When the ocean is calm, even the best surfers have to work hard to demonstrate their prowess with small, tricky, manoeuvres. But how things change when the big seas roll in. Then we see truly glorious stuff.
When markets and industries become volatile we are more exposed to danger but we have a much better chance of creating ‘blue oceans’ where our market space is not contested, or contested only weakly. We profit handsomely by creating meaningful difference.
This perspective puts a completely different frame around the new age of volatility and uncertainty that we have entered. Now we see that we don’t have to join the doomsayers and lament the loss of the good times.
Rather, we understand that the good times – the times of opportunity – have arrived at last. Like surfers who live for the big waves, we can now demonstrate our prowess on the business long board. While the doomsayers recite and admire the problems, we reach for the opportunities and take them.
To do this, we must first understand the nature of the waves we are going to catch. Then we must be clear about how we will ride them.
Long-term demographic, social, political and technological forces have always shaped the global economy. However, it is the very large changes now taking place in public and personal finances, in consumer markets, in social media, and in the sustainability agenda, that make the current era particularly volatile and interesting. These changes are like great ocean swells. They need to be studied and understood but they are too large for most businesses to build moneymaking strategies around them. We can, however, ride the waves that these great swells create because they tend to be more specific with respect to customer groupings, customer needs, and the way in which these needs are satisfied (which are the three elements that define any business).
Consider sustainability, and in particular the drive towards a low carbon economy reflected in the carbon tax and other government policies. Whether you agree with these policies or not, and whether or not the timing of their introduction is right, they are going to change product demand and re-configure value chains. New industries will emerge and some old ones will fade away. In this process, there will be winners and losers on a large scale across most industry sectors, including services; there will be rideable waves everywhere. So it makes more sense to think about how to get on the right side of these changes than it does to rail against them.
Consider consumer markets. The deep change here appears to be a permanent shift in consumer attitudes to value and loyalty, linked to a parallel shift towards internet shopping. The rideable waves flowing from these shifts involve lower-cost fulfilment models, more rapid product innovation, and skilful exploitation of social networks. Again, there will be winners and losers; we are already seeing the latter in the retail sector, with some high profile failures and signs of struggle in the traditional department stores. But the winners – the smaller, flexible, retail chains with clicks-and-bricks strategies – will become increasingly evident.
Finally, let us consider financial markets. Here the swell of volatility and sovereign debt crises – almost unthinkable five years ago – is creating new attitudes to risk and return that suggest large opportunities. Take financial advice. In an era of volatility, the old ‘time in the market’ strategies peddled by advisers flogging share investments make no sense. Investors, particularly older ones, will be much more concerned with capital preservation, and the industry will inevitably respond with innovation around cash management and capital-guaranteed products. Who will be first here, who will be best, who will create meaningful difference? These will be the winners.
This is a big subject, and the paragraphs above do no more than present a few examples of business opportunities that will flow from the swells of change. I could just as easily have talked about waves of opportunity arising from the shift to Asia, or from the high Aussie dollar and our two-speed economy (yes, there are big opportunities there too).
Your task now, if you see the logic, is to get your team together and brainstorm this matter intensively. Here are a few tips to help you do this:
- Letting the collective imagination out is essential, and businesses have not always been good at this. Be brave, go to blank, and remember that the silly question is often the first intimation of a totally new development.
- Think in terms of customer need (or utility) rather than product. For example, people don’t need toothbrushes and toothpaste; they need clean white teeth. If a better way to achieve this is found, toothpaste will be a thing of the past.
- Drive this process relentlessly by becoming a ‘nice wolf’. Insisting on breakthroughs, constantly asking ‘so what?’ to open up practical new pathways, always believing that there are secrets to be discovered that can lead to rivers of gold.
I return now to the main theme of profiting from change. The glass is half full, not half empty. These are great times for resourceful, imaginative business people. We have a once-in-a-lifetime opportunity to profit from big waves in blue oceans.
Rather than join the doomsayers and fret over impending Armageddon, in the great Aussie tradition let us just say: Surfs up! It’s time to grab the board, hit the water, and ride those waves.
Christopher J Tipler is a Melbourne-based management advisor and author of Corpus RIOS – The how and what of business strategy. His web site corpusrios.com contains more material on this and related topics.