When The Threat Is Here, It Is Too Late To Change!

When is it too late to change

Here I shall use the spreading of deadly bacteria as a metaphor for change.

Consider a body of water that we all know well, the Mediterranean Sea. It has a volume (give or take a cupful) of 439 trillion litres.

Now imagine 1 litre of seawater with some of the deadliest bacteria known to man. This will contain around 1 trillion bacteria.

Imagine that these bacteria divide every minute so after 1 minute there are twice as many, after 2 minutes there are four times as many.

You like swimming in the ‘Med’ whilst on your summer holidays and have heard about these bacteria. How long do you think it will take before the whole body of water is filled with these deadly bacteria and we have another dead sea on our hands?

Is it weeks, months or perhaps years?

The alarming answer is a little over 68 minutes. I’m sure that we would have longer to get out and dry off before succumbing but this is alarming.

1 minute before ‘the end’ only 50% of the water is contaminated but this is still too late. 3 minutes before the end only 12.5% is contaminated but we have still left it too late. After a certain point, it is simply too late to change.

To save our beloved swimming destination we should really stop the deadly bacteria being put there in the first place or have developed some way of killing them.

My message here is all about taking action. When is it too late to change, when no amount of action will save our business? With rapid communications and lightning-fast technology, threats to our businesses are spreading ever more quickly. When we have spotted the threat and reacted it may actually be too late to change.

In the current climate, we need to be looking at what comes next. The old adage ‘if it ain’t broke don’t fix it’ does not apply, we need new products and services before our current ones become outdated.

Scientists amongst you will recognise this as a classic exponential curve. For some industries and countries, the steepness of the curve may vary but change in this day and age is much more rapid than in the industrial revolution.

Consider the current coronavirus as an interesting example. There are two aspects that we should be concerned with. The first is how contagious it is (change spreading at a local level) and how quickly it multiples and spreads on a global level. Let us apply this to the business world.

In business, changes made by our competitors will have varying effects on the marketplace and may be difficult (or easy to copy). Should we copy technology or develop our own to achieve the same ends (or perhaps add more value)?

How will change affect us and how quickly do we need to react?

Unlike my fictitious example of bacteria in the sea, we will have more than 68 minutes to react to serious business competition. But once a competitor produces something that threatens our products or services, how long have we got to live?

So what can we do? Well, the answer is to react like a chameleon does if that is the strategy that you wish to use. Change must be instant and you will need to be scanning your business environment to see as far ahead as possible.

You will not be able to use cumbersome decision-making processes and your sales, marketing, manufacturing, and distribution will need to change with very little input from senior management.

Another possible way of creating a strategy for the future is to look at the following:

  • Who are your customers?
  • What are you selling to them and why (what problem are you solving)?
  • What technology is coming over the horizon?
  • What skills do you possess as a company?
  • Who else is competing for your customers’ money?

Then consider the following just to start off with

  • How could you utilise new technology?
  • Can you make it lighter, heavier, smellier, greener …..?
  • Can you add value or combine products or services?
  • Can you use your skills to branch out into another sector?

Here are two examples.

I once met an author of children’s books who had just written a book about gardening. I introduced him to my list of things to think about and he immediately latched onto ‘add a smell’. The ‘scratch and sniff’ gardening book became a viable idea at that point.

Now consider a manufacturing company that makes a commodity such as mattresses. They have manufacturing expertise and knowledge of the human form but very little design skills. Find a designer and ‘hey presto’ you have the capability to design and manufacture higher value items such as furniture.

In the world of electronics, advances can be even more startling.

Remember, when change hits you it may already be too late to change.

Innovation In Banking, Dare To Be Different

innovation in bankingInnovation in banking is required now. Retail banks can no longer assume that the growth and returns that they once enjoyed will continue. Amid a host of banking competitors – including new market entrants, forward-thinking incumbents and non-banks – banks need to differentiate themselves in ways that are not easily copied. To restore confidence and realise strong future returns, banks must set the stage now.

Here are some stories from a few (five) years ago that illustrate potential innovations in banking (thank you to IBM’s Business Value Institute for this material). Some are with us today. What do you think banking will look like 5 years from now?

Samson lives in Soweto and works at one of the big factories near Johannesburg, South Africa. With Soweto’s high crime rate, he is pleased to make small payments free of charge from his account using his mobile phone. Samson can now keep less cash in his pocket, finally making banking affordable, safer and convenient for him.

Luis, in his San Diego office, reads with interest an e-mail from his online bank that shows him how to better manage his finances. It provides a series of steps he can take to improve his credit rating over the next four months, and outlines the potential savings on his outstanding loans and credit debt.

As he walks past a new electronics megastore in Bangalore, Anil receives on his mobile wallet a credit offer to buy a flat panel television. Interestingly the offer is from a U.S.-based bank taking advantage of the booming consumer credit market in India.

Heather, at home in London, is delighted that her bank finally lets her transact across different financial products – even different institutions – through the bank’s own portal. No need to visit multiple sites to check account balances or transfer money among institutions. And, it’s easy to optimize bonus points earned through her personalized loyalty program.

All of these people share one thing: their banks were giving them useful tools that were tailored to meet their particular needs. These futuristic scenarios demonstrate how retail banks can step beyond the expected; for example, by doing more than just improving the speed of existing processes and offerings.

Today, banks are pushing the limits of organic growth, and of growth via mergers and acquisitions. Increased competition and more discerning clients around the world mean it’s more important than ever to stand out in the marketplace. So, how can retail banks differentiate themselves and continue to grow?

To distinguish themselves, banks must look beyond new product introduction and spread accountability for innovation throughout the organization. Shareholder value will be created by those that nurture the capabilities that support ongoing innovation, not just within bank walls, but also by looking outside the institution for new ideas, including partnering opportunities.

Who are your competitors?

It might seem a silly question, but do your know who your competitors are? If you are in retail you might list some shops on your high street or name your local supermarket chain. These provide some competition in that they sell goods and services that compete with yours. The trouble is you may have more competition than you think.

What exactly are you competing for? If you are a shop then you are competing for the money (or credit card) in some one’s pocket. What else can they spend their finite resources on? If you are a pub then your customers could do any of the following:

  • buy drink from the local supermarket
  • go to the local bowling alley
  • visit the local chip shop or pizza takeaway
  • go to the gym

So the money can go to a number of places which may also be time or season dependent. The gym option may be number one just after Christmas or before the holiday season.

So you should think about:

  • who else might be competing for the money in your customers pockets
  • what factors might affect the spending patterns of customers
  • what exactly are selling to your customers (and why)
  • do you know everything about your customers
  • can you sell anything different to your customers

This may lead you to other discussions regarding the direction of your business and where you intend it to be in the future (strategy in consultant speak). This may not have been on your ‘to do’ list for today but it just might help you ride out the recession.

The Slipping Point

Most readers will be familiar with, or have heard of Malcolm Gladwell’s best selling business book ‘The Tipping Point’. The author suggests that there is a point at which you need apply only a small effort to create an effect. This is rather like giving the final push to topple a large boulder or tipping a finely balanced set of scales. If only we could find this point, we could all save ourselves time and effort.

Once the tipping point is found then we, and our businesses will be beating the competition and lining our pockets with untold riches, right? Is there anything to stop us? Well, quite a lot actually. Take the simple case of sitting down on a chair. You see the chair, walk round to the front and then sit down. Did you check that the chair was still there or that it did not have a wobbly leg. Most of the time nothing will happen but what happens in the 1 in 100 or 1 in 1000 cases when a practical joker has removed the chair?

This is a somewhat simplified example but neatly illustrates the point that we must keep our wits about us at all times. Having created a strategy for the future we want it to succeed but how many of us do not keep watch? What is it exactly that we are watching for? This is where we come to The Slipping Point. If you were driving up a slippery slope or along an icy road it would be the place where you lost grip, where your forward momentum slowed, and where things just did not go as planned. What can be done about this?

  • Ensure Management are ‘Hands Ready’ i.e. they are aware of what is going on but are not micro-managing or too eager to take control. This provides space to see the bigger picture.
  • Do your employees work in teams? The more they do this, the more support they provide, the more knowledge is shared and the more flexible they are when confronted with challenges.
  • Is there a desire to win or are you all there to pick up your pay cheques?
  • Even if you have a desire to win, do you know how to win?
  • Keep an eye on the external environment, competitors, customers and any other factors that could affect the economic landscape.
  • Foster as many external relationships as you can. These provide information and can also be leveraged in times of need.
  • Promote the right culture. Transparency and morale are often used but infrequently heeded. Lead by example and gain trust and you will be in good shape.
  • Promote the concept of stretch, an environment in which your employees and management alike are challenged and allowed to learn.
  • Get the best from your staff. This extends from what management actually ‘do’ to staff to encourage and motivate them as well as reward systems.

Pay attention to the above and you have a very good chance of executing that carefully crafted strategy and avoiding The Slipping Point.