TagBusiness Transformation

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.

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.

Transforming Your Business in Times of Continuous Change

In times of continuous change, there are both winners and losers. Some company’s grow to become high performing, innovative and competitive enterprises while others develop into fighters, fighting for survival on a daily basis.

Today’s business environment is constantly evolving, with many factors both internal and external to the organization affecting the achievement of its stated objectives including the level of its competitiveness compared to competitors.

Some of the contributing factors include prolonged geopolitical and economic uncertainty, unresolved trade issues, rapid advancement in technological innovation, increased competition from new market participants, and fickle customers with constantly evolving needs.

As a result, the business has to be adaptive if it is to grow and succeed in such a disruptive environment.

When everything is going well, it’s easy to focus more attention on the good stories and less on what could go wrong. The blue overshadows the red, and this is a major problem in some companies.

These companies allow their past success stories such as successful product launches, increased market share, core technologies, and other organizational capabilities to blind their ability to view the future with a different pair of eyes.

Culturally, they are locked into the old way of working, bound by legacy systems and processes. Little time is spent on reviewing and evaluating the existing business model to establish whether it is still viable or not in these disruptive times.

On the contrary, transformational companies are not satisfied with the status quo. They are appreciative of the fact that past success is not a guarantee of future success.

Just because you are doing well today doesn’t not mean you’re going to enjoy everlasting success.

Business history pages are littered with doom and gloom stories about companies that have collapsed due to lack of innovation and unwillingness to evolve with the market.

Examples of such companies include the technology company Xerox, the retailer JC Penney, the social networking company MySpace, the department store Sears, the high tech company Polaroid, the bookstore Borders, and Circuit City the consumer electronics company.

What do all these companies have in common? At some point in time, they were all mighty industry titans, too big to fail and led by great, smart people.

However, in the midst of their successes they failed to adapt to changing customer needs, new technologies, competition and business models.

Even though these companies had built their businesses from the ground to the top of their respective industries, their death knell was the self belief that no other company was capable of doing better than what they were already doing and unseat them at the top.

Unfortunately, because of this fallacious way of thinking and ignorance they all paid a hefty price.

To avoid having your company join this list of colossal business failures:

  • Don’t get comfortable doing the right thing for too long. Continuously look for opportunities ahead and remember that today’s success can obscure tomorrow’s possible failures.
  • Regularly ask yourselves if what you’re doing and how you’re doing it is enough. It’s about making productive use of the resources available to you to improve your company’s performance and competitiveness.
  • Don’t dwell too much on the past. It’s important to know what has happened, but more importantly you need to understand why it has happened and how your company would perform in the future.
  • Commit sufficient time to analyzing new technologies, industry trends and competitors. Reviewing financials provides a rearview mirror of business performance, and you need forward looking indicators to understand your customers, competitors and the competitive status of your business (in terms of products, core technologies, market share, talent, culture)
  • Stay open minded. As highlighted above, when a company has been successful for too long, very little time is spent on thinking through alternative downside scenarios. It’s so easy to focus on the good news, spurn bad news and avoid discussing negatives. Questions such as “Why haven’t we done it before, What if this doesn’t work? What would we do then? What might make this not work?” are reluctantly answered. As a result, what begins as minor issues eventually develop into major issues. Don’t be a victim of own success to such an extent that you become ignorant of change.

Transforming a business into a high performing, innovative and competitive enterprise is a journey characterized by ups and downs. Consider every challenge, every problem and every piece of bad news as an opportunity to learn and improve.

Talking about Digital Transformation

These days I’m hearing quite a number of business leaders talk about digitization, going digital or digital transformation.

Regardless of which term you’re most comfortable with, it’s a good sign that leaders are seriously considering taking advantage of the power of modern technologies to transform their businesses.

An investment in IT is no longer considered a cost to the business. Rather, in highly performing organizations, embracing emerging digital technologies is considered an enabler of business performance.

In these organizations, business leaders are cognizant of the conditions in which technology supports the overall business strategy as well as those in which it helps shape the business strategy itself.

It’s no secret that we are in the digital era. Digital technologies are everywhere. Just think of the significant increase in the pervasiveness and the power of digital technologies in new domains such as cloud computing, robotics, wearable devices, 3D printing, drones, machine learning, blockchain, virtual reality etc.

These new technologies are influencing not only the way humans live and work, but also how we learn, play, innovate, transact and govern.

Your existing strategies will not carry you into the future

Although I’m not able to predict with certainty what the business landscape will look like in the next 5 or 10 years, I strongly believe that organizations that will survive and succeed during this period will be defined by their ability to master and take advantage of the power of these emerging technologies to deliver value to customers.

Traditional, tried-and-tested ideas that propelled your business to where you’re today are no guarantee they will continually move you forward and ahead of your industry incumbents in this digital economy.

Let’s look at Amazon as an example. The global ecommerce retailer started off as an online bookstore and along the way embraced emerging technologies to become a leader in cloud computing services, media and artificial intelligence.

The company did not become successful because of its size. Rather, taking advantage of digital technologies helped it to become a powerful global brand.

Just because your current business model is working does not necessarily mean you should allow it to run its course. It’s critical to always question, refine and enhance your competencies and strategy otherwise you risk becoming irrelevant and falling victim of some successful, but now outdated, past practices.

It’s not all about a set of technologies

Simply overlaying technology, however powerful, on your existing business infrastructure does not work. A change in structures, systems, processes, skills and network relationships is paramount.

Neither does digital transformation entail simple automation of traditional, routine and repetitive processes. It’s also about embracing new rules of engagement and continually experimenting with new approaches and adapting them to suit your performance objectives.

For instance, embracing advanced data and analytics tools to learn about and better understand your customers and solve their problems, challenge your current business model and ultimately alter the sources of your revenues and profits.

Shift your focus from thinking about how digital technologies support your current business to exploring how they could also shape your future strategy and business models. In other words, think of innovative ways these digital technologies can help you create and capture business value.

Further, effective decisions on digital transformation are not hype-driven.

Different companies are at different stages of the transformation journey, experimenting with different technologies to create new capabilities, establish new relationships and identify differentiated drivers of value.

Thus, instead of just mimicking what other players in your industry are doing, acknowledge that there is no one-size-fits-all solution.

Consider how the different forms and functionality provided by digital technologies could influence your company’s strategic actions and provide better value for customers of your products and services.

Don’t go it alone

Success in today’s digital economy depends on your ability to build a network of relationships and co-create value with other digital players. As an example, think of how traditional banks are partnering with fintech and regtech entrepreneurs to fundamentally enhance, transform and disrupt their current business models.

These tech entrepreneurs are ambitious, with bold views on how they can disrupt and reorder the traditional banking model. By taking advantage of different digital technologies, they have challenged and disrupted traditional methods of delivering financial services.

So depending on your industry setting, you need to recognize the role of such specialized entrepreneurs in solving your fundamental business problems in new and effective ways.

As digital technologies increasingly pervade the very fabric of our society and business, are you keeping pace with the change or you strongly believe in your established playbooks to continually help you survive and succeed?

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