity test, inert flaws will continue to render inadequate performance which produces more activity yielding the wrong deliverables that compromise the levels of customer satisfaction.  With poor levels of satisfaction, we perceive the product mix and demographic distribution to hold the key to unlocking markets.  More tools, such as Customer Relation Management, introduce more glances at the same flaws but with more advanced analytics which cannot remedy the systemic flaws.  Segments arise that point directly at under- or unserved markets, a signal for new entrants and fiercer competitors to enter and achieve where incumbents are failing.  The downward spiral towards total collapse accelerates into decline and failure.

Leaders shift costs and keep customers satisfied.  All that is left for the Pirates is to cut costs and jump ship…