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ARE U.S. FIRMS IN TROUBLE? THE ANSWERS PROVIDED IN A RECENT POLL OF 854 SENIOR EXECUTIVES MAY SURPRISE YOU

 CAMBRIDGE, Mass., Jan. 12 /PRNewswire/ -- Despite difficult economic conditions, slightly more than half of the 854 senior executives of U.S. firms who responded to a recent Chief Executive/Arthur D. Little poll indicated that their firms' overall performance had improved significantly over the past five years, and 73 percent thought that their firms' standing was now ahead of others in their industry.
 Moreover, these executives believe that their firms can continue to thrive without effecting any major improvements in their critical business processes or in the manner in which they address the needs of various stakeholders. Company performance was thought to have improved most among small and mid-size companies, as contrasted with companies with more than $500 million in sales.
 (A complete analysis of the results of this October 1992 reader survey will appear in the March 1993 edition of Chief Executive.)
 "We were very surprised at the results of this survey," observed P. Ranganath Nayak, a senior vice president of Arthur D. Little, Inc. "They don't correlate with what we've been observing in our work with clients or our discussions with chief executive officers around the country. The sense of complacency expressed in this sample of American industry seems almost out of place with the realities of the competitive marketplace as we understand it."
 In noting that such enthusiasm appears to fly in the face of reality, Dr. Nayak explained that it is not uncommon for performance improvements to lead companies to bask in a false sense of accomplishment. Often, management feels that the company has "moved up on the competition," when in fact they are chasing a moving target.
 One reason that these executives may be kidding themselves about their performance and the industry standing, according to Dr. Nayak, is a lack of competitive intelligence. "Competitive benchmarking is a strategy that has been used by fewer than a third of the companies in our survey," he noted.
 Even more startling to Dr. Nayak and his colleagues at Arthur D. Little is that the executives surveyed feel their firms will enjoy continued success without having to improve the way in which their businesses operate. "I believe it is very unlikely that American companies will prosper in the 1990s absent improvements in their operations," he said.
 Respondents to the survey gave the most credit for their firms' performance improvement to programs aimed at satisfying customers. This improved customer focus is a recurring theme throughout the survey, with the senior executives citing customer loyalty as the most important business issue confronting their companies and also the area most in need of improvement.
 While Arthur D. Little's management experts recognize focusing on customer needs as a positive trend, they also see in it the seeds of future problems. "I am concerned that one of the main business messages of the 1980s -- total quality management (TQM) is being somewhat misinterpreted," said Robert M. Curtice, a vice president of the consulting firm. "There appears to be a flawed belief, promulgated by some misguided TQM disciples, that the customer is always king -- no ifs, ands or buts.
 "The simple truth is that every business has multiple stakeholders whose needs must be mutually, and often simultaneously, satisfied," Curtice continued. "besides the customer, you have to satisfy employees, owners, and increasingly, key suppliers, regulators, and other stakeholders such as environmental activists. While this may be viewed by many as a simple truth, it is becoming a supreme management challenge."
 When asked if there were any major impediments to performance improvement within their organizations, most executives responding to the survey cited the lack of a sense of urgency to improve as the primary obstacle in their path. Nayak believes that these executives would do well to look within themselves to see if some of the complacency they see standing in the way isn't of their own making.
 "This decade is going to be a difficult one for most corporations, " he said, adding that "surveys of this kind can serve as a wake-up call for executives. While measures such as improvements in product quality and customer service are critical in assessing performance, what really matters most is how quickly a company improves relative to its competition.
 Chief executives who understand the need to focus on achieving performance improvements that are not only continuous but accelerating will be the ones leading successful corporations in the next century," he said.
 -0- 1/11/93
 /CONTACT: Patrick Pollino, of Arthur D. Little, 617-864-5200/


CO: Arthur D. Little ST: Massachusetts IN: SU:

CH -- NEFNS1 -- 3803 01/12/93 07:33 EST
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Date:Jan 12, 1993
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