Economic cycles are just that—cycles. During a recent economic forecast presentation, Alan Beaulieu of ITR Economics, shared a chart that shows US Industry Production to Gross Domestic Product has dropped below zero four times in recent history: in 1982 (-7.1 percent), 1991 (-3.1 percent), 2001 (-5.3 percent) and 2009 (-14.6 percent). Certainly the challenges of 2009 have not been rivaled throughout modern history, and not only did they end the run for many businesses but significantly reshaped those left standing. That said, it was not entirely unexpected—the economy has cycles. And we are experiencing another one right now, although it is an upswing. Are we due for a correction? And if we are, are you ready? Every business that experienced the challenges of economic cycles will surely be prepared for the next cycle, right? The only question is when it will come, not if.
For many, 2009 was a time of reframing success. It required the realization that pre-2009 standard business practices would not return. And dynamic market changes have continued since then at an every-increasing speed. There is no going back. Technology will drive increasingly faster change in just about every market, customers expect more value in everything they buy, and industry leadership will not last if not carefully tended and continually renewed.
The buyer value proposition has changed dramatically as well. Customers want solutions on their term—when they want it, how they want it, and at the price they are willing to pay. Customers increasingly hold the cards and businesses feel whipped into competing on price. What do we blame if our business struggles with economic pressures and can’t break out of the cycle?
The answer is not what, but who. We are responsible. As business owners, leaders and managers, we seek to get better at what we know how to do. The challenge is that what we know how to do isn’t always what we need to do now. Companies that performed extremely well by providing a product or service better than others are finding that technology has redefined what is now considered the standard of excellence—it might be new speed, convenience, or personalization. If you are using the same basic strategic and same strategic plan as you had in place even three years ago it would be wise to update it. If your strategic plan is over five years old it is likely no longer relevant. To stay competitive, your vision must stay fresh. What are some of the things that most challenge existing strategic plans?
- Speed: Today we can access just about any piece of information just about anytime, anywhere, on any number of devices. The Internet was fully commercialized in 1995 and since that time, revolutionary new interfaces and devices continue to increase customer demand and expectations for real time everything: weather, news, family updates, music, product orders and fulfillment, to name a few, all with transparency in business. Your customer’s have access to alot of data and they no longer need you to give it to them. What value are you providing?
- Convenience: Disposable, portable, and packable are just some of the new convenience features being built into new products with just about everything geared to living life on the move: Swiffer mops and dusters, with their throwaway cleaning pad, dispose of messes and simplify cleanup; soup is available in containers to throw in the microwave and eat on the run, and resealable pouches improve the shelf life of products and allow consumers to store products longer in the original packaging. The office supply chain Staples has the “easy button” for a reason—customers are looking for fewer steps, less effort, and simplicity in today’s hard charging environment. Have you reduced paperwork and made doing business with you through mobile devices easy?
- Personalization: Most customers, with the aid of the increased flow of information from the Internet, are often able to create their own solutions and not rely on off-the-shelf products. More and more products and services are customized to the user. Education, clothing, book publishing, and greeting cards can now all be tailored down to a market of one. How do you help customers navigate choices?
How long has it been since your business took a hard look at what it sells and how it is sold, what services are offered, and what benefits are provided? If it’s over ten years, you are overdue for an overhaul. If it has been five years, it is time for a hard look. The length of time a business exists on the Dow Jones Industrial Average has shortened considerably, from sixty-one years back in 1958 to just over eighteen years today. That means that companies are moving through life-cycle stages faster than ever. Is your business keeping up with the changes—in product offers, production processes, selling systems, and operational improvements?
Businesses need to rethink how they describe their model from one that focuses on what they sell, which can change rapidly, to one that focuses on needs they meet. The fundamental bedrock of needs changes much less often than the products or services that currently meet the need.
When businesses describe themselves by a product format (greeting cards) or a process (printing), it is almost inevitable that one day that solution will no longer be relevant. Market change demands that businesses not stand still and they must constantly seek the better mousetrap. Most of us are consumers and therefore benefactors of this very concept. Yet as business leaders we tend to prefer the status quo or at least slower-moving trends. What we want just doesn’t matter. Change is happening faster and will continue to speed up.