I was recently reading Louis Foong’s “Leadership” blog, when I was reminded of a quote that is attributed to the controversial yet successful leader Jack Welch:
As Louis quite rightly points out in his blog, alongside Welch’s successes, he has endured his fair share of critics too. However, this quote certainly stands out for me. It could be seen a notable mantra for the business world today.
People talk about the pace of change increasing so much it has almost become a cliché. Yet it’s true – production cycles are shorter, consumer expectations are higher, and everyone is talking about adaptability and agility. It’s difficult to see beyond the hype!
Conventional thinking suggests that small, nimble companies have an advantage. They can ‘creep up’ on their mid-size and large competitors, gaining market share quickly and persistently. Some would argue that it’s much easier for small companies to ‘change before they have to’. Commentators point towards large organisations such as Kodak that just didn’t seem able to get over the mental barrier of adapting to the new and evolving business environment. In Kodak’s case, it’s reported that the issue wasn’t innovation; they had sufficient knowledge and resources to invent and sell digital cameras. It was a reluctance to move away from a business model that relied on selling traditional film.
Yet often mid-size and large companies have access resources and know-how that well exceed what new entrants can afford. What techniques can be used to leverage this, gain advantage and see where change is necessary? There are many, and some useful examples are listed below:
- Business environment analysis: Techniques like SWOT and PESTLE might seem rather passé, but they are genuinely useful for understanding the internal strengths and external weaknesses that an organisation has. What are the threats? What might come and bite us later? This can be combined with techniques like Porter’s 5 forces to understand the power of buyers, sellers and the risk of new entrants.
- Understand the current business: It’s useful to establish where the problems are located and, as I alluded to in my previous article, it’s vital to gain an understanding of what ‘now’ looks like. This involves both investigating the current business problems as well as ‘crunching the numbers’. This number crunching often draws on business analytics and insight to gain a holistic view of where the problems are, where unseen opportunities may lie and where the profit comes from.
- Business model innovation: Alongside an analysis of the business environment and the current business problem, it’s extremely useful to reflect on your organisation’s current business model. In fact, innovating and creating options for business model change can be extremely enlightening and valuable. What other customer segments could you serve? What other revenue streams might exist? How might you completely re-vamp the business model? Osterwalder et al’s “Business Model Canvas” is an excellent tool for this, and the “Business Model Generation” book is an excellent read.
These are just a few of the tools and techniques that can be used. However, good quality business analysis helps organisations to spot opportunities and protect against threats. In summary: it often isn’t about the capability to change, but the willingness to embrace change.
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This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions