What are the outside forces impacting your business?
How to identify the forces that could provide opportunity for growth and impact your business decisions
Things change. In today’s world, they change at a rate faster than we have ever experienced. And that amount of change drives us to be much more reactive, to focus on what we already know, and to address opportunities and challenges with the same mindset we did last year, month, week. The dilemma is that outside forces are constantly impacting your business via changing customer expectations, shifting employee wants and needs, supplier uncertainty, and expectation transfer. Unless you are exploring, pondering, and adjusting continuously, you are likely to miss the importance of these changes (small and big) that impact the success of your business.
Michael Porter’s revolutionary Five Forces, introduced in 1979, are still valid. They do, however, need a refresh and an addition. Porter believed that the critical forces were:
- Bargaining power of suppliers
- Threat of substitutes
- Bargaining power of buyers
- Threat of new entrants
- Industry rivalry
The challenge is that the complexity within each of these categories has grown exponentially.
- Suppliers are often halfway around the globe today in economies that have different regulations and their own set of economic, political and other forces.
- Price increases can drive your profitability down dramatically and unexpectedly in short periods of time.
- Customers are more fickle and more likely to have decreased tolerance, thus lower switching costs to move to competitive offerings, some you may not even have thought of as direct competitors previously (i.e. YouTube as a substitute to traditional TV series or Twitter as a substitute news source).
- Buyers have access to more data and the ability to search for alternatives in a matter of minutes.
- New entrants to markets can operate with an intensity and desperation to “buy in” versus build over time.
Another category to understand and stay on top of today – the power of social media. We complain about it and some of us don’t even fully grasp it, but the fact is, it dramatically shifts decision making, the ability to influence effectively, purchase behaviors, etc. It is both a force in and of itself and a tool to achieve goals within other categories. It is today’s word of mouth and the power is enormous to both make and break brands, products and even companies.
And then we have today’s explosive force of expectation transfer (the assumption that because it happens in one area, it should happen in all interactions/areas), a driving force with a power unlike any we have known. For instance, if I can purchase a product in one click on Amazon, why can’t I interact with your business 24/7 – when I want and via the channel I want? Why do I have to stand in line at the DMV when I can schedule an appointment for just about anything else online to fit my schedule? Why does my bank insist I show up in person to conduct certain tasks? Engagement that happens in an industry completely unrelated to yours does not mean you are immune from the belief that ‘everything’ should go that way.
Most leaders and managers feel confident that they understand the industry, competitors and partners fairly well. However, it can be surprising what the data and facts can tell you that are different from currently held beliefs (even your own).
- Go through all those hard copy and electronic magazines you have from industry and professional associations. Hand them out to team members. At your next leadership team meeting, have someone present for 7 minutes on something interesting they came across. It gets the magazine off your desk, teaches others to look for possibilities and alternatives and shares the information gathered with others.
- Subscribe to trend sites. Put a task on your calendar (or do whatever works for you) to make sure you spend 15 minutes every week to review them. A few sites I recommend include GlobalTrends.com, TrendWatching.com, NowandNext.com, FaithPopcorn.com, Burrus.com And in a few moments, you can probably find numerous others that inspire you.
- Watch TED videos with your team. Talk about them over a lunch and learn.
- Regularly check your known competitor’s websites, Facebook pages, LinkedIn profiles and YouTube channels.
- Consider what comes just before or after your product/service in the value chain. Talk about shat shifts are happening in those sectors with your team periodically?
- Schedule a quarterly meeting, every quarter, just to discuss what is going on outside your business walls that might impact you, your customers, your employees, your suppliers, etc. Define the areas to explore and then assign an ‘expert’ (someone who does not really have expertise in the area assigned). Have them research and present a summary to the team.
- Have team members attend your industry conference with the assigned responsibility of coming back with disconfirming data about what you previously held to be true.
As you do this ongoing exploration, consider:
- What significant changes have you seen in your company, your industry, your products, your markets, consumers, competitors, and employees in the past five years? …the past six months? Consider the categories of communications, information, speed and size, technology, competition and customers, generations and diversity as well as regulations, expectations, social media, changing global forces, customer choice and experience…
- Where else can we look? Who is incredibly successful in current markets? What business models are new? What products have been best sellers in the past twelve months? What new needs or wants do consumers/clients have?
- If money/other resources were no object, who would beat us?
- What business issues are we facing (i.e. cost efficiencies, funding, recruitment & retention, product expansion, going more digital, leveraging technology, leveraging social media…)
- What have others experienced that may be coming your way?
- What do these changes mean to your organization…who you serve…your employees?
- What new forces & challenges are your customers facing?
- How do you continue to stay relevant & worthy?
- What new opportunities are there for you?
Leaders must be able to constantly scan the environment, take in data from a multitude of sources, assess and determine the impact or potential impact on the company. If you’re not constantly considering who’s knocking on your door, there may not be anyone there by the time you answer!
- Defend against the outside forces with agility.
- Have a plan to deal with one of the most pervasive outside forces — social media.
- Educate yourself on how cybersecurity can protect your business.
- Arm yourself with the facts on the new overtime laws and how they will affect your business.
- Consider all of the economic outside factors.
Category: Economic / Future Trends
Tags: business leadership, finance