TagBusiness Growth

Doing The Right Thing For Too Long

Markets and business models are shifting, and so should you keep up with these market changes if your business is to survive and succeed. Compared with the past, the current era of digitization represents an inflection point.

Consider individual trends such as artificial intelligence, virtual reality, Big Data, cybersecurity threats, drones, the Internet of Things, driverless cars, blockchain technologies, and more.

These new technologies have significantly changed the way we connect and interact as individuals, including how businesses deliver products and services to their customers.

Reinventing your business will determine whether you succeed or fail in the digital age. As the saying goes, disrupt or be disrupted. No company, business, or industry is safe from disruption. Today, individual businesses have the potential to compete against multinational companies and win.

These businesses are quick to anticipate market changes and flexible to get ahead of the curve. Sadly, many companies are blinded by their successes and aren’t willing to disrupt themselves. They are not experiencing their desired growth trajectory because they are stuck doing the right thing for too long.

Don’t get comfortable with the status quo and allow your business to get stuck on a strategy and mindset that no longer fit the market.

Here are a few questions to ponder, the answers to which will determine the future of your business:

  • What is at the core of your strategy?
  • Are you in touch with the customers you want to serve? When customers give you negative feedback, how often do you listen and act on it?
  • Are you operating your business on the premise that you know what is best for your customers therefore they are supposed to buy whatever product or service you offer them?
  • Are you keeping up with market shifts or you only know how to grow under one set of conditions or products and services, but not how to survive and strive under another?
  • How robust and flexible is your IT infrastructure to help you innovate, perform your company’s Jobs To Be Done, and scale your business?
  • Are you creating a strong culture that is focused on customers, including a culture that not only embraces change but seeks it out?

Given our world is changing faster, it’s imperative to continuously look for signs that things are changing and think about how those shifts would play out in the short-term, medium-term, and long-term, not forgetting the impact on the execution of your strategy and enterprise performance.

The signs can reveal individually. At times, they are part of a wider trend.

Nonetheless, how you adapt will determine whether you succeed or fail. Keep learning. Learn about innovations in your industry and beyond. Try out new business models and technologies and embrace a philosophy of constant change.

Once you understand how the market is changing and evolving, you can develop the right product or service and strategy that will help you achieve your desired outcomes.

We often talk of the ability to “connect the dots” and “take a helicopter view of the business” as key ingredients for success. But how often are business leaders and their teams doing this?

Across the organization, a culture of “them versus us” prevails. Important decisions are made at a functional level with little or no consideration of their impact at the enterprise level.

Having the ability to grasp the big picture and see how different trends intersect is essential for determining the right path or course of action to pursue.

So, how do you spot market transitions and develop a clear sense of where the market is going?

  • Be curious and hungry for new ideas. Continuously ask tons of key performance questions and pay attention to what’s around you.
  • From time to time, challenge conventional wisdom. It’s easy to stick with what you know about your business model, customers, competitors, markets, or industry but dare to pivot when conditions change.
  • Don’t be nostalgic about the past or worried about protecting what you’ve built in the present. Always be curious about the future and develop a willingness to take calculated risks.
  • Ask existing and would-be customers how they feel about your company’s products, services, and strategy. Instead of turning to sources that reinforce your existing point of view, seek multiple perspectives and cross-reference them as new facts come in.
  • Develop an ability to handle multiple random data points at once. This will help you generate critical market, customer, and business performance insights and make smarter, informed decisions. Be careful to distinguish between the signal and the noise since data can be deceiving, especially when you’re looking for “confirmation” that protects your business model.

Data might not tell you why something is happening, but it does tell you what’s going on.

  • Look for patterns and abnormalities that might suggest something is going on, including any interdependencies.
  • Anticipate all the various scenarios of what could happen.
  • Plan your course of action in response to what’s happening in real time.

As the signals of a market shift increase, the need to act becomes more imperative. Note, monitoring and identifying market shifts, and effectively taking the appropriate course of action is a matter of timing.

If you continue doing the right thing for too long and lack the boldness to disrupt both the market and your own organization, you risk being disrupted and left behind. There is no company that is too big to fail. Neither is there a startup that is too small to succeed.

Are You Realizing Full Benefits From Your Technology Investments?

Although the COVID-19 pandemic has accelerated digital innovation and adoption by businesses of all types and sizes, pre-pandemic, many companies had already started their digital transformation initiatives – harnessing technology to drive operational efficiencies, business change and deliver lasting performance.

Unfortunately, not all technology investments have delivered or are delivering the desired benefits.

Rather than take an enterprise approach, companies are deploying technologies in pockets, or silos, of their organizations without effectively scaling them across the enterprise.

This is according to a recent publication by Accenture Future Systems research which has found out the gap between investment and value is widening.

Pivot to Value With Living Systems makes some interesting points. Here are some excerpts with my commentary.

  • As the pace of change has accelerated so has the need to quickly embrace new technology. The best way to respond to change is by transforming the finance organization’s culture to be more agile, flexible, risk tolerant, and experimental. A sole focus on identifying, selecting and implementing the right technology, for instance, customer predictive analytics, is not likely to lead to success. Instead the organization’s people, structure and processes are also essential ingredients prerequisite for success.
  • Companies that can release new technology capabilities faster than their competitors are at a distinct advantage. New technologies such as AI, Robotics, IoT, Smart Devices, Data Analytics, and Blockchain are transforming the competitive landscape, providing new ways of delivering value to customers and new service opportunities. The factors, tools and systems that made you successful in the past may no longer be correlated with your future success. Therefore, don’t wait for your business to be disrupted first before you can act.
  • Businesses have taken innovation into their own hands, such as directly experimenting with new technologies and cloud services in “pockets” instead of across the whole company. Investment decisions are not tightly integrated with business priorities, and most companies have no easy way to measure the return on investment. The challenge today for many organizations is contending with too many priorities, a plethora of disjointed systems across the business, unnecessary costs and more than one version of the truth . The result? Inefficient data availability leading to less informed and intelligent business insights.
  • Simply investing more in technology won’t necessarily deliver the business flexibility that organizations need. Put simply, technology is an enabler of business performance. Only when the essential components of a business – it’s culture, people, structure, systems, and processes – are closely aligned can the company achieve powerful results.
  • Organizations that want to unlock the full value of technology need a growth strategy that is unified across business and technology. The focus is on exploring how technology can make the business strategy a reality and identifying greenfield opportunities in products, services and competitive positions. Before investing in new technology start with ‘Why’ then identify and understand the opportunities and threats that new technologies pose for your organization. Does the investment enable the achievement of the organization’s stated objectives?
  • Instead of acquiring new technology for one-time projects, leaders fund persistent value streams measured by business outcomes. Focus on the value case of the investment. Digital transformation is only partly about technology; it is also, and more importantly, about using technology to improve the way finance creates and delivers value across the business.
  • Realign the organization to put technology at the heart of every business. Many new technology implementations fail due to poor or lack of collaboration between business and IT teams. Reinforce collaboration between business and technology teams. Business subject matter experts play the critical role of defining operational requirements, leading process design initiatives and monitoring performance, while technologists focus on ensuring effective data security and governance, systems integration as well as monitoring identity and access and control.
  • Adopt new practices for agility and experimentation. Hire and train people to be more risk tolerant, creative, and develop a big picture and growth mindset. Also, create a culture where individuals and teams are encouraged to play and experiment with new ideas and business models, including with other parties such as universities, entrepreneurs, industry players etc.
  • Empower people to innovate with technology. Investing in new technology is not a matter of Humans vs. Machines. Instead, it is about Humans and Machines working together to drive business performance. Therefore, provide employees with opportunities to develop skills for working in a new digital environment.
  • With a culture of innovation, an agile mindset, and continuous learning, employees are equipped to capitalize on new and changing opportunities as the business evolves. Mere adoption of the latest technology will not improve your finance organization’s and business prospects. You also need to apply the time or resources necessary to make the sort of organizational changes required to benefit from the possibilities the technologies offer. Empower people to see, think and do differently. For example, anticipating and understanding changing customer behaviours and being prepared to respond accordingly. Never stop asking, ‘How can we get even better?’

I recommend business leaders to read the full report and hold a discussion with their teams on its key points and recommendations.

Challenging Conventional Growth Assumptions in an Era of Unprecedented Change

There is no doubt that 2020 will go down as a year to remember. COVID-19 has disrupted the pace of business and upended many of its traditional assumptions.

If the COVID-19 crisis has taught us anything, it is that disruption can happen at lighting speed and have profound impacts on strategic performance.

Thus, companies need to continuously rethink their assumptions about business growth and prepare for an uncertain and dynamic environment.

In order to drive growth, conventional wisdom says the company has to:

  • Introduce new products
  • Enter new markets
  • Acquire new customers
  • Add more brands
  • Acquire companies
  • Expand into adjacent businesses

The concern with blindly pursuing such strategies is that they open the door for complexity to permeate the operations of the company.

Quality is often confused with quantity, and the pursuit for growth often causes the organization to chase rabbits running in every direction.

The organization lurches from one strategic initiative to another, at times acquiring troubled businesses that aren’t in sync with its core business model.

And like a hamster on a wheel, the company is engaged in continuous spinning but lacks meaningful forward progress.

It’s ventures in markets around the world are spread-out and disconnected.

Achieving sustainable business growth is not about doing more. Rather, it’s about doing things better, focusing your efforts on that which matters most.

In other words, understanding what customers really want and how best to serve those wants. Instead of:

  • Acquiring more customers, have you considered firing non-profitable customers with steep costs-to-serve?
  • Launching more products, why not kill non-performing products, variants and brands and focus on the potential few?
  • Randomly entering new markets, how about you focus on the few markets where you can win and dominate?

Because of a lack of understanding of what customers really want, many businesses have bought into the myth of excellence – the false belief that a company must try to be good at everything it does.

Companies large and small are offering customers everything except what those customers really want.

Millions of dollars are spend on focus groups, surveys, customer panels, competitive analysis, and processing call-center reports, all to limited avail. Every business day, executives are inundated with data about their products.

They absolutely know the size of their market share, how products are selling in different markets, profit margin across hundreds of various items, etc.

Yet all this data is focused around customers and the product itself – not how well the product is delivering customers’ expectations.

In a world of increasingly ubiquitous product quality, increasingly similar market offerings, increasing price wars, and shrinking profit margins, understanding customers’ problems-to-be-solved is key to avoiding the frustration of hit-and-miss innovation and achieving sustainable growth.

What are some of the tell-tale signs that your company is addicted to doing more and trying to be the best at everything?

  • Your recent customized new products and services against target markets are increasingly less profitable than those in the past.
  • You are scraping the bottom of the barrel in acquiring new customers.
  • You are struggling in some of the geographic markets you have entered recently.
  • Your topline has been growing faster than your bottom line in recent quarters.
  • Your selling and administrative expenses are creeping up as a percentage of revenues.
  • Employees across the organization are confused about the top priorities.
  • Employee morale is on a downward spiral and attrition on the rise.

As a business, you don’t want to get yourself in a position where you are the best at something your customers don’t want or need.

By failing to understand what causes a customer to choose one product or service over another, you are leaving yourself vulnerable to disruption as better products and solutions come along and customers quickly jump ship.

Most of the time businesses are selling or pushing their products and services to the market instead of appropriately shaping and delivering offerings that customers are seeking to meet their needs and wants.

It is always difficult to abandon a business model that has been successful in the past. But times have changed.

And for those companies that move fast and early, an opportunity exists to create blue oceans of uncontested market space created by this shift.

What matters is note the bundle of product attributes you bundle together, but the experiences you enable to help your customers make the progress they want to make.

You to need to switch from a supply side perspective to a demand side perspective, and start asking a few basic questions about your customers and your business:

  • Under what circumstances are your customers purchasing and using your products and services versus other competitors?
  • What is the one thing you are not offering your customers today that they are secretly imploring you to provide them?
  • Are there segments with distinct customer expectations that you are inadequately serving with a one-size-fits-none solution?
  • What are the things that have made you who you are today? What are you good at?
  • What are the key five things about your business that you cannot, under any circumstances, afford to change?
  • Are you investing in attributes that your customers don’t truly value, and it’s not translating into profitability and business growth?
  • Which initiatives or processes need to be eliminated, curtailed or modified?
  • What is changing around you that gives rise to a shift in customer behaviours and expectations?
  • Who is not consuming your products today? How do their problems differ from those of your existing customers?
  • What’s getting in the way of these non-consumers using your products to solve their problems?

Asking questions like these help generate insights into changing circumstances that send your customers either to you or to your competition.

This enables you to define the business you are in, the size and shape of the market in which you compete, and who your competitors are.

It also helps see customers where there were none, ideas for solutions where there were only problems, and opportunities where you least expect them.

Of course answers to these questions arise from diverse sources:

  • Company internal systems.
  • Convergence of emerging trends.
  • Existing customer frustrations or pain points.
  • People who are not purchasing and using your products or services.
  • By observing how your customers use your products, especially when they do so in a way that is different from what you have envisioned.
  • Looking around at other industries. There could be something that works in another line of business that might translate neatly into yours.

The promise of new markets, more customer segments, more product categories, and more brands is almost alluring, but the payoff is hardly a definite thing.

So next time you find your company succumbing to the seduction of more, just remember achieving growth is less about producing something new and more about enabling something new and important for customers.

Growth can be found where none seemed possible before. The trick is to see what everybody sees, but think what nobody has thought – differently.

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