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rolling with change to create value creation
2012/1/19 0:00:00  from:china entrepreneur magazine

rolling with change to create value creation

by amir gal-or

there is a famous expression about the weather in boston, ma, which i remember fondly from my days at harvard university, which is situated just across the charles river from this fine city.  it goes like this:  if you don't like the weather, wait a second. then, the sky would likely go from cloudy to sunny, or the opposite. the weather changed regularly and sometimes instantly, for the better and then again for the worse - but one thing was for sure, it was always changing. this too seems to be the case with current economic and geo political current events. blink for a moment, and reality as you knew it, has changed.

for those on top of their game, such changes should effect business decisions.  economic and political changes are sometimes for the better, sometimes for the worse and sometimes birth a totally new trend. technology and the internet, for example, have introduced many opportunities, transparencies and changes. whichever the course, however, one thing you can be certain of is that there has been change and, just like with the weather in boston, you will need to roll with it if you want to keep up, or better yet, lead the way and benefit from it.

in the future, when we look back at the coming year of 2012, it will likely be remembered as a year of many as well as major changes with regard to political leadership, policy and the continual shifting of power, mainly from west to east.  

in addition, the political landscape is changing worldwide. in the middle east, this can be summed up in two words, what the press is calling the "arab spring". europe is also undergoing transition; leadership in italy and greece just changed hands. and, the united states is soon to potentially follow suit with a pending national election in 2012. as for china, we are all well aware that new leadership is soon to assume the reins of power.

along with the change in leadership, world economies are nearing a turning point. europe is currently experiencing a banking crisis, the future of the euro is in question, the economies of greece and italy are at near collapse and in the words of president obama, the united states is not quite over the recession. in addition, we are witnessing major decisions being made regarding the waving of nation debts, the changing of currency policy and on the shorting of manufacturing.  the ability of the leadership in power to make decisions that will bring about positive change in all of these areas will certainly be tested in 2012.

business and market environments have also been swept away in this frenzy of change and are daily affected by current events. in fact, now more than ever, new business models are regularly emerging to deal with these changes. entirely new industries are being formed; there is also a clear shift in power both on the geo political level as well as that on the industry level. the mode of operation is constantly changing; however, this change is key, even essential, for any long term business leadership or value creation.  

naturally, every business will handle changes differently. businesses in their own right are diverse -each one has a unique management team, a level of available resources, and a defined strength of brand.  one common denominator that all businesses share with their competitors, however, is that they all operate in the same eco system.  as a result, i would argue that many of factors that are crucial to a company's success are actually external rather than internal. this said, the challenge for most management teams and owners is how and when to change according to these external factors - present and future. in my opinion, the ones who will do the best are the ones, who, to borrow from an english language slang expression, know how and are able to roll with it.

what exactly do companies need to understand and do in order to successfully roll with it? first, companies need to evaluate their business model and determine if any modifications are required due to changes brought on by external factors. ask yourself, what is your value proposition? who are your real customers? and, how is your relationship with those customers? what are your present activities? and, what is the associated cost structure? who are your partners? and, why? what is the base cost of your product/supply chain? what channels are your available channels? what is your status in terms of finances and cash flow? what are the trends within your revenue stream?

once you have the answers to these questions, the next step is to begin thinking about the future and devising a 3-5 year plan. fast forward to tomorrow and try to predict your situation a few years down the road.  this exercise should be done with people within the company's eco system and should include board members and managers, as well as trusted customers and suppliers. gain feedback from each separately and independently as well as in a group environment in order to benefit from collective brainstorming.

those with a firm grip on the reality of their situation, a fine sense for future trends and the open mindedness and agility to make adjustments complementary to changing external factors will be more likely to ultimately prevail and weather the various seas of change. some won't.

an example of the won'ts - we all know how powerful social networking has become. social networking has changed the way we receive news and share information.  from the online gaming perspective, it represented a huge growing niche that required a model other than the traditional. infinity had a leading online gaming company that unfortunately missed two huge chances to change their business model and win big.  the company is called zinga. as a result of their inability to identify the window and change their model in a timely manner, they are now in an ipo process at a 14b usd market value.  

i find culturally savvy chinese companies are indeed able and willing to change their businesses models quickly as they have an interest in cross industry play. the problem, however, is that chinese companies are not culturally wired to lead change, but prefer to wait and see how others fare with such activity first and learn if the effort generated success.  this creates a reality where the leading updated models originate from places other than china.

examples of business leaders of change include well-known names such as apple and amazon.  apple, which i tend to cite regularly as an example, consistently reads the market and does not limit itself to one industry, or become preoccupied with online verses off line thinking.  apple always focuses on the evolving need that is emerging and leads the pack.  amazon, which originally sold books on line, shifted to selling a wide variety of products.  they added cloud computing services and hardware devices to contain users and built the world's top logistics platform as well as a content hub.  a side note: netflix, which started so well like amazon but in the on line and off line movie distribution industry, failed to leverage new opportunities and to change its model due to a deep misunderstanding of its customers.

nokia, however, is a wonderful example of a company that beautifully changes its business model according to predicted market demand and has a keen understanding of its customers. from boots to cables to computers to cell phones to internet, nokia is always able to read the blueprint before it is clear to the rest of the world. and then, these days, there is also google, which soars past competitors, leading the way, redefining the rules and chartering new ways of thinking.  they don't bother worrying about making mistakes;  they smell the aroma of change in the air and just roll with it.

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