Deloitte in a recent article on Disruption talk about a new level playing field that they describe as VUCA: volatile, uncertain, complex and ambiguous.
They believe ‘companies face increasing demands from customers they’ve never served with needs they’ve never had to meet, relentless productivity pressure thanks to competitors with lower costs, and business model threats from upstarts in new sectors’.
Reading Deloitte’s article you would wonder how any business, that is not large and well resourced, could possibly hope to stay in business?
Deloitte see this challenge as requiring companies to ‘anticipate, adapt, maneuver, make decisions, and change course as needed’. The answer for Deloitte lay in changing the way businesses view and approach risk. VUCA represents strategic risks and this risk must now be taken seriously. They define strategic risks as being ‘the ones that threaten to disrupt the assumptions at the core of a company’s strategy’.
Deloitte’s believe that smart companies will develop a system to deal with the unexpected changes in the VUCA world and they will:
- Accelerate discovery
- Scan ruthlessly
- Confront biases
- Prepare for surprise.
It is a good article and worthy of reading but l believe it is aimed at those large businesses (companies) whose leaders really struggle in knowing their customers and seeing their next level of need.
For those businesses in the SME market how can they hope to resource and build the capability to assess and manage strategic risk? Is there another solution? Well I think there is and it is a more natural and effective solution than developing systems that seek to manage strategic risk.
It is in simple terms being the strategic risk (you are the cause of VUCA), that is, the business that creates the changes in the marketplace that other companies are trying to detect and chase.
SME’s are perfectly positioned and equipped to be the businesses creating the disruptions.
Great businesses at their core (in their DNA) have an attitude and approach to growth that allows them to always lead their markets. They are always evolving, adding-value and reinventing. There are no paradigms in their business as they are constantly seeking to deliver greater customer value everyday and therefore everything is always under constant review. Their mantra is ‘better everyday’. Every morning when they wake up, and even before they reach the office, they are thinking about how they can do better everyday. It is their way of life and it is the culture of their business.
It is, if you prefer, a philosophy of continual renewal that they live out:
- A continual re-examination of the ‘what and why’ of growth
- A continual reinvention of the way in which things are done
- A continual lifting of the value delivered to customers
- A continual stepping out from competitors.
Combine this continual renewal with the effect of compounding and now you are creating the disruptive patterns in your industry that everyone else is chasing. Continual renewal must be built from year to year on a solid foundation with a clear direction.
So why can SMEs achieve this competitive outcome better than large well resourced businesses? Simply because they live their business, they are their businesses. For their owners, it is not just a job in which process is created so that strategic risks are addressed and responded to. They live their customers’ life everyday and are constantly looking far and wide on how to improve value, and they built their businesses on these principles. But not all SMEs are like this, it is only those that have made the commitment to be a great business. If you are unsure what a great business is then this video will assist ‘An Introduction to Growing Great Businesses’.
These are businesses that:
- Place the customer first and make all decisions based on the impact they will have on the customer value outcome;
- Their growth mantra is centered in delivering better customer value every day and they know a focus on greater customer value will lead to greater profit and capital value;
- They understand what real sustainable growth looks like and how to achieve it, and
- They focus on building the competitive engine of their business.
What is the answer to keeping a handle on all the changes that are occurring in and around your marketplace that impact the customer value you are capable of delivering? Be the business that creates these changes and steps ahead of the value everyone else was delivering yesterday. Be a purpose led business focused on customer value with a strong competitive engine at your core.
