transforming beyond the pandemic
Successful trials of new COVID-19 vaccines and planned mass vaccination programmes shine a light at the end of the tunnel for the current pandemic, signalling positive change and the time to plan your business transformation for growth.
Those who plan their business transformations now based on that change and the forthcoming clarity on Brexit, will be better placed to sustainably grow their value in what will continue to be a tough UK economic environment.
The importance of timing, and understanding changing business environments, form some of the most important success factors for companies to successfully reach their strategic objectives.
Using timing and change as your competitive advantage
I never would have thought I would use a quote from Donald Trump in an evolvereia blog, let alone start with it - but no matter your political viewpoint, there are few quotes so relevant for the subject matter of this article when he said ‘’Opportunities are never lost, just found by those who clearly see the power of trends and timing’’.
You have to look back over 300 years to find a time where we have experienced such an economic downturn, with still many consequences to face as the reality of the removal of the various support packages introduced during the pandemic hits.
We will have to look forward at least five years in the UK to see a post pandemic level of recovery, and one that still will be saddled by lasting economic debt and social inequalities that sadly may take a future generation to truly eradicate.
The pandemic has brought to some the possibility for opportunistic growth in an environment of chaos and destructive disruption. For all of us it has brought an environment of accelerated change, and a legacy of a new business environment shaped by these changes bringing forward existing and new trends.
As we approach the end of this year, we know that two things will change and impact on how businesses will operate in the year ahead and beyond. The promise of mass vaccinations for the COVID pandemic and the outcome of Brexit negotiations and our trading relationships with the world.
Standing still means going backwards
It means that almost all businesses, even those successful today will need to develop and deploy new strategies that are based on our changing environment and the timing of such changes in order to grow their value in the future. Few businesses will be satisfied to stay still in such periods of extreme change because standing still will mean going backwards.
Business transformation and the capabilities of businesses and their people to grow value in times of such change are not buzzwords, but increasingly essential requirements and skills for many to be successful in the future. Change brings opportunities to do things better, and businesses who have these capabilities have a significant competitive advantage for their future success.
Business transformation starts with businesses identifying the time to change and the changing environments they operate in to create strategies for their future success and value growth.
There has never been such a time or an environment of change to act on as now.
The importance of timing in business
Bill Gross is one of the most successful investor and fixed income fund managers in the world. In his excellent Ted Talk on ‘the biggest reason why start-ups succeed’, he presented insights into his research into the most important success factors in over 200 businesses he surveyed.
He analysed five core reasons for success and came to a conclusion that timing was in 42% of cases the main reason for success in the businesses surveyed, more important than the team involved at 32%, the business idea at 28%, the business model at 24% and the funding behind at 14%.
His research provides some parallels also for Business Transformation – where true business transformation results in a radically altered business model and value proposition, and where the balance between being too early or too late in bringing a new product or service to market for example can be critical to realising the expected benefits.
Business Transformation success rates however have additional factors which lead to their success rates, due to being heavily influenced by the execution itself from moving from an existing business strategy to a radically new one. None the less the importance of timing is a critical factor in successful business transformation.
Of course, there is no proven or scientific way to establish the optimal timing for businesses, it’s often a question of judgement based on business intelligence, and a degree of maturity, depth of intelligence and entrepreneurial opportunism.
But we do know that there are a number of timing related circumstances, where the conditions best exist to make the analysis necessary, to helps form an understanding of when the best time is to undertake business transformation to grow value.
Times of uncertainty
Such times demand analysis that provides a clarity of the changes that a business should react to or prepare scenarios for. Such analysis should provide an impact assessment of changes to provide a strategic understanding before implementation. Such accurate information reduces the levels of uncertainty within such plans.
Times of disruption or disorganisation
Such times create confusion to businesses about the external environment and changes occurring within it. Analysis during this time can provide improved clarity and stability to anchor strategic changes by providing perspectives and options that enable a business to focus and reach their strategic objectives.
Times of rapidly changing or overwhelming information
Sometimes it can be the case that overwhelming levels of information exist in response to changing environments, and in such situations analysis can help by focusing on providing clarity of the key information necessary for strategic plans to be formed.
Times of increasing stability and growth opportunities
Such times can often provide the environment to enable growth strategies to be most effective, yet still demands considerable analysis in order to prioritise and understand the potential for such strategic changes and investments to be made. Increasing stability enables medium- or longer-term strategic approaches to be made than can grow value with reduced risks and through adopting agile approaches as opportunities develop.
Times of tipping points of change
Significant advantage can be established through analysis that identifies tipping points of change, such as the rapidly improving likelihood of a post pandemic environment driven by mass vaccination. There is a strong argument that acting a little early in such times is more advantageous to growing value than acting too late. What has to be factored in to identifying such timing, is the time necessary for such analysis, to result in the development and deployment of a business transformation strategy to hit the sweet spot of a tipping point of change.
The last year has brought many of the above considerations of timing into play, often resulting in defensive strategies made through disruption . However the importance of analysing and understanding the increasing stability and the tipping point of change, is a key to forming growth strategies for many businesses who have been negatively affected by the pandemic, or the lasting changes and opportunities it has brought forward.
Analysing and understanding your changing business environment
Understanding if your business transformation and strategy has good timing relies largely on your ability to assess the changing business environment and the changes that provide your business with opportunity to grow value.
An old saying is that when it comes to market timing, you can be lucky, or you can be good. The greater your capability to accurately look forward, the greater your ability will be to identify your opportunities and undertake successful business transformation.
There are two proven tools that can provide an effective way for companies to undertake this work and to identify the key change factors affecting the external environment and your competitors.
These are the STEEP Analysis, and Porters Five Forces Analysis, sometimes referred to as the Industry Structure Analysis. With these tools you will be better placed to understand what is positively or negatively impacting your business, and how you can make change your competitive advantage.
STEEP
A powerful and simple tool to develop your understanding of the external environment.
The STEEP analysis when used correctly is a framework to establish how the external environment impacts upon a business’s strategy, and in identifying the opportunities for developing new improved strategies and transformation activities that create increased business value.
STEEP stands for Social, Technological, Economic, Environmental and Political-legal elements that influence a business environment. Often companies reviewing strategies work with limited information to help guide their strategic opportunities, especially smaller businesses who may have less access to such macro and micro information and trends.
At this time of change especially, the more up to date information that can be established as a base to work with the better. Much of this information is available freely or with moderate cost. In specific cases it may be a wise investment to commission specific information to your business’s needs.
If your business today is not working with such information and awareness driving your strategic options, then it is important to start collating and maintaining such information as changes frequently occur and knowledge gives you an advantage.
The five elements of STEEP analysis
Social
The social element of the external environment considers the aspects that describe society. Changes in the social environment can create significant changes for established strategic plans and requires careful monitoring of trends in society to arrive and act on the correct conclusions.
Technological
Businesses that rely on or are influenced by technological advances to generate new products and services are prone to be affected by rapid changes in the environment. Monitoring and measuring the effects the changes within this environment can give significant and timely benefits on respective product-development strategies.
Economic
The economic environment contains aspects that indicate an individuals’ capacity to obtain products or services within a set of economic conditions. Assessments should be made based on how consumers will react when there are changes within the environment, and how their firm should adjust their strategy to remain competitive given the circumstances.
Environmental
This increasingly impactful element considers the present-day situation of the physical and biological environments that businesses and brands can face, especially for businesses who make use of natural resources in producing and distributing goods.
Political (including Legal)
This element of the analysis consists of understanding the political and legal environments of a specific market where businesses operate within. Failure to understand and adapt to the macro and micro political and legal environments will result in facing barriers which may be very costly to deal with.
Working with your STEEP analysis
Availability of relevant information is the first step, but equally important is how you work with that information in a way that benefits your strategic plan and level of transformation activity.
Comprehend the element of the environment being analysed
· What are the current key events and trends within the element?
· What is the evidence supporting the existence of these trends?
· How have the trends evolved historically?
· What is the nature and degree of change within the trends?
· What kind of impacts do the trends have for the business and the market?
Assessing interrelationship between trends
· What are the conflicts between the trends?
· What are the interrelationships between the trends?
Relate trends to issues
At this stage, your analysis should have identified the trends that will significantly help or hinder the business in reaching its goals. Creating a list of possible trends with the intention of prioritising the list down to main issues is the most effective approach to take.
Forecast the future direction of issues
At this stage analysis must go beyond the information collected, to determine the driving forces behind the issues. In order to understand these driving forces, an identification of the symptoms and causes of trends must be completed. This task can be one of the most time consuming but valuable steps of working with the model. When completed it can provide a wealth of insights and intelligence which can guide the strategic decision-making process.
Derive implications
This step is about forming conclusions about the external environment and how it will impact the present and future strategic plan, and in forming input to the degree of transformation necessary.
Porters Five Forces Model
A powerful and simple tool to develop your understanding of the competitive environment.
With the external environment and the changes occurring in it established, attention should be given to understanding the competitive environment and the possibilities of change within it, that can affect the best laid plans you may have identified. The Five Forces Model was derived by Michael Porter to illustrate the different pressures a business faces when competing in a market and can provide a framework to establish how competitive forces can influence and affect your plans.
Working with Porters Five Forces Model
The use of this model requires a deep understanding of your market and the suppliers and competitors who operate within it. Again if such information is limited within your business and your people, it’s wise to establish a continual level of intelligence in these areas, especially in a fast changing environment where a range of considered scenario based options can enable rapid response to any developments.
From a transformation and change perspective, this tool can also act within your business as a real enabler of all who work in the business to join together in bringing awareness and a active role into the decision making capabilities of the business. This in turn can bring increased organisational commitment to any actions taken in response.
Use of the model
The key is to populate each of the boxes of the model with relevant and up to date information, that enables assessment and scenarios to be made which can influence or adjust a strategic plan.
Defining what is attractive or unattractive for entrants or incumbents to your business area, based on the strength or weakness of the forces, is one of the keys to deriving value from it's use. Its challenging to be scientific in the model's use, a high reliance on judgement and entrepreneurial capabilities is necessary to form sound insights.
Entrants
Where little incentive exists for an aspiring entrant to your market due to low profit opportunities or return, then this indicates an unattractive position. Conversely It also asks your business to consider the value to your business by operating within it.
An attractive proposition exists for entrants where there is high incentive for an aspirant competitor to enter your market to increase their profitability and value growth. Conversely this can ask your business to consider how to protect the value to your business.
Incumbents
Where little incentive exists for an existing competitor to remain or develop within your market, then this indicates an unattractive position. Conversely, it also asks your business to consider the value to your business by operating or investing further within it, or to look to new market segments.
An attractive proposition exists for incumbents where there is high incentive for an aspirant competitor to develop within your market to increase their profitability and value growth. Conversely this can ask your business to consider how to protect and counteract the risk of increased competition, risk to market share and risk to profitability.
Acting on the changes these models provide
Both models have some degree of limitation – however many leading businesses work with them as a structural part of initiating strategic change.
The output and insights given help provide a definition of the future situation a business wants to achieve, and from that strategic position a business can map the degree of change necessary to realise the opportunities that come in a changing business and competitor environment.
New opportunities are found by Identifying trends and the timing of initiating action. The coming weeks and months will provide concrete changes that can remove some of the ambiguity and uncertainty of recent months.
It takes a little time to act upon these changes, and those who act in a timely way to prepare for that are more likely to sustainably grow their value even in the ongoing challenging conditions that will exist.
Having a strategy is one thing, delivering it is another – and equally important as deciding to make change happen, is having the capabilities to achieve it. Our next blog article will focus on the additional value that business transformation capabilities can bring to your business in acting in these times of change.
#evolvereia #BusinessTransformation #PaulGlass
#TimingIsEverything #CompetitiveAdvantage
Paul Glass – founder of evolvereia
evolvereia Blog - Pandemic
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