When you lift the hood on successful companies you usually discover an engine of solid, professional management practices. These companies have a thoughtful multiyear strategy created and refined with input from all the key functions in the business.
Senior managers are diligent in aligning all of the departmental and functional priorities to the strategy. Teams are constantly talking to their customers and looking for incremental improvements to existing products and services that will improve market share or profit margins. Ideas for new products or services are carefully analyzed against the company’s metrics for return on investment.
If you are competing in a stable marketplace, this approach is smart. These practices will keep your business growing at a sustainable pace and growing profitably.
But how many of us would describe our business environment and the marketplace for our products and services today as “stable”? Whatever the causal factors might be — new technology, shifting consumer behaviors, government or regulatory policies, demographics, the economy, new global competitors — many of us are waking up to find disruptive competition is a fact of our business lives. What do we do?
Read and react
The longer your business has been profitable and successful, the harder it is to imagine those trend lines suddenly heading south. If you are truly in the midst of disruptive change, this isn’t a temporary cyclical phenomenon. The marketplace and the customer behaviors that created those data points may be gone. Instead of looking at the past five years, look at the past five months: What do you see?
Disruptive markets, by their very definition, are full of opportunities and prospective customers for different products and services. But those opportunities become new products or services only if your company is facing forward. As a senior executive, you have to set that tone and direction. You have dozens of informal conversations every day with your staff as well as more formal meetings and events. The story you tell about the company’s outlook as well as your energy and your optimism will be contagious.
Even your most talented employees will find it impossible to work on improving your current products in the morning and radical ideas in the afternoon. Think about separate teams in every sense — different staff, different rules and even different locations.
Fast and cheap
For established, successful companies, getting new products or services to market quickly and cheaply can be very difficult. But in a disruptive environment this might be your most important focus. You know that not all of your radical new ideas will be well received in the market. Your goal is to find the winners among all the ideas and still have capital left. That means you have to find the losers as well.
The pace and scope of changes in a disruptive environment can overwhelm your normal planning and budgeting processes. Instead of 12-month project plans, think about what you’ve learned, what needs to be done and how that can be applied in the next 90 days.
