The Fragility of Authority: Consequences of Underinvestment in Technology

Intro

Here’s what happens. When leaders spend too little on tech, their business slowly leans heavily on just one kind of customer. That’s because growth stalls - prices stay flat, new markets won’t launch, past results can’t be copied. People often miss this, even when profits still look good. The real issue grows quietly: how things get done becomes locked into one way - one deal type, one client profile, one method of delivery. Once you see it, you can catch warning signs before they flash red. You might notice shifts in funding and task management, which together paint how bad it's getting. Then comes a clear path forward - five moves that create room for change without demanding an all-or-nothing overhaul.

Section 1: How overdependence forms (3–5 subsections)

1) The easy growth trap

One piece takes over costs. Learning from sales figures helps pick winners, then stick with them. What runs well gets copied across units. Teams in charge of delivery shape processes around each segment’s unique needs and pace. People delay tech spending even when they’re expanding fast enough.

This is where things get tricky. When growth happens without proper systems, companies lean too heavily on personal expertise and quick fixes. It might hold up just fine in one area, especially when everyone follows the same old methods. But once another layer comes into play, the whole setup can collapse.

2) Cost structure reshapes itself

Failing to invest in tech pushes tasks onto staff, extending hours, adding supervisors. People fill gaps where systems are missing - employees become solutions. Later:

Costs creep in because managing glitches takes effort.

What used to be rare now shows up all the time - defects and do-overs have become common.

Late reports pop up when numbers don’t match. Political delays often trail the mess. Inconsistency sparks the trouble from the start.

That is when hidden expenses start to rise. Under pressure, the system weakens but seems normal at first glance.

3) Pricing power erodes

When true costs go unseen, pricing reacts instead of leads. One main group pushes back stronger, requests endless tweaks, yet the company agrees - no proof exists. A single reduction begins alone, slowly turns into standard practice.

What slips away when tech spending falls short shows up in twice the damage. One path it travels is quiet at first

One thing stops standardizing prices or forcing routes: it just does not work.

Exceptions move faster than any check can catch them.

Punch line: if you cannot measure the deal, the deal measures you.

4) Risk gets misread as stability

Focusing comes alive through concentration. Leaders convince themselves they’re “specialists.” At the same time, the segment turns into one weak link:

A shift in how things are bought now drains funds.

A single rule demands spending that wasn’t planned.

A shift in one competitor’s pricing can squeeze profit levels.

When data is shaky, warning signs get dismissed. What looks steady actually hides uncertainty.

5) Capability lock-in

Few hands know how it works when money goes to technology. Knowledge sticks around those who built it, also the custom ways clients use their tools. Lock-in follows close behind

It's tough to shift team members on demand.

Delivery doesn’t split up well into modules.

A service just can’t be turned into a thing you sell.

This trap is what makes leading a single segment feel like being stuck in it too much.

Section 2: How to detect it early

Observable signs (8–12 bullets)

• When sales go up, differences in gross margin grow more noticeable day by day. Sometimes the number changes because people adjust it instead of following rules. It shifts depending on discussions that happen without clear guidelines.

• Money turns to cash slower now. Bills customers owe sit longer unpaid. Companies keep more payments back than before. Or arguments over amounts slow down getting paid.

• Finance: When the main part of the business hits delivery delays - like waiting on stock, unfinished work, or client payments recorded later - working capital rises.

• Finance: Customer and segment concentration increases, seen in both revenue and gross margin output, despite spread across multiple groups.

• Firefighting pops up often, as teams scramble to meet demand. Spreadsheets handle rough capacity guesses. Alongside them, ancient workarounds guide decisions. Rush orders take over when timing breaks down.

• By now, reworking changes and handling special cases happens all too often - the same issues keep appearing, needing constant follow-up, approval, yet still returning.

• Right now, service level targets and performance stats come in after deadlines. When reviews happen, it’s sudden, stressful - should be part of steady routines instead.

• Commercial: Discount drift: concessions become assumed (free add-ons, expedited delivery, extended warranties, extra scope).

• Commercial: Scope creep slips through unnoticed - teams mutter "we’ll fix that soon" when no one enforces the process.

• Commercial/Operations: More bespoke variants than the team can support, with no product/service taxonomy and no enforced standards.

Section 3: What it damages (cash, margin, execution, people)

Cash risk (include buyer-driven terms dynamics)

The excessive dependence between suppliers and buyers strengthens the negotiating position of buyers. The KSA/GCC region has a practice where major customers request payment conditions which make suppliers responsible for financing their sales. When you are dependent, you accept it:

Businesses must accept payment delays as their main expense for market access because they need to extend their payment terms.

The process of invoicing becomes delayed because of three main issues which include retention problems and milestone gating issues and approval delays.

Different documentation methods create inconsistent records which lead to more disputes between parties.

The situation becomes more severe because organizations fail to invest enough in technology which results in delayed and insufficient billing and proof-of-delivery processes that lack proper evidence. The full extent of cash risk goes beyond typical payment periods because businesses cannot force payment compliance when they do not have adequate documentation and fail to receive their data on schedule.

Margin risk (discount drift + custom cost)

Two margin killers compound:

Discount drift: concessions become systematic because organizations lose their ability to monitor corridors and enforce approval requirements.

Organizations need to determine their total exception costs through the combination of overtime expenses with rework costs and management team time spent on these situations.

Without system-level cost-to-serve, leadership believes margin is a pricing issue when it is an operating model issue. The segment trains you to create customized results through its delivery system which operates at prices that are half of the standard rate.

Execution/capacity risk (fixed cost fragility, idle capacity)

The company creates permanent production facilities to manage peak customer demand through its main customer segment by using dedicated staff and specialized equipment and managing expenses for management. When volume dips or timing shifts:

Utilization collapses.

The system shows idle capacity in locations which do not require it.

Service levels suffer because bottlenecks move.

The lack of technology investment creates system fragility because organizations must use basic scheduling systems and inventory tracking methods and resource management tools which produce limited results. You can’t rebalance quickly.

People risk (specialization, redeployment lag)

The system produces experts who specialize in particular fields because it needs them to function.

Staff members discover the rules which one customer follows instead of the established company protocols.

Cross-training is deferred “until after the next delivery.”

The storage of institutional knowledge exists within people instead of being contained within organizational frameworks.

Organizations need to modify their operational plans because redeployment operations produce longer delays which make their operations take longer. The delay between performing actions and achieving results results in delivery breakdowns and product failures and staff departures because of their extreme fatigue.

One KSA/GCC scenario (generic, realistic)

A mid-sized contractor or manufacturer in KSA/GCC secures ongoing projects from one major client segment which includes a large program owner. The team meets its documentation and compliance requirements through manual trackers and additional coordinators and customized reporting systems. The program continues its present state because it decides to extend its current operations instead of making any updates to its systems. The buyer has established more rigid acceptance standards while he now allows customers to pay their bills over an extended time period. Cash tightens. The company responds to the situation through price reductions which help maintain product sales volume and they add more coordinators to handle the increasing paperwork. The business needs segment revenue information and internal authorization systems because its operational patterns create increasing working capital needs and decreasing profit margins.

Section 4: The Segment Resilience Reset (5 steps)

Step 1: Concentration reality check

What | Why | How | The Concentration Map development process shows revenue and gross margin and cash conversion data for each segment and customer to identify profitable and dangerous dependency points which the system uses to create a list of vital exposure factors.

Step 2: Rebuild the commercial envelope

What | Why | How | The team requires procedures to determine prices and terms and to authorize price adjustments; the team needs to stop customers from getting better deals with extended payment options. The team requires deal desks for their essential customer base but they need to monitor all exceptions which happen. The team requires an approvals system and real-time monitoring of all active exceptions which need tracking.

Step 3: Fix cost-to-serve with targeted digitization

The system requires funding for specific technological functions which include order-to-cash operations and delivery proof verification and cost tracking and workflow management. The system provides better visibility which helps organizations detect their concealed custom expenses and shortens the time needed to resolve disputes. The system should operate through scheduled sprints which focus on implementing one process at a time. The system generates precise and consistent data which enables organizations to perform pricing and billing operations.

Step 4: Optionality build across adjacent segments

The analysis should focus on three consecutive market segments which operate at 70–80% (Typical range) of your present operational abilities because this approach enables better negotiation power and preserves manufacturing operations; implement current delivery systems to develop customized solutions for each market segment. The organization requires a 12-month business pipeline which should include two operational entry points to access new market segments.

Step 5: Capital and talent rebalance with lender-style stress tests

The solution includes three elements which are What, Why and How to achieve the desired outcome. The company should redirect its capital expenditure and essential personnel from making custom products for one market segment while performing lender-style stress tests under two different scenarios which include reduced volume and extended payment terms. The company needs to prevent a gradual liquidity crisis from developing. The company should establish specific triggers which will activate predetermined contingency measures and establish a condition for complete withdrawal from the agreement. The company needs to create a board-approved plan which defines operational thresholds and corresponding response measures.

Section 5: Tools (describe templates, do not link)

Concentration Map: exact fields/columns it contains

• Organizations can monitor their dependence levels by using performance indicators which extend past financial performance data.

• Segment

• Customer

• The contract type falls into one of four categories which include framework contracts and project contracts and recurring contracts and spot contracts.

• Revenue (last 12 months)

• Revenue % of total

• Gross margin (value)

• Gross margin %

• Gross margin contribution % of total

• The cash conversion cycle (days) or proxy (DSO + inventory/WIP days – DPO)

• The payment terms which businesses establish through their contracts determine when they expect to receive payment from their customers. The actual time it takes for businesses to receive payment from their customers after making sales.1

• Retentions/holdbacks % (if applicable)

• Dispute rate (Typical range, or count of disputed invoices)

• Variance flags (pricing exceptions, scope changes, SLA penalties)

• Risk rating (1–5) and rationale

Exceptions ledger: discounts/terms given vs value received

• The development of discipline occurs at this stage.

• Deal ID / Quote ID

• Segment / Customer

• List price and final price

• Discount % and reason code

• Terms requested and terms accepted

• What value received in exchange (volume commitment, faster acceptance, reduced scope, exclusivity, prepayment)

• Approval level and date

• Delivery exceptions requested (rush, bespoke reporting, custom specs)

• The Estimated Incremental Cost (Example) shows who owns the property.

• Post-delivery outcome (margin realized, disputes, days to collect)

• Lesson learned / policy update

Walk-away rule: threshold logic (use “Example” values only)

• The organization operates under a core policy which safeguards all financial donations and monetary resources.

• The calculation of contribution margin needs the cost-to-serve threshold which should exist between 15% and 20% (Example).

• The cash terms gate requires businesses to either increase their prices or demand immediate payment from customers or payment through milestone-based installments when payment periods exceed 75 days.

• The company needs to restrict major delivery exceptions to three or less per deal unless an executive member provides authorization for extra exceptions.

• If any gate fails and no compensating value is logged in the Exceptions ledger, the default decision is “no-bid” or “reprice.”

90-day execution plan: what gets measured weekly

• Weekly scorecard metrics (keep it tight and visible):

• The analysis includes three essential metrics which show top segment revenue percentage and gross margin percentage and cash conversion pattern.

• Pricing: discount rate trend, number of exceptions, approval compliance

• The company needs to send customer invoices right away while it tracks all disputed invoices and processes payments that fulfill its target goals.

• Operations: on-time delivery, rework rate, top bottlenecks, SLA/compliance timeliness

• The delivery of technology depends on sprint results which demonstrate how orders convert into cash while the workflow shows which products reached customers and their current status of activation and user uptake.

• People: cross-training hours (Typical range), role coverage for critical steps, burnout indicators (overtime trend)

Section 6: FAQs (5 questions)

1) Is this just a “sales problem”?

No. Sales shows the symptoms. The root cause of this issue stems from two main factors: weak cost-to-serve visibility and uncontrolled exceptions which technology should help you handle.

2) The company operates at a profit during its current business operations. Why change?

Profit can exist together with business instability. The market shows overdependence through two situations which include volume changes and when contractual periods exceed their scheduled duration. The primary business goal demands organizations to preserve their profit margins when market instability occurs.

3) Do we need a full ERP replacement?

Not necessarily. The system should begin with specific functional capabilities which address financial needs and exceptional situations through order-to-cash operations and proof-of-delivery verification and workflow approval processes and cost recording functions.

4) How fast can optionality be built?

Your core capabilities enable you to enter new markets through adjacent segments which allows you to access new markets within months instead of taking years to do so. The organization faces a standardization problem instead of having any issues with its level of ambition.

5) What if the dominant segment retaliates?

The value of optionality becomes evident to me. A party can maintain its credibility through successful negotiation exit strategies which create equal benefits for all involved parties. The need to depend on others creates situations where we face more stress but having multiple choices helps us avoid such situations.

Conclusion

Technology projects that lack proper authority support will usually experience failures which do not produce dramatic consequences. The system operates through silent failure because it requires the organization to grow its workforce while making special accommodations for individual cases and creating customized solutions. The operating model becomes unable to achieve similar results in different business segments because it develops excessive reliance on one particular market segment. The expected outcome of this situation will result in three main problems which include cash weakness because of customer-imposed payment conditions and payment disagreements and profit reduction because of price reductions and individual product pricing and employees who cannot move beyond their current limited roles.

The first practical task for this week should involve creating the Concentration Map which needs to be combined with cash conversion data and exception information. If your “best segment” is also your biggest source of pricing and terms leakage, you have a resilience problem, not a growth strategy.

The system needs to perform the [DIAG] diagnostic test as its following operational step.

Internal links

https://www.3msbusiness.com/weakd-leadership-support-for-innovation

https://www.3msbusiness.com/the-cost-of-overreliance-on-legacy-systems

External links

https://hbr.org/2006/01/competing-on-analytics

https://www.gartner.com/en/information-technology/topics/technology-trends

https://www.mckinsey.com/capabilities/tech-and-ai/our-insights/the-case-for-digital-reinvention