I clipped this back on 2017/12/07. I didn't save the attribution.
How to change?
Often the status quo is not an acceptable course of action. The environment is changing around us and we need to make not just incremental improvements over what we are doing, but rather to rethink, reinvent, and reengineer what our strategies should be. The conventional frameworks start the process of reflection on our past, and that is often the wrong way to make you think of change. We want to create discontinuities not to reaffirm what we have done. By providing too much emphasis on competitor’s behavior, the conventional frameworks tend to anchor us in the existing industry practices.
We have found that the obvious answer to initiate a process of change is to start with the customer. What can we do to help the customer improve its business? How can we look into its full life cycle and detect novel ways of providing something that is truly unique? By focusing on the customer, we find it is much easier to detect opportunities to be truly unique and promote change.
How to pursue profitable growth?
Profits are revenues minus expenses. It does not require much creativity to reduce costs; there are always ways to curtail our expenditures. What is more demanding is to find ways of increasing our revenues profitably. Are there a lot of potential revenues and economic growth which are left under the table because of our inability to detect those opportunities? How could we assess the potential for growth?
One practice that is commonly used is sales forecast. I find that completely unacceptable – first, because sales should not be a subject of forecast. We forecast events over which we have no control, such as the weather. On the contrary, sales are something that we truly can and should influence. Second, sales forecast means an exercise of extrapolation of the past into the future. Again, this is unacceptable if we want to challenge our previous performance and if we want to engage in new forms of management that, hopefully, can make our past irrelevant – for the better.
Where is the answer? Again this resides on the customer. If we were to look at each customer individually, we will detect what potential exists by treating them differently, meaning offering more creative value propositions. This will allow us to examine “white spaces” – untapped opportunities – from the bottom up to come up with a much more effective growth strategy than the one resulting from competitive analysis.
How to spark creativity?
What we are saying, in various ways, is that we need to find mechanisms that allow us to be more creative, the so-called thinking out of the box. When I was using the conventional frameworks, I rarely found them to be the source of inspiration conducive to creating an innovative strategic environment. It might be my limitation while using those frameworks, but I doubt it. The emphasis on creating “competitive advantage” was focusing on the competitors. That is not the best way to do it. Instead, attempting to understand the granular needs of the customer and to seek the best ways to satisfy them provides the answer.