When you are developing strategy for your business you have two approaches to consider: prediction or control. Do you try to predict the future – or control it?
During the process of developing strategy, our clients look at trends that surround the business. These might be industry trends, social or economic trends, environmental trends, technology, payment systems, etc. The business operates within a context, and it is important to consider the external factors that influence the business’s future. This is sometimes framed by the question, “What or who could eat your lunch?”
This look at the trends could make a case for your company to change production methods, product offerings, markets targeted, etc. It could even spur a decision to create a complete shift in your business model. When your leadership team can accurately identify trends and then connect the dots to their respective impacts on the future of the business, the company’s plan can transcend “business as usual”. Accurate prediction enables the business to prepare for contingencies, or to capitalize on emerging openings in the market.
The timing of the prediction is also crucial. If you assume that your company is going to need to make an acquisition to grow within X years, you need adequate advance time to accumulate capital or access to capital. If you need to develop a new product because your exclusivity on your big seller is running out, you need to allow for R & D and development time. Failure to predict can place your business in a crisis situation, where adequate thought and resources are far more difficult to come by. You could find yourself on your heels, playing catch-up.
Of course you can guess wrongly, and that is one of the reasons why some companies wind up in analysis paralysis mode. If only they could uncover the perfect data they would know exactly what to do. Unfortunately for them, even the very best data won’t protect the company from the fallout of a strategy executed too late to be of benefit. Prediction isn’t perfect, so the company’s chess moves are gambles. The goal is to identify what’s coming, to see what nobody else is seeing, and use that to the company’s benefit.
Another way to dominate is to take action to create the market conditions that are optimal for the company. In pharmaceuticals, for example, the first company that makes it to market with a new drug can earn millions while other companies race to catch up with a comparable product. In retail, a dress or shoe design can be knocked off quickly by competitors who produce a cheaper version, so market success is all about who gets there first with an innovation that establishes a must-have model or brand. Wh”needo knew that we needed Heelys sneakers or fitness trackers? We as consumers discovered the “need” after we saw the item, and the company had captured us.
If you are a real estate developer you exhibit control and create competitive advantage when you buy up a substantial inventory of desirable land. You might go as far as to invest in site development to make the sales and building processes more efficient. This stockpiling control move makes it easier for you to attract prospective clients, since you have immediate access to their first choice of location. You block the competition in your market because you own the block. Pun intended.
Either way, action is the key
Even a gorgeous strategy is nothing without the execution. Whether you decide to look around to develop a prediction or make a pre-emptive strike to control the environment and establish your strategic position, you implement, measure and adjust as necessary. Rinse and repeat. Fail from time to time, but fail forward and fail fast.