How To Address Threats To Your Business Rewardingly

How To Address Threats To Your Business How To Address Threats To Your Business 2

Acknowledging a threat headlines not the same as dealing with it. Up and down the organisation, discussions can degenerate to a situation where everyone repeats reassuring baseless comments. Without any logical basis, they conclude that a threat can be managed, regardless of the dangers posed by disruption. In the face of a threat, companies need to find ways to get out of this delusion and complacency. This enables them to evaluate the situation objectively. Helpful in, outside perspectives from customers and various experts lend an unbiased perspective. More, how to address threats to your business starts you vigilant to warning signs of threat and the risk of becoming obsolete in your industry.

In the face of a looming threat, companies often make these mistakes.

Seeing The Future As A Variant Of The Present

When companies tend to see the future as a variant of the present, they often fail to imagine truly radical threats. These threats stand capable of wiping out their whole market and rendering them obsolete. Illustrating with, although the executives of Kodak glimpsed the threat of digital photography, they assumed that everyone loved prints as much as they did. Consequently, they failed to internalise how severe the threat was. By this, they failed to imagine a world where images were shortlived expressions, sent via email or cell phone, and never printed. This attitude revealed that the executives viewed the future as a variant of the present.

Erroneously, they assumed that digital photography was just a new way of producing prints, not a potentially powerful new phenomenon. This mistake of underestimating the speed with which the digital world would overtake film and prints, cost them dearly. By 2005, Kodak employed less than a third of the number who worked for it twenty years earlier.

Putting Undue Emphasis On The Economics Of The Existing Business, Ignoring The Possibility That A New Technology Or Approach To Business May Eventually Decimate This Economics

Comparing the economics of the existing business to the economics of adopting a new technology or business practice, to decide whether to adapt to them, frequently proves disastrous. It often starts a company holding on to a dying business model for too long. Their short-term evaluations on profitability slows them from moving into a totally new relevant business model. For instance, Polaroid filed for bankruptcy in 2001, as it delayed dealing with the digital. This delay was aggravated by the fact that the economics of the digital business did not measure up to its old business.

Not Considering All Their Options And Focusing On Shoring Up The Existing Business Model Going Obsolete

Encumbered by an outmoded business model, a company can sell that business or at least cut back significantly, to manage its losses. Scornful of, Mobile Media focused on absolutely the wrong issues of achieving scale and moving to a new generation of paging, when pagers were about to become obsolete. Consequently, it paid for this by filing for bankruptcy in January 1997.

Here Headlines How To Address Threats To Your Business

1. Find Out Whether Those Who Disagree With Your Company’s Assessment Of The Threat Are Right

The press, analysts and competitors, feature as an obvious source when looking for disagreement. For instance, Kodak could have roused themselves out of delusion, by the articles in Fortune and Business Week, between mid and late1990s. The articles emphasized that Kodak was extraordinarily vulnerable to the switch to digital photography. Furthermore, they revealed that the switch could happen quickly, and that Kodak might find it difficult to produce a business model that would be profitable in the new dispensation.

In these, Kodak could have thrown over the belief that uninformed outsiders were picking on their company, for someone lining up all the evidence in support of the Business Week and Fortune articles. It could have employed the evidence to challenge the strategy that assumed film would be profitable for a long time to come. Clearly, positioning your assumptions against rational evidence helps you to reap from the ideas behind how to address threats to your business.

2. Develop A Diary Boasting Specific Set Of Predictions That Test Your Assumptions About The Speed Of A Threat

This enables you to have a handle on the speed of the progress of a threat. Again, through this diary, you monitor our underlying assumptions and determine how quickly each barrier to the adoption of a new technology or approach to business would fall. To continue with, it is important that these assessments or predictions be detailed and based on data or judgments from outside the company.

For instance, Kodak could have used this method to monitor their underlying assumptions and determine these. How quickly each barrier to digital photography would crumble? High quality photos, how soon will it be possible to print them on personal printers? To email photos around, how soon will it be easy to do? Displaying personal photos on computer screens and electronic media, how soon will it be easy to do? Predictions could be based on prices, number sold, and other quantifiable measures, not on fuzzy numbers or subjective evaluations.

3. Develop A Business Model Of How Your Company Might Look Once The Threat Hits

Oftentimes, there is a flash point at which a new technology or business model takes over. Of note with, the diary of predictions about the speed of a threat’s progress points to a possibility of a flash point. Raising the possibility of a flash point stimulates companies into contingency planning about what to do if one occurs. This contingency planning entails the development of a business model for how their company might look once the threat hits. This model starts companies putting key assumptions on the table for debate. Revisiting their assumptions helps them to revise the business model as the future becomes clearer. Unfailingly, adopting this practice keeps you about ideas of how to address threats to your business.

4. Avoid Taking Actions To Shore The Short-term Without Addressing The Long-term

Frequently, short-term actions make it harder to move to long-term solutions. In respect of Kodak, they kept wasting cash on film, photo-processing, and film-camera technology, obsolete in a digital business model.

5. Ask Yourself, “Does Your Industry Have A Favourable Structure For Decline? Can You Compete Successfully For The Remaining Demand?

Your industry boasts of a favourable structure for decline if it can still offer profit as revenue declines. In contrast, it has an unfavourable structure for decline, if the industry like traditional photography would mostly disappear once a new technology or a new way of doing business takes hold.

Furthermore, if you have assets like a low cost structure and a great brand, that means that you can compete successfully for the remaining demand. More, being in an industry with a crummy structure for decline, where you cannot also compete, draws one constructive advice: sell as soon as possible. On a different note, if you cannot compete but are in an industry with a good structure for decline, it is wise to sell pieces of the business selectively while seeking to get the most cash flow possible. This cash flow can come by eliminating or curtailing new investments, maintenence, research and advertising.

Next, if you can compete and are in an industry with a good structure for decline it would be beneficial to exert leadership. You can establish cost leadership, in a way that discourages destabilizing price wars. Continuing with, if you can compete but are in an industry with a bad structure for handling decline, seeking niche markets that have high returns and are not declining as fast as the rest of the market, is a good option (Porter Michael, 1998).


How to address threats to your business, admits ideas stimulating you to become a rational and logical observer of trends in your industry. This attitude starts you throwing over unfounded sentiments, for vigilance that primes you alert to threats like new technologies and new ways of doing business.


Michael Porter, On Competition (Boston: Harvard Business School Press, 1998).

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