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Mar 10
2006

Business Change in Turbulent Times

Posted by: Steve Marr

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Business leaders focus a lot of energy on the future, looking forward and planning accordingly. However, Scripture tells us that the future is at best unpredictable. King Solomon writes, "Do not boast about tomorrow, for you do not know what a day may bring forth" (Proverbs 27:1, NIV), and James writes, "How do you know what will happen tomorrow?" (James 4:14, NLT).

Even some of the best minds, looking forward, have not always been able to accurately forecast future trends. For example, in 1901, Popular Science magazine predicted that "aerial navigation could not begin to compete with the railroads." In 1925, Lee Deforest, a leading electrical inventor, said, "Television is an impossibility, a development of which we need not waste time dreaming."


In recent years, telecommunications companies such as WorldCom, Sprint, and others made multi-billion dollar bets on fiber optic technology. Their strategy, touted by many industry experts, was to lay as much fiber optic cable as possible, create large capacity, and then wait for increased demand to bring in piles of cash, Today, however, Internet phone companies using new voice-override IP technology, which allows increased communication traffic over the same lines, are offering service for $24.95 a month, including all long-distance, voicemail, and caller ID. Clearly, the big telecom companies misread the future.


Even though the future cannot be predicted with certainty, we still need to plan and create forward-thinking strategies to the best of our ability. King David writes, "May [God] give you the desire of your heart and make all your plans succeed" (Psalm 20:4, NIV) Psalm 119:26 (NLT) says, "I told you my plans, and you answered." Yes, we need to plan, we need to look forward, but we must not forget that we cannot predict the future with 100 percent accuracy.


Understanding some key principles of change will allow us to more effectively adapt to and apply change in our businesses.


First, most change occurs over time, even if the effects seem to be immediate. Occasionally, a major breakthrough or event will change everything overnight, but that is the exception, not the rule. Consider the attempt by Absalom to overthrow his father, King David: "Then a messenger came to David, saying, 'The hearts of the men of Israel are with Absalom.' And David said to all his servants who were with him at Jerusalem, 'Arise and let us flee, for otherwise none of us shall escape'" (2 Samuel 15:13-14, NASB). To the casual observer, the overthrow happened in a day. But a closer look reveals that an unsolved problem eventually led to the sudden turn of events.


"Absalom used to rise early in the morning and stand beside the way to the gate- and it happened that when any man had a suit to come to the king for judgment, Absalom would call to him and say, 'From what city are you?' And he would say, 'Your servant is from one of the tribes of Israel.' Then Absalom would say to him, 'See, your claims are good and right, but no man listens to you on the part of the king.' Moreover, Absalom would say, 'Oh that one would appoint me judge in the land, then every man who has a suit or cause could come to me, and I would give him justice'" (2 Samuel 15:2-4, NASB). Long before Absalom's attempted coup, he had been subtly undermining his father.


Consider the slide of Dunkin' Donuts, a longstanding leader in the national donuts and coffee market, and the ascension of Krispy Kreme, a regional favorite now pursuing a national presence, and specialty coffee houses such as Starbucks and others. Today, Dunkin' Donuts is struggling after being out-positioned by these relative newcomers to the national stage. Although the market shift is clear today, the results took time to develop. Had Dunkin' Donuts understood-and responded-when the trend first started to emerge, they could have been well positioned for explosive growth. However, they failed to wake up until the damage to their brand had already been done.


Second, small changes often herald major transitions. Consider the shift over the past forty years in the radio market. In the early 1960s, there were few takers for FM frequencies, despite the enhanced sound quality. The FM band was largely populated by universities and classical music stations. Over time, as more people purchased FM receivers, the FM side of the dial became king of the hill, and the AM band was relegated to talk radio and "oldies" stations. Looking back, the transition was slow and steady, but complete.


Think about the first cell phones. They were large, cumbersome, and permanently installed in the car. Today, cell phones have not only become handy, portable telephones, they're also cameras and virtual computer terminals. Most business executives did not foresee how the cell phone revolution would alter the very way we work.


Third, rather than spending all our energy peering into an uncertain future, we should focus on understanding the changes that have already occurred in our society, but which have not yet had their full impact, and then tailor a strategy around those changes. For example, mass production became well known when Henry Ford adapted it to the automobile industry. As Ford and other auto makers proved the value of the assembly line, other industries also began to adapt. Those who were first to incorporate these new practices built an outstanding advantage in their markets.


Consider that 40 percent of American adults are not married (that's nearly 90 million people), and that 60 percent of those people have never married. Regardless of what we might think about this trend, it changes the way that many businesses should be perceiving their customers-and marketing to them.


Dentistry is a very challenging medical profession today because oral health has improved dramatically. Many dentists are struggling to fill their appointment times. In counseling a young dentist who was just starting out, I advised him to change his office hours to provide service four evenings a week and Saturdays, while taking weekday time off. The result was a solid practice, anchored by single adults who appreciated office hours that fit their busy work schedules.


Look at the growth of Spanish-speaking customers in the marketplace. This trend is unmistakable and growing across the country, not just in the Southwest. This immigrant population, both legal and illegal, is growing faster than the population as a whole. Much of the market is under served, and marketing not well targeted.


A chain of auto parts stores was struggling with low sales in several locations. The owner was considering closing two stores that happened to be in neighborhoods with a majority of customers whose primary language was Spanish. Given the natural customer base, I advised him to consider adding signage in Spanish and some bilingual counter staff. When he also began to advertise on Spanish radio and in Spanish-language newspapers, both stores became very profitable. The difference was not a change in business operations, but a new understanding and targeting of his customer base.


The Lord told Saul on the road to Damascus, "It is hard for you to kick against the goads" (Acts 26:14, NASB). Warren Buffet, the billionaire financier, said, "It's not how fast you row the boat- it's how fast the water is moving in the river." It is far easier to understand existing trends and act on them, than it is to struggle against those same trends.


Fourth, consider that most change and innovation shows up first in non-customers. In other words, it's not enough to be customer focused- we need to be market focused. Years ago, department stores such as Sears and Hudson's understood their customers, but they lost sight of the larger market. As more women joined the workforce, creating more double-income families, these customers needed easier shopping options. Stores like Wal-Mart stepped in and took a huge share of the market. Regardless of how solid our businesses might be today, we need to be aware of and understand overall market trends, and act before those trends overwhelm us.


Fifth, embrace new initiatives and be willing to drop old ideas. Solomon writes, "There is an appointed time for everything" (Ecclesiastes 3:1, NASB). We must constantly try new ideas to determine what works. My experience is that only about 40 percent of new ideas, reasonably well-planned and executed, will work upon implementation. But rather than making us more cautious, this reality should prompt us to try even more new ideas, to increase our chances of hitting the winning mark. Waiting too long to change, until we're up against the wall with only one option for victory, puts us at long odds. We're better off avoiding such circumstances by acting early.


Identify what is not working in your business and abandon it. In every business, a product, market, processing system, or office procedure needs to be discontinued. Tom, a professional rug cleaner, had a few customers who were more than forty-five minutes away from his core business area. He realized that continuing to serve them was undermining his productivity. By transferring those few customers to another firm, he increased his own efficiency and profitability.


Although the future cannot be perfectly predicted, you can keep your business moving forward by understanding the principles of change and adapting accordingly.

Steve Marr, Your Christian Business Coach

As featured in Business Reform Magazine

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