“Helen! You have to see what they are up to now!”, Kenny says with even a greater sense of urgency.
“Who Kenny, who are up to what?”, Helen answers.
“You know, those guys I have been telling you about, the ones that are copying what we do in our online business”
“Let me see” Helen responds back to Kenny.
“You are so right, it looks like they have a similar catalogue, but wait look at this…. Wow!” Helen says as she leans back into her chair.
Have you ever had a time when your competitors absolutely wowed you like they just did with Helen?
You see Helen Lee runs a fashion business that had its roots in retail stores in high streets across London, but has recently expanded into an online portal where her business is now starting to sell and ship to clients globally.
Her high end fashion label garments are sourced through family connections in China which she traditionally imported in to the UK, but she thinks it may be possible now to ship directly from the factory in China. That is if she can get all the moving parts working together. But the presence of this direct competitor in her market is stressing her out. They seem to be moving very fast and gaining a loyal following, well so it seems at least.
Transitioning into new business models is not easy.
It requires planning and of course doing things differently. Particular it is a challenge when there are new entrants into your market that seem to be re-writing the rules of business – the very same rules that your business once wrote in the old days of bricks and mortar!
So what can be done? How would you help Helen? What advice would you provide her?
Would you tell her to get out of high street shops and concentrate on online only? Or would you suggest she needs to keep doing what she is doing currently, a dual strategy that crosses from tradition to the digital economy?
Well we are probably sure of one thing, within Helen’s extended family, she is likely to be getting a lot of advice, but where to start first?
Helen however is a very smart and successful business woman. Its just that she is faced with a new challenge. So she decided to do something that she did when she first set up her business years ago and felt she should revisit this again. In fact, she reflected on that it should have been something she routinely undertook because it was likely that if she did, she would not be in the situation she is in today.
Helen called her key managers in for a meeting. She said there was a need for “time out” and she explained to them their predicament. She asked them to consider this over the next week, where they would spend a full day, or more if they have to, together brainstorming ideas, but also looking at their strengths, weaknesses, opportunities and threats – yes that’s right, a whole day doing a SWOT Analysis!
Would you have suggested to Helen a similar activity?
Perhaps, perhaps not.
There is an interesting concept known as the Contingency Theory of Change, in a nut shell, it just means there are many varying factors so that one response for one situation gets a certain type of outcome but repeating this same response in a different context can get an entirely different outcome. As for Helen, clearly she understood an “intervention” was required and her business acumen drew her to more objective analysis of the situation by using a strategic planning tool such as the SWOT. Helen was also astute to know if things had to be turned around, she needed all of her team to be on-board as well.
We will follow up on Helen in a future post, to see how the workshop and the SWOT Analysis went.
The key message though, is that we can get off track very easily in business.
Our best intentions are there and we think we are doing all the right things and working very hard at it, but then the rules change and if we do not respond and sometimes respond fast, well we will be out of business.
However, the paradigm shift today is probably more relevant, considering the speed of these shifts and their global impact. You do not have to go far when we think of the new economy businesses today like Uber and AirBNB and how disruptive they are to the markets they are in.
When we hear or see the word “system”, what comes to your mind?
Well the dictionary meaning has it along the lines of a set of procedures, principles, frameworks or set of things working together to provide an overall outcome.
In the business context, you can think of systems as a way to ensure things are being done consistently and at the acceptable level of quality. In the startup world, I think systems are essential as they help educate on the “what to do” and the “how to do” and also a critical but overlooked area is in ongoing assessment of business performance. What are your strengths and weaknesses? What are the opportunities in front of you and also the possible risks and threats? In other words, the S.W.O.T Analysis (strengths, weaknesses, opportunities, threats).
We often seek out the next bright and shiny object as the solution to our problems, but I think the SWOT Analysis is an elegant method of assessing where you are at, particularly if you are doing this annually in your business or startup of which the outcomes of the analysis can feed into a plan or more formally the annual strategic business plan.
According to Wikipedia there are differing views as to the original author of the SWOT Analysis but it was around the 1960’s and 1970’s when it first appeared. Like many systems or frameworks, the appearance of simplicity is deceiving as what the SWOT Analysis does, is it looks at both internal factors and external factors and their relative strategic fit.
The other great thing about the SWOT Analysis is that it is simple to perform. Like you can do this on your own having coffee! In fact right now quickly write down your number one answer to the following four questions:
1. What is your biggest strength?
2. What is your biggest weakness?
3. What is your biggest opportunity?
4. What is your biggest threat or risk?
See, simple! Even with myself writing this article, I have quickly reflected on the answers to those questions for my own circumstances.
Of course it is a better idea to engage your colleagues and workshop this in more detail and even consider themes such as the following:
Political Landscape etc etc
Perhaps some of the points raised need to be validated to see if they are actually true or not and then of course you can use differing ways to filter or prioritise. Regardless, can you see how the SWOT Analysis could be helpful to you in your business? Also you don’t have to engage a management / business consultant to do this either!
Of course there are other systems, frameworks or models that can be used instead of the SWOT Analysis and some of these include…
Porter’s Five Forces Model
Threat of new entrants
Threat of substitute products or services
Bargaining power of customers (buyers)
Bargaining power of suppliers
Intensity of competitive rivalry
VRIO (Value, Rarity, Imitability, Organisation)
The Question of Value: “Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?”
The Question of Rarity: “Is control of the resource/capability in the hands of a relative few?”
The Question of Imitability: “Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?”
The Question of Organisation: “Is the firm organized, ready, and able to exploit the resource/capability?” “Is the firm organized to capture value?”
Six Forces Model
Competition – assessment of the direct competitors in a given market
New Entrants – assessment in the potential competitors and barriers to entry in a given market
End Users/ Buyers – assessment regarding the bargaining power of buyers that includes considering the cost of switching
Suppliers – assessment regarding the bargaining power of suppliers
Substitutes – assessment regarding the availability of alternatives
Complementary Products – assessment of the impact of related products and services within a given market
McKinsey 7S Framework
Now as you can probably conclude by now, I love systems and models (I also love a good graph too). Having been a management / business consultant for many years working in the corporate sector, models were part of my kit bag. However in the startup entrepreneurial space, things are slightly different, that’s why my number one model is this one:
K.I.S.S or Keep It Simple Stupid!
Meaning, sometimes we can over complicate things or over engineer them, so finding the balance is important. Even though all the models that I have mentioned (and trust me on this, there are hundreds more – even ones I have created) allow great insight into your business, the SWOT Analysis therefore, is a good one to start with.
Remember, you just need to ask yourself these questions consistently and diligently each year: what are my strengths, my weaknesses, my opportunities and my threats.
Then of course you need to define and refine what you are going to do about it all, that is, the execution of the outcomes or findings.
However, that my friends, is of course another story for another time, because somehow, even when we have the insights and the answers, we still do not take action! Possibly this phenomena, if we call it that, explains the quote: “to err is to be human…”!
But of course we do not always see our short comings despite our efforts, after all we are always trying to put our best foot forward, we are promoting ourselves, positioning ourselves, having makeovers. We seem to be making a “habit” of not being honest, transparent and authentic.
An exercise I like is the Johari Window. This framework or technique, helps to elevate our sense of awareness through four metaphorical windows:
Known Self – Things we know about ourselves and others know about us
Hidden Self – Things we know about ourselves that others do not know
Blind Self – Things others know about us that we do not know
Unknown Self – Things neither we nor others know about us
There are many ways you can use the Johari Window, but basically the outcome is transformation as through information comes insight and then hopefully change. While the Johari Window is generally used for personal transformation, this same technique can also be used for business transformation.
You see, it is my view that unless we are constantly working on our “weaknesses”, we miss opportunities to fundamentally transform. A year goes by and nothing changes. Another year goes by and we have not learned anything. We are still where we were a year ago, may be ten years ago. However the reality is that around us is change.
Whether it is Stephen Covey’s 7 Habits, The Johari Window, or even performing a SWOT Analysis, we need to systemise these practices and others, into our business (or personal lives) to ensure we continue to remain relevant, but importantly continue to provide a meaningful contribution.
So while you may be empowered with your Strategy, achieved Sales effectiveness, obtained efficiencies in your back end Solutions and engaged the right Support, this last imperative of implementing Systems will be key to adapting to change regardless of whether you are an entrepreneur in the early stages of your startup, or have a business up and running.
So when somebody asks you next time “Tell me about yourself, tell me your weaknesses?”, make a fist and say “Yes”!