Growth tips 30 seconds to business enlightenment.
It's time to review your high level strategy again
12-Jan-2012
"If you don't have a competitive advantage, don't compete" - Jack Welch
The pace of change is such that many industries are being transformed seemingly overnight, and in many cases, entire new industries are being created. According to science-fiction writer William Gibson, "The future is here. It's just not evenly distributed yet."
Albert Einstein once said, “If I had an hour to solve a problem and my life depended upon the solution, I would spend the first 55 minutes determining the proper question to ask. Once I knew the proper question, I could solve the problem in less than 5 minutes.”
Failing to ask the "proper questions", on a regular basis, leads to many firms being caught on the back foot with obsolete business models. The signs of emerging future trends are all around us, but sadly, too many firms fail to lift their heads out of their day to day operations to address them, unaware that they may be walking down a blind alley.
It is vital to conduct a disciplined strategic analysis (at least once a year) to understand the trends and their future implications for your industry, and to identify the key strategic moves you must make in order to survive and thrive in the future.
Some of the key factors to be considered include:
The business model.
According to IBM, for your business model to be of value in the future, it must have three core elements:
- A unique strategic position that defines who you are
- A strong grasp of future market trends and the strategic moves you need to make to navigate them
- A high level of profitability - either a lower cost base than competitor firms - or a highly differentiated offering that cannot be easily copied.
Booz & Co. describe three types of business model innovation:
“Market Readers” (Operational Excellence):
These companies focus on incremental change by keeping pace with proven market trends, and are able to maintain superior profits by conducting business on a larger scale - with greater cost efficiencies than competitors. E.g. McDonalds with their move to healthy food choices and espresso coffee
“Need Seekers” (Customer Intimacy):
These companies continually research their target market customers to ask them what they want, and develop new products and services based on the customer needs they identify. E.g. Penske (truck rentals) expects every manager at every level, including the CEO, to call at least 10 customers every week.
“Technology Drivers” (Product Leadership):
Most customers cannot imagine the future beyond their existing experiences. These companies seek to lead their customers into the future via new technology. E.g. Apple with their track record of being first to market with new product innovations.
The 5 competitive forces that shape industries.
An excellent framework for strategic analysis can be found in Michael Porter's five forces model.
- Rivalry between existing competitors
- The threat of new entrants
- The threat of substitution
- The bargaining power of suppliers
- The bargaining power of buyers
Macro forces - P.E.S.T.
It is also important to look at the broad macro-level forces – and how changes in these factors can impact your firm:
- Political factors (e.g. laws and regulations, actions by Governments)
- Economic factors (e.g. growth rates, interest rates, customer purchasing power)
- Social factors (e.g. demographic trends, changes in people’s behaviors, attitudes, preferences)
- Technology factors (the pace of technology change is accelerating – do you REALLY understand the implications of the word "accelerate"?)
Based on all the factors outlined above, how sure are you that you have a winning strategy for the future?
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At your weekly management meeting (you do have one don't you?) - share the latest Growth Tip with your team and ask the question: "How can we apply this information in our business?"
Commit to taking some form of action. You will be glad you did.
34531334269947::RESULTS.com | The Missing 98%
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| Date | 21-May-2012 |
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