IAN MANN REVIEWS: How to spot turning points in your business before they happen


Seeing around corners: How to spot inflection points in business before they happen by Rita McGrath

This book addresses a problem that every business owner or manager must address - how to spot inflection points that will impact your business, before they happen.

An inflection point comes with extreme possibilities. It could offer you a magnificent business opportunity if you can see it coming and address it sooner than others. It could as easily destroy your business or seriously damage your bottom line.

"Evidence of an emerging inflection point doesn’t present itself neatly on the conference table in the corporate boardroom," the author notes, with a hint of sarcasm.

The authors cite eight practices that businesses should adopt to protect themselves at worst; and grow superbly at best. I will share a few below. The challenge is to spot and interpret weak signals that things may be changing, before the news is obvious to everyone.

Information flow

The first is to institute mechanisms that will allow information from the street corner to flow into the proverbial Corner Office. It is too easy for leaders to miss potentially important inflection points because they are isolated from the people who could be knowledgeable informants. This isolation creates a false sense of what is going on in the world.

When looking for the signs of an inflection point, information and trends must be both allowed and enabled to get to headquarters. This doesn't 'just happen': it must be made to happen.

Lou Gerstner, the man who returned IBM to greatness when its dismemberment was imminent, spent his first months in office visiting customers and talking to frontline employees to get a feel for what was really going on. He held "deep dive" sessions where participants were invited based on what they knew, regardless of their position in the company.

In similar vein, Citibank's credit card division, had their leaders report on an insight learned from an actual customer that month.

Welcome diversity

The second imperative is to ensure you are leveraging a diversity of thought.

We are all now highly aware of the dangers of sharing critical data with organisations who either do not wish to, or cannot protect sensitive information about you or your affairs.  

The privileged lives of the Facebook founder and many about him, may well have blinded the firm to the danger posed by others who might take advantage of the Facebook subscribers' openness. The inflection point – the awareness of data abuse - is now a serious problem to Facebook, whose revenue stream is dependent on selling personal data.

Inviting diverse viewpoints into your discussions might save you from being blind to other perspectives. Blindness might leave you ignoring trends when they are subtle and have you suffering the consequences when they are bold.

"There are no answers in the building". Customer-facing employees often unintentionally hide information from leaders to give a good impression. Leaders operating from inside the building must connect intimately with the external environment. This can be engineered by having leaders go into situations where they run into customers naturally.

Beware of denial

Denial is a function of many factors that can have serious consequences.

In an interview in 2006, Robert Apatoff, CEO of the iconic mapmaker Rand McNally, dismissed the negative effects of digital on his business. He cited the human desire to hold a paper map, much like the desire for a daily newspaper. A year later Rand McNally was acquired by a distressed-asset investment firm.

The future doesn’t descend suddenly. It takes years and more often decades before it becomes a business-destroying or enhancing phenomenon. Subtly, the future is already here in embryo and that is why it is an imperative to “talk to the future that is unfolding now.”

Look to the future

This requires that you Identify representatives of the future and go there. If you wanted to know how a 25-year-old will be looking at the world in 10 years, a conversation with the 15-year-old of today is an imperative. By understanding where the future is starting to take place now, you can begin to develop an early point of view on it.

And of course, you need to turn to the people who are directly in contact with the phenomenon who usually notice changes early: the scientists, the salespeople who are talking to customers every day, the help desk, and more.

"As I have found with virtually every major inflection point I've studied, there was early evidence of this one's potential long before it landed on our doorsteps".

The difficulty is always the period before the signals of an inflection point become obvious and strong.

"When there are so many things that could represent a potential inflection point, picking out the weak signals that actually matter is no small challenge," McGrath warns.

Steve Ballmer, Bill Gates' successor at Microsoft failed to understand the five most important technology trends of the twenty-first century: Search—lost to Google; smartphones - lost to Apple; mobile operating systems—lost to Google and Apple; media—lost to Apple and Netflix; and cloud—lost to Amazon.

These losses are the risks of overlooking weak or faint signals that other competitors can see. Weak signals represent strategic opportunities and the earlier you can spot them, the easier you can design your strategy to respond to the opportunity effectively.

Build scenarios

When you are driving and you can see far ahead, you can adjust your driving if you see an obstacle and it only requires a slight adjustment. When you cannot see far ahead the same obstacle requires a sharp and fast movement of the steering wheel.

Building scenarios to identify potential alternative views of the future, is very helpful. This is because assumptions are the basis on which positions are taken as "facts" by most decision-makers. Scenarios are a way to imagine a different world.

For example, nothing about how a restaurant should be operated, prepared owners for the fact that only 63% of all meals purchased from restaurants, are actually eaten inside that restaurant.

Two key issues need to be avoided in thinking about the future: Imagining a future in which only one thing changes and everything else stays the same; or thinking only in terms of linear change.

Among the many more complex issues this book deals with, is a simple one with immediate take-home value. Jeff Bezos said: "It's impossible to imagine a future 10 years from now where a customer comes up and says, 'Jeff I love Amazon; I just wish the prices were a little higher,' [or] 'I love Amazon; I just wish you’d deliver a little more slowly'. Impossible".

If you know something will be true over the long term, you can put your efforts into maintaining that truth. This is an immediately valuable focus for concern and effort.

The ideas in this clear and compelling book go way beyond what I have described above, and I would urge everyone who is directly concerned with the sustainability of their company, to work through this book diligently. It is a well-balanced combination of insights and practical 'how-to' advice.

*Ian Mann of Gateways consults internationally on strategy and implementation and is the author of ‘Strategy that Works’ and ‘The Executive Update.’ Views expressed are his own.

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