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A Kiteboarder’s Guide to Embracing Business Uncertainty

Amanda at Tybee Island, Oct. 2017

Amanda at Tybee Island, Oct. 2017

If it’s a weekend and the forecast shows potential for good wind, my husband and I head to the beach. We aren’t always rewarded with enough wind for great kiteboarding, but if there is wind, we’re often the only ones there, set up and ready to take advantage of it.

Meanwhile, others who have waited for the wind to materialize before jumping in the car often arrive just as the wind is dying.

Just like the wind, most everything in business is subject to change, often when you least expect it. And change brings uncertainty, which often manifests as doubt, delay and paralysis. We don’t know what’s going to happen, so we wait.  According to psychologists, we humans are hardwired to dislike uncertainty; it’s in our DNA. In a recent study, researchers discovered that uncertainty is more stressful to humans than knowing that something bad is definitely going to happen.

But what if, instead of being a negative, uncertainty in business was a positive? In my experience, this is often the case. Why? Because uncertainty creates opportunities to pull ahead of the competition and stay ahead. And businesses that are willing to take on more risk and operate in uncertain environments can win a competitive advantage over those that are not. They’re on the beach and ready when the wind picks up.

Uncertainty creates opportunities to pull ahead of the competition and stay ahead. Click To Tweet

Don’t let uncertainty put the brakes on your business’s growth. Here are six ways in which fast and unpredictable changes in your business environment can create opportunities to gain competitive advantage.

1. Marketplace changes create new opportunities for us to surge ahead of competitors. When the world is certain, even mediocre companies can perform adequately. The world plods along much as it always has. Companies serve known customers, providing for well-understood, long-standing needs. The trouble is, in highly certain times, when nothing much is changing, companies tend to become more and more alike. In search of growth, they go after one another’s customers, or drop price to gain market share (predictable winds lead to crowded beaches). Margins get squeezed. It’s okay for everyone, but great for no one.

Uncertain business environments, on the other hand, create the potential for companies to break out of the pack. When something unexpected happens—a new technology, a new competitor, a new customer need, or a change in governmental policy or regulations—it gives alert and prepared companies a chance to speed ahead if they respond in a faster, smarter, and more-adaptive way to make the most of the new situation.

Uncertain business environments create the potential for companies to break out of the pack. Click To Tweet

2. The faster and more surprising the change, the greater the advantage for companies that respond quickly. Company leaders who welcome marketplace changes and think, “How can I exploit this, before my competitors do?” rather than “Let’s hunker down to watch, and hope this goes away,” are able to take fast action, and can make the best of even difficult situations. Managing well in uncertain environments, to minimize risk while taking advantage of changes that occur in the business environment, is an uncommon capability that can be a tremendous source of competitive advantage.

A business unit president I work with was concerned when she noticed that sales in the Midwest region had plummeted in the space of just two months. After a series of conference calls with salespeople in the region, we discovered the reason: A competitor had begun offering same-day delivery and directly targeting all of my client’s best customers. We acted fast, identifying a set of products that my client could reliably deliver in a two-hour timeframe, using company-owned delivery vehicles. The competitor, who was using third-party logistics firms for delivery, couldn’t match this offer, and sales rebounded, surpassing even their former level.

3. We can take simple steps to be more prepared for the unexpected. Anticipating a wide range of possible future scenarios, and having a frank discussion with other leaders in your firm about what you should do to prepare for the possibilities, is essential to preparing for the unexpected. Of course, we can’t predict the future, but through this type of discussion, it often dawns on us that there are a few “no-brainer” steps we can take to be ready for what might happen (such as packing the car with kite gear if there’s over 50% chance of wind). For example, fast-food restaurants that specialize in chicken likely have a plan for how to respond quickly with substitute sources of protein if a fast-spreading virus decimates chicken supplies. And, scenario-planning exercises can help us to become more deliberate in watching for the early warning signals of future market disruption.

4. The more we proactively change the business environment, the greater control we have over business outcomes and competitive advantage. Martial arts experts know that if you want to be faster than someone with fast reactions, you have to create the situation. Consider how you can shape your business environment to pre-empt an effective competitive response.

Consider how you can shape your business environment to pre-empt an effective competitive response. Click To Tweet

One company I know was superb at helping to shape future regulations and industry technical standards—to its own advantage. Another was adept at developing new distribution channels that the competition hadn’t considered, and would have a hard time penetrating quickly. Both companies kept their strategies under wraps during several months of negotiation and preparation with other parties. As a result, other players were caught by surprise, and were slow and relatively ineffective at responding.

5.  We can create new profit streams by reducing the risk and uncertainty for our customers, especially in volatile markets. If your company is good at spotting the opportunities inherent to uncertain business environments, and at managing amidst uncertainty, consider how you can create new sources of growth and profit by reducing the risk of your customers, or even your suppliers. Insurance companies are masters at this, but every company should keep their eyes open for opportunities to do so.

A tire company I know reduced uncertainty for its suppliers by committing to “take or pay” for certain volumes of raw materials each month. In return for this concession, suppliers gave the company lower prices. Even more important, however, was the fact that by reducing supplier risk, the tire company ensured that suppliers would be economically healthy and able to ramp up supplies quickly when the market demanded it. Removing risk for suppliers created a greater ability for the tire company to thrive in an uncertain market.

6. Customer and market data, combined with artificial intelligence, can dramatically increase our ability to make fast decisions amid risk and uncertainty. Artificial intelligence and data are driving innovations across agriculture, automotive, energy, retail, weather, sports, and nearly every other arena. In many cases, these innovations have transformed the customer experience and brought tremendous new efficiency and value (an example is ikitesurf, an app devoted to collecting data from kiteboarders, and helping them to know when the wind, weather and tides will be ideal). These innovations also have the potential to reduce risk while increasing speed.

Kabbage, started in 2009 and now valued at over $1 billion, specializes in making loans of up to $100,000 to small businesses. The small business market is inherently risky—only about half of small businesses survive their first five years. Small businesses that fail often default on their loans in the process. Kabbage spotted this uncertainty and decided to exploit it. The company built a system to allow small businesses to qualify for loans and receive the funds in minutes—if the companies give Kabbage access to online data that provides a window into the health of their business, and their capacity to repay the loan. This includes UPS data on shipments, eBay and Amazon order data, and even social media data. If the loan applicant has a healthy stream of orders coming in, Kabbage is happy to provide a loan. Kabbage solved a big problem in small business lending by reducing risk and uncertainty, and providing small business with extremely fast access to funding.

In summary, people are hardwired to fear uncertainty, but embracing uncertainty is key to growth and innovation.  When you deal with uncertainty in a rational and fact-based way, uncertainty can work for, rather than against, you.  Having the right risk mentality and moving quickly in uncertain business environments can create a lasting advantage over competitors that are slower to respond. So next time you face a market upheaval, consider how a smart, fast response can create new opportunities for your company.

Embracing uncertainty is key to growth and innovation. Click To Tweet

Want to move fast on a strategic opportunity? Deploy a focused team, and get out of their way!

Jetpack manNo doubt about it: we live in a rapidly changing world. Disruptive technologies, shifting customer behaviors and emerging business models are shaking up nearly every industry. If you are going to survive and succeed amidst this change, you need to move in a fast and adaptable way. Yes…even if you’re a huge global organization with many layers of leadership.

To survive and succeed amidst change, move in a fast and adaptable way. Click To Tweet

For seasoned executives, the knowledge that they must compete with young, energetic upstarts who can switch speed and direction on a dime can be scary. And with good reason: It’s often very difficult for established organizations to move quickly and behave in an entrepreneurial fashion.

Here are just a few examples of what may be slowing your company down:

  1. The incentives you use to motivate your leaders may be misaligned with the direction you need to head. Mark, a leader in a financial services firm, found it hard to convince the firm’s sales people to invest their time in growing sales of new products, because their commissions were much higher on existing products. Unfortunately, those existing products were fast becoming obsolete.
  2. Your organizational structure may not match up with new priorities. Laura, business unit president at a software firm, sought to grow recurring revenues and reduce cost, by transitioning customers to software-as-a-service (SaaS) offerings. Her business unit’s progress was very slow, however, because the professional services and customer support organizations were built to serve customers who were buying customized, on-premises solutions, not SaaS.
  3. There may be a gap in your employee’s skills and knowledge, which impedes their success in pursuing new business goals. Jose’s objective was to develop a new product line to serve customers who were expanding their e-commerce capability, yet his employees were ill-prepared to serve this market.

However, none of these harsh realities can become excuses. We must respond quickly, intelligently, and with courage when we face obstacles like these. One of best solutions is to create cross-functional teams and assign them to pursue particular growth opportunities.

When you create a small, focused team, you want to provide access to all the great things your company can provide—things such as customer relationships, company assets, funding, distribution channels, and the like—but you also want to protect them from having to ask permission too often. You need to protect the team from some of the big-company activities and policies that might slow them down.

Granting “special privileges” to these teams can accelerate their learning and progress, and enable fearless growth. Here are some approaches that I have seen work well:

• Faster processes for approving expenditures, and lenience on investment approval hurdles.

• Freedom to focus on “learning objectives” and other non-financial metrics, as opposed to strict financial targets.

• Explicit “permission to fail” on experiments or initiatives.

• Flexibility on legal requirements. For example, instead of having an iron-clad contract with customers, a simple handshake agreement might suffice, so the two companies can quickly try new things, collaborating together to learn.

• Permission to not attend quarterly business reviews, weekly staff meetings, routine training classes, or other events that are not directly aligned with the team’s mission.

• Permission to bypass internal processes that slow down action and learning.

• Access to outside experts.

• Lenient travel budgets.

• Greater latitude to hire (or terminate) team members.

• Different rules for how the team interacts with customers. For example, permission to call on existing accounts without having to ask the account manager’s permission.

• Leeway to use marketing materials that are not fully buttoned up and formalized.

• Time to explore industries, companies, technologies, and ideas that are not directly related to your business (seeing how things are done in a completely different industry does wonders for creative thinking).

Implementing even just a few of these measures will vastly improve your team’s speed and agility. They’ll have more freedom to pursue your strategic goals. They’ll feel motivated and empowered, which means they’ll take faster action, and you’ll improve retention. And, by working with others outside their function, team members gain new skills and perspectives. Innovation will flourish.

By working with others outside their function, team members can gain new skills and perspectives. Click To Tweet

Perhaps most important, they’ll build networks across your company, and with business partners, suppliers and customers outside your company. These networks mean that your team will know who to call—and who collaborate with—down the road, when they encounter a new opportunity or challenge. You’ll be able to pursue your goals more successfully, no matter what the future brings.

Click here for more ideas for how your team generate practical growth ideas, and pursue them quickly and effectively.

Five Steps to Achieving Consensus–Even When It Seems Impossible

 

unnamedWith the fast pace of change in the world today, there is great uncertainty surrounding almost every decision we make. And, when there is uncertainty, there are going to be many different opinions about the best path forward.

Reaching a consensus is important because we need all functions and players in our organization to be aligned and moving in the same direction. Organizations can get stuck at a cross road, unable to pick a path forward, when they place too much emphasis on getting everyone on board with a controversial decision. This is a mistake. Continue Reading →

Change the Game

Change The Game

I recently worked with a large, successful company whose growth had slowed. They needed new ideas—and not just any ideas, but big ideas: new growth trajectories that would generate at least a billion dollars in revenue. Entirely new categories.

They were already one of the largest players in their industry, so taking market share was not easy for them. They needed to build new markets—creating and serving customer needs that had never before existed.

The problem was the ideas just weren’t flowing from the team. Continue Reading →

Unshackle Your Team’s Creativity

Forward Business Planning

Have you ever wished for more input, insights, and ideas from the employees on your team?

Especially when our businesses are not performing as well as we’d like, we really need our teammates’ creative ideas. But when we gather a group and ask for ideas—whether for new product features, cost reduction ideas, or ways to improve service—we often see the same, recycled thoughts. Or ones that are only a smidgen better than what’s currently being done.

It’s not the employees’ fault. Humans are wired to keep doing what they’ve been rewarded for in the past. We are wired to protect our allies, and to avoid risk. These tendencies tend to hold us back when it comes to thinking in new ways. We are shackled by what’s worked before and have a hard time imagining a new way of doing things.

Here are a few techniques for helping your team break free to develop new ways of thinking about your business. Continue Reading →

Think Like an Explorer

Businessman Walking Outdoors

When I was sixteen, I went on a 2-week horseback trip in the Bighorn mountains of Wyoming. Each morning, we were given the coordinates of the location where we would camp that night, then turned loose with a map and compass. It was satisfying to arrive at the destination each night, after navigating our way through the mountains on our own.

Heading a new strategic direction—entering a new market, innovating a new product line, or changing the way we go to market—can feel like heading out into the wilderness. If we think like an explorer would, however, we can find our way to new sources of profit and growth.

Here are four points to keep in mind when navigating new strategic territory:

Continue Reading →

5 Ways to Gain Extraordinary Customer Insight

Composite image of businessman looking on a ladder

Have you ever invested great time and expense in developing and launching a new product or service, only to see revenues fall far short of expectations?

We think we’re delivering exactly what the customer has asked for, but it turns out that we didn’t really understand what our customers were willing to buy.

We’ve all been there. McDonald’s introduced chicken wraps and other menu items to satisfy the demands of health-conscious diners, only to find that customers don’t actually want to eat healthy food at McDonalds. The fries are just too tempting.

Especially in fast-changing markets, companies often get so busy running the business, they fail to understand their customers’ experience and needs. They are blind to what actually goes on when customers use their products.

Let me suggest a few ways to break out of this cycle, so that you understand what your customers value and how they think. Continue Reading →