Being Opportunistic in a Volatile World
Final week my post drew considerable interest, possibly due to its shock value at a time when the news was really shocking. When the tsunami was a natural disaster, the response around the component with the Tokyo Electric Enterprise was a human calamity. Lack of preparation will invariably result in unintended consequences in case you are managing a nuclear power plant or any other business.
The reverse is also correct. The entrepreneur capable of understanding seemingly unrelated external forces, and weaving them into a thoughtful tactic, will clearly comprehend the strategic advantage. How may well the strategist consider social, technological, economic, ecological and political aspects to achieve insight on the way to benefit from ever-changing marketplace situations?
Scenario planning is a methodology whereby the entrepreneur considers converging factors that (in combination) creates a tipping point. Consider several of the following predictions, determined by facts already in evidence currently.
In the next ten years, we are likely to see:
Predicative Modeling-Cloud computing enables the migration and cross-referencing of large institutional databases. For example, actuaries, using sophisticated algorithms are able to model ailments based on lifestyle choices monitored in real time. They are able to calculate your risk of a heart attack based on which smoothie you tend to order at Jamba Juice, your frequency of exercise, prescriptions you use, etc. Offered as a benefit of a health care plan, the member is offered incentives to opt-in and receive preferential rates. Such tools slow down rampant health care inflation.
A Cashless Society-The majority of transactions amongst big banks are managed by exchanges where no money actually changes hands. Coins of the small denomination are nearing extinction. Today, you can download an iPhone app that serves as a debit card and can be swiped within Starbucks locations. For most transactions, cash is already irrelevant.
Smart Infrastructure-Automobiles come preinstalled with all of the features of an iPad (the 2011 Hyundai Equus will come with one) and all the benefits of the internet. Smart grids control the flow of traffic, directing drivers to particular lanes at a given speed to optimize drive time and reduce accidents. Traffic signals are regulated based on traffic volume. Sensors predict bridge and rail failures.
Needless to say, the speedy modify will take place in every sector, along with the strategist need to weigh many opportunities according to an organization’s capability to benefit from them. As a basic rule, organizations really should seek to attain scale and attain within its core (a minimum of 30% market place share) before expanding into new endeavors. As Jim Collins points out in his sequel to Excellent to Great (How the Mighty Fall), several providers fail because of an “Undisciplined Pursuit of More”. In their zeal for diversification, they typically leap also far from their core competency.
Every single chance has to be assessed within the context of the organization’s resources, bandwidth, and human capital. For every single chance, there’s an expense, and an opportunity cost. To pursue any new chance an organization must leverage resources which dilutes focus on the core business. Pick your possibilities very carefully.