In business speak, existential threats are the external factors that threaten the future continuance of the organization. If we consider business lifecycle stages of start-up, growth, market capture, market dominance, decline, and replacement, there is a point when the culture of the organization becomes comfortable, resulting in a slow loss of the energy and innovation that made the organization initially successful. Early stage organizations face numerous existential threats and therefore it is baked into their DNA that they need to adapt to survive. While not a discussion on one’s purpose in the universe, this blog will focus on how culture and strategic planning impact an organization’s perception of existential threats and its ability to provide market value.
A few examples that stick in my mind when considering this topic is the fossil fuel industry are: Netflix versus Blockbuster, and AMD sweeping CPU market share from Intel. Economic and environmental threats have been contributors to energy multi-nationals no longer ranking as the world’s most valuable companies. Technological change utilized by Netflix was the undoing of Blockbuster. Intel has fallen behind as their pace of innovation declined after many years being the clear winner, giving an opportunity for AMD to leapfrog Intel with superior products. “We are the only shop in town,” until you are not. “We are the best in our industry,” until you are not. “Our customers love us,” until they find a better alternative. Being the best is a moving target and resting on success will only allow your organization to drift away from its peak potential, and if unaddressed for too long one is left with a crisis. An existential crisis is a strong motivator, but not a good one. Understanding your organization’s external environment is critical, but how your organization perceives these threats is additionally important.
Public institutions are especially vulnerable to existential threats because, in some situations, the users of their services have no alternatives. There are no Yelp reviews for public services, and no amount of 1-star reviews will allow a Canadian Citizen to file a tax return with anyone other than the CRA. If you cannot vote with your dollars you can vote with your feet, citizens can move if they are dissatisfied with the services being provided. When considering public services, the municipal level has the most skin in the game as individuals can move to the next city over with far less hassle than changing regions or immigrating to a new country.
It is important to note that digital professionals, who are typically well paid, can work from wherever they are, which means some demographics can be more sensitive to the services provided by the public institutions in their area. However, this should not come too much of a surprise as people tend to pick neighbourhoods with good schools, low crime, and favourable job opportunities. What is changing is that with a highly mobile and global workforce, the consideration done by individuals now extends beyond local into regional and international contexts. If your State/Province was not considering these macro forces in play, the problem will not become visible until it is too late. We can already see this as people leave California for other states in the US.
Existential threats are strategic issues, and therefore require your leadership team to continuously communicate the organization’s strategic goals and help to shape a culture that avoids getting too comfortable being the best or only option available. For private organizations this is challenging as it is far easier set a goal against a known and confirmed target, which is hard if you are leading or have few competitors. A common strategy is to formulate a mission that is hugely aspirational to work towards, that way your benchmark is no longer your industry, but your past self. For public institutions, the challenges lie in how the culture perceives its external environment. If “this is how we have always done it” is a dominant response to external challenges, consider this a red flag to explore. Ultimately, existential threats shape organizations to be their best, however when they are conquered the success can be a threat too.