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Monday, 12 November 2018

Dealing with 'inevitabilities' in business strategy

Many of the threats and opportunities we identify on SWOT and PESTEL analyses are uncertain: things that might or might not happen or things that might happen one way or another. Others are simply trends which carry with them an air of inevitability.

For example, we don't know:
  • if antibiotics will lose their effectiveness or if medicine will find an alternative approach,
  • if the world will be able to reverse the effects of global warming and/or overpopulation, or
  • whether the current political trend to the right will continue, etc.
However, we can be pretty sure that:
  • products and services will continue to digitise,
  • data will become increasingly important in the way the world functions,
  • autonomous vehicles will eventually succeed human-driven vehicles, 
  • people will be more inclined to rent assets which they had previously been required to own, and
  • AI will take on ever more complex tasks previously thought to require a human to perform them.
Of course, the distinction between these categories of uncertain and inevitable changes can be blurred and depend on the lens through which you look at them. But in any strategic context and time-frame, it is usually possible to distinguish between the two.

How should a strategist handle these inevitables?

One swallow does not a summer make


Every inevitability will have its doubters: people who think it will not come to pass - as often as not, because they simply don't want it to happen.

But as strategists, we must deal with the world the way it is, not the way we wish it were.

Even the strongest trends seldom proceed in a straight line. There are invariably numerous setbacks and other surprises. The doubters will cease upon these as evidence that it will not happen. But, as Aristotle said:
One swallow does not a summer make.
There can be few recent examples as dramatic as the bursting of the dot.com bubble around the turn of the century. Many businesses went bust, and I am sure that small fortunes were lost. At the time many heralded this as proof that people wanted to continue to do business as they had before and that the threat of technology had been shown to be a hollow sham. However, as much of a setback as it was, the dot.com trend recovered and strengthened.

Part of the strategists' role is to see through these setbacks and other anomalies and remain focused on the underlying trend.

Not 'if' but 'when' and 'how'


Once we've established that something is more or less certain to happen, we can stop worrying about if it will happen, and start applying our minds to when and how it will happen.

The strategist should monitor such trends on an ongoing basis. Do recent events suggest that the trend is speeding up or slowing down, or likely to speed up or slow down? Are they evolving in a way which is slightly different to how they started out or where originally expected to play out?

For example, Amazon changed the business of book distribution (and many other businesses!) forever. But what fewer people had anticipated was how Amazon was able to use its new-found power in the publishing industry to launch the Kindle where so many other e-readers had failed before it.

Being alert to these subtle changes in a trend which seems otherwise inevitable could be a source of significant strategic advantage, especially where all of your competitors are also building their propositions around the same trend.

So, perhaps it is time to go back over your SWOT and PESTEL analyses, distinguish between those which are uncertainties and those which are inevitabilities, and ensure you have appropriate sense-and-respond strategies in place for each.

photo credit: Duncan Rawlinson - Duncan.co - @thelastminute Passage via photopin (license)