Tag Archives: strategy

React vs Respond

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Most of us are good at reacting. The pandemic required it. And, we were good at it. We figured out fast what was necessary. What will stick? It is no longer enough to react to circumstances, we now have to respond.

Think carefully about your business and the accommodations you have made. Fingers crossed, we had hoped to relax back to January, but reality is clearer now. It is easy to find the trends. Which are impacting your business model?

Technology, geography, sensory substitutes, communication channels, I am curious to hear your stories. Most interested in hearing about the opportunities.

Death of the Third Place

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Ventured into my first Starbucks since March. The parking lot was empty, signs on the floor for social distancing, but no customers to distance from. Two baristas behind the counter mentally wrestled with who was to take my order. Waiting, I looked around at the cordoned seating. Is this the death of the Third Place?

Most companies have managed to return to some threshold of spaced out (space between people) operations. Products are moving, services provided. But, what of the customer experience.

Starbucks built their business on the notion of the Third Place and caffeine. I am certain they could have been more efficient had they applied six sigma principles to the order taking and coffee preparation, but what would be the point? Starbucks was all about the Third Place between home and the office where time was NOT of the essence.

What has changed about your customer experience? “Yes, you can come to our office, but please text us when you arrive. Remain in your vehicle until we confirm by text that we are ready for you.”

What happens to the Third Place in your business model?

Agile

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I let others conjecture the path of COVID-19, AND a couple of things are clearer. My focus is not on the pandemic, but your business-model-response to shifting circumstances.

  • The heat of summer in the northern hemisphere will reduce the ability of the virus to survive, creating a seasonal impact. This does not appear to be true.
  • There will be waves of contagion. I don’t know if we are in the second wave or the lingering impact of the first wave. Does it matter? There will be more waves.
  • Hope against hope, there will not be a vaccine until early next year.

Those business models that survive will be those who adapt to reality.

  • Find a market with a business need, set out to solve it.
  • Test the solution to be adequate and understand its value in the market.
  • Determine if the cost of the solution is less than the market value (profit).
  • Determine if the market is large enough (enough profitable transactions) to build a business.
  • Determine the next adaptation required to sustain the business model.

This begs the question of innovation and creativity. What is the agility of your organization?

Second Order Consequences

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I got an email last night warning that the low-hanging fruit has been picked. The CARES Act is past, PPP applied for and received, people furloughed, cautious re-openings. We are very good at those tasks right in front of us.

Another friend of mine, Gideon Malherbe warns of the second order consequences. What are the longer lasting impacts of WFH, online services, digital relationships, telemedicine, distance learning, end-to-end system integration? More important, how can you plan for those things unseen? Worth a read.

Did COVID-19 Break Your Business (Model)

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The most strategic decision you make is “What business are we in?”

Before you answer that question, there are two other questions –
Is there a market for that business?
Is the market big enough to sustain that business?

COVID-19 wants to break your business (model)
Is your business considered an essential business?

What else changed about your business model (forever)? Most of these issues are fixable, but you have to adapt.

  • Channels you use to market to customers. What are your customers currently paying attention to? What are your customers rejecting related to marketing messages?
  • Customer interface. Is the face-to-face interface currently not possible? If face-to-face is necessary, does that interrupt your business model? For you to succeed, what has to change?
  • Texture of the customer relationship. Is the relationship transactional? Are you a trusted advisor (thought leader)? Are you customer intimate? How does your business model create that relationship? Has COVID-19 interrupted that relationship? How will you adapt?
  • Value promise. What is your value promise? Has COVID-19 interrupted the way you deliver that promise? How will you adapt?
  • Price. As you adapt your ability to deliver that value promise, does it impact the price your customer is willing to pay for that value promise? Will you adapt your price? Will you find another way to maintain your price structure related to your value promise?
  • Resources. What resources do you need to fulfill your value promise? Are those resources still available in the volume you require? Has the price point changed for those resources? Do you have to bring some of those resources in-house? Are there internal capabilities that need to be out-sourced?

Has COVID-19 interrupted your business model? Is this only temporary or is this forever? Can you adapt in the short-term? Might you have to adapt in the long-term? How will you re-think your business model?

These permanent adaptations will seem clumsy at first, but permanent nonetheless. And the clumsiness will become practiced, and those among us who practice will become competent at a new way. And the new way will improve on par with the old way. And, we will wonder what took us so long to get over our resistance.

Wash Your Hands Again

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After 9-11, the question emerged, how do we get back to work? Sure there was a lot of short term (and important) work in putting our lives (country) back together, but we soon emerged to a new normal. And we had to get back to work.

COVID-19 presents the same problem. While we are in the midst of hand-wringing, wondering what we can do short of washing our hands seven times before lunch, at some point we have to get back to work. There is no basketball, no hockey, no soccer, perhaps a three year old football game on ESPN. At some point we have to get back to work.

And, what does it look like when we get back to work. While we are thinking about washing our hands one more time, could we think about our first moves to the new normal. We have changed our routines. Handshakes become chicken wings to the toe tap to more distance greetings. Some things we have adapted will become permanent.

Those permanent adaptations will seem clumsy at first, just not the same, but permanent nonetheless. And the clumsiness will become practiced, and those among us who practice will become competent at a new way. And the new way will improve on par with the old way. And, we will wonder what took us so long to get over our resistance.

So, what are you thinking about as you wash your hands, again?

The First Strategic Question

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“Why and which?” Rachel repeated. Come the first week in January, Rachel had to present her 2020 plan to the rest of her management team.

“How did you approach this plan last year?” I asked.

“I’m not sure, seems like we just got the group together and set some goals for the year.”

“Interesting. And, how did that work out?”

“It’s funny,” Rachel said. Her eyes wandered to the ceiling. “We never really looked at the plan again, until last week when I started thinking about 2020.”

“Did you accomplish any of the things you set out to do?”

“We knocked a couple of things off the list, but I have to tell you, some of the stuff didn’t even matter. It was really kind of vague.”

“So, why did you create the plan?” I asked.

“Because we were supposed to,” Rachel replied.

“So, you never really asked the question –why-?”

“Maybe, you are right, that is the first question.”

What Went Wrong?

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“What do you think is the most difficult, planning or execution?” I asked.

“Planning is no slouch,” Travis replied, “but execution is where things go wrong. We may have a perfect plan, but we don’t have perfect execution.”

“Travis, sometimes I look at all the things a company wants to do, process changes, re-engineering, efficiency programs. They are all good ideas, yet, most fail. Why?”

“Execution?” pondered Travis.

“So, why did the execution fail? I saw the written plans. I attended some of the meetings. I observed the training. I watched the pep rallies. I saw the teamwork posters on the wall. I know incredible amounts of money, resources and energy went in to make it happen. In the end, not much changed. So, what went wrong?”

Travis hesitated, “Execution?”

“I saw team members trying new sequences, working with new equipment, handing off projects in new ways. But in the end, it didn’t stick. A new process would get shortcut. The old way worked faster. The enthusiasm faded into push-back. The word on the floor was, if we stiff arm it long enough, the re-engineering would go away. Morale plummeted. Ultimately, the initiative was abandoned. What stopped the execution?”

Travis wasn’t sure.

“Management focused all of their attention prior to the change. Little or no thought was given to how the new behaviors would be positively reinforced. What gets reinforced gets repeated. What does not get reinforced will stop. Dead in its tracks.”

Want to Build Your Business?

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This is how it starts. In the beginning, the founder has an idea. This could be a hare-brained concept or even a hobby. (Some hobbies should stay hobbies.) But, the founder, not being able to resist, transforms the hobby into a business.

Admittedly, it is a little business, and who is doing all the work? The founder, of course. Is there work left over? There is always work left over.

So, the founder hires the first employees, mostly friends and family, because no one else will work for those paltry wages. And, what do these people do? A little bit of everything. The founder organizes the work around the people, asking what each employee (friend or family member) does well. “What do you do well?”

Indeed, there is some of that work to go around, and around. The work is organized around the people (scarce resources). Is there work left over? There is always work left over.

The strategic focus for this startup organization is all about sales. Without sales, this fragile organization dies. And, in the beginning, these don’t have to be profitable sales, because in the beginning, the founder puts all the expenses on a credit card, line of credit, whatever it takes to get the company off the ground.

This is proof of concept time. Is there a customer out there, anywhere, willing to buy our product or service, at any price. Why would a customer buy? There must be an angle, something unique. Oh, it must also be cheaper.

All of this requires energy and hard work. Success depends on it. The problem is, the just dessert for hard work is – more hard work.

What Will Your Company Be Like?

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So, here is something I want you to think about. As technology is integrated into your business model, what does your company look like in five years, ten years? When we can measure all kinds of things in real time, in feedback loops with algorithms that detect meaningful change (or stasis), what does work look like?

Autonomous driving vehicles are tested and adopted in plain sight. The mining industry prefers autonomous machinery because accident rates have dropped to almost zero, component wear (brakes, tires) dramatically reduced, productivity dramatically increased.

What will happen to your company as you afix sensors to almost everything? Below is a little list. If you have something else you are measuring, let me know, I will add it. What will change in your business model? More importantly, what will be the new work created?

  • Physical Pressure
  • Air pressure
  • Barometric pressure (altimeter)
  • Humidity (air, surface, soil)
  • Temperature sensor
  • Fluid pressure sensor
  • Fluid flow sensor
  • Fluid position sensor – mechanical position
  • Fluid specific gravity
  • Fluid accumulation sensor (rain)
  • Vibration
  • Accelerometer
  • Photo pixel shift (movement)
  • Photo pattern recognition
  • Photo contrast (light-dark)
  • Photo color sensor
  • Bio – photo oximetry (SpO2)
  • Bio – fingerprint sensor
  • Electric current switch sensor (On-Off)
  • Electric current voltage sensor
  • Electric current resistance sensor (Ohms)
  • Electric current touch sensor
  • Proximity sensor
  • Infrared sensor (transmission – reflective)
  • Sound wave sensor (sonic, sub-sonic, ultra-sonic)
  • Smoke sensor
  • Gas sensor
  • Alcohol sensor
  • Temperature sensor
  • GPS sensor
  • Gyroscope sensor
  • Tilt sensor

Your five year thinking will be a one year tactical plan in four years? -Tom