How to pivot is an important question as the tempo of change accelerates. First, we should look at what causes a change on a macro level. Then, we’ll explore how startups and small businesses can be proactive in making adjustments. The three overarching themes that drive change around us are the advancement of technology, the flow of information, and the interconnected nature of the world.
The Advancement of Technology
We live in a world that changes faster than it ever has before. Technology and the demand for tech skills are also expanding. These days, by the time you open the box of your new computer or phone, it’s outdated. In fact, by the time, the latest Apple laptop has been designed, built, manufactured, shipped, sits in the box at the retail store, and sold — that computer is now significantly behind the new capabilities that are in the world. It’s seemingly impossible to keep up.
The cassette tape hit U.S. homes in 1964 and thrived in the 1970s and 1980s. It wasn’t until 1991 that CD’s became the better technology with higher fidelity audio and eclipsed sales of cassette tapes and vinyl. In 2001 CD’s really cemented their place as the default solution. Tapes died a quick death, with the last major album released on tape in 2009. This means audio cassettes had a nice 35 year run as a viable technology. But consider the replacement for the CD. In 2001 Apple released the iPod and by 2005 iTune sales eclipsed CD sales. That’s right, the change happened in just four years (not 35 years). Would the MP3 player be the future? Nope. Just ten years later music streaming services would eclipse MP3 sales as the new leader. Technology advanced quickly and rapidly. With this advancement comes a lot of change to markets and interactions.
The Flow of Information
Advancement in technology is not the only thing that is continually disrupting our world. The flow of information today and the amount of knowledge we have at our fingertips is exponential and ever-changing. Information moves at an almost instantaneous rate. People around the world can learn things as soon as it is released and respond accordingly, constantly keeping the competitive landscape on its toes. The need to respond and stay competitive in that type of environment is consequently difficult. The challenge today is more not so much knowledge, but understanding and execution.
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The Interconnected Nature of the World
Because we live in a global economy, the faster things change, the more we become dependent on one another. This is evident when an event occurs, whether it’s good or bad, in one part of the world it can clearly affect the rest of the world. Even if the event might have nothing to do with you, your company, your employees, or your business — it can greatly affect you because of the interconnected nature of our world. Many products today are sourced from one area of the world, assembled in another, and sold in yet another. Supply chains have become incredibly complex. Small business can sell services globally from anywhere.
How does a Business Plan in a World that Changes Rapidly?
Because of the advancement of technology, the flow of information, and the interconnected nature of our world, leaders, small businesses and entrepreneurs, must become more nimble.
The Two Types of Mistakes a Business Makes in Response to a Changing Economy
- Ignore: The first type of response is to ignore. They look at something, like the novel Coronavirus, and think, “no one could have ever predicted that and planned for it and so we’re all just gonna move on with our lives.”
- Over-plan: The second type of response is the opposite. A business can start to try to create contingency plans for every little thing, creating a diminishing rate of return where the business is spending way too much time, energy, and resources on ideas unlikely to happen. It can be crippling to the decision process, which ultimately affects the ability of the business to thrive. It’s paralysis by analysis.
The survival of the business depends on the ability to plan for 80% and then work hard on organization, leadership structures, and processes that are nimble. A surviving business is a learning organization that values an ability to pivot and learn. It’s about planning for the ability to change and adjust, not planning for every individual change.
How to Become a Learning Organization
How do you structure a team to be nimble? There are four fundamental keys to become a learning organization.
- Leverage Technology: A surviving business needs to be at the forefront of technology.
- Learn Quickly: Knowledge needs to pass quickly through the organization. Technology needs to be used to process that knowledge and make it meaningful.
- Understand Interdependencies: A smart business will understand how they are connected and dependent across supply chains around the world. Once they understand this, plans need to be organized to have necessary adjustments in place if an event were to occur to affect the interdependent partnerships.
- Prioritize Commitments: Looking at goals, deliverables, payments that might typically be longterm commitments, and finding ways to prioritize those into shorter-term, more nimble commitments. Real estate is one of those items that has been a longterm, inefficient commitment. Good questions to ask yourself and your company are: what are some current commitments that are unnecessary and that you can get rid of? Perhaps you need a coworking space?
Businesses That Are Pivoting Successfully
Some of the companies that have done well at this are retail stores, specifically big box stores. So let’s look at a company like Best Buy, Walmart, or Target. These companies have leveraged technology and pivoted in the ever-changing economy. For identified their local retail stores are just distributed warehouses. They have revamped their online platforms to leverage direct to consumer possibilities. Consumers can purchase online items that are available locally in-store and have options to pick up on-demand or have the item shipped to their house from a store that’s close. In doing so, these big box stores have shifted from retail stores around the country to distributed small warehouses where they can quickly get items to the consumer. It may sound like a small shift in thinking, but it’s a huge shift in execution and purpose.
Are You Ready for Change?
The world is changing at a rapid pace and we can no longer set 10-year plans without adjustments. Today businesses must constantly question their direction and reorient. The world will get upended on a more regular basis, whether it be from a global pandemic like the Coronavirus or the rapidly changing technology, the flow of information, and the interdependent nature of the world. Survival is based on moving and pivoting quickly. Think of it like an athlete who has trained their body to adjust, react, and respond quickly to their environment. Build your company to be nimble and ready for action. Set your goals and look to the horizon, but always be prepared to pivot.
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