01 AUGUST 2012
Never waste a good recession
by Danie Jacobs: Director: Centre for Business Dynamics & ILSC at University of the Free State.
Many business owners across South Africa would argue that what we're experiencing now is worse than the ‘recession’ we had in 2008/9. Well, the reasons are plenty: the global financial crisis, especially in Europe, is continuing and in some cases worsening; government is inwardly focused as a result of the forthcoming elections and there is a slowdown in spending from their side; the private sector is sitting on their cash rather than spending it. The reason – indecisions on policy issues like the nationalisation of mines, land reform, etc.
Whatever the reason, it is becoming more and more difficult for companies to survive in today's volatile and highly competitive global business environment. This new industrial order demands new ways of thinking, new ways of managing, and new ways of working. Thus, of utmost importance in this new order is the extent to which companies invest in their capacity to innovate and change (aligning with current and future realities), making their human capital and business models “revolution-ready”.
The obvious question is then how to approach this?
A good starting point is to familiarise yourself with the components of a typical business model. Central to a business model is normally your Customer Value Proposition (your offering in all its dimensions). You also need to understand how your company creates value for itself while providing value to the customer. Further consideration should be given to your key resources (assets such as people & technology required to deliver the value proposition) and the key processes (operational & managerial processes that allow a company to deliver value in a way they can successfully repeat and increase in scale).
If you have consensus on the critical elements of your business model, the next step would be to do a detailed analysis of your existing model (the status quo). The reason being is that realising a preferred future necessitates aligning key organisational aspects [structure, systems & processes, leadership/management style, resources, shared values, strategic performance, etc.] with the proposed strategic intent (desired state).
It is also essential to ask employees and customers their feedback. The information and insights gained from employees and customers are invaluable in assessing the current state of your business and it highlights the issues to be resolved, the risks to be mitigated and general areas that need desperate attention for improvement/innovation.
- Do a detailed analysis of your current Business Model, the premise behind its development, its natural interdependencies, and its strengths and limitations.
- Employees, including management & leadership should be assessed on their level of engagement with the organisation. Engaged employees are a necessity when growth or expansion is considered
- High level stakeholder/customer consultations must be done to assess your current Customer Value Proposition.
- Your current strategy should be reviewed against the backdrop of the Insights, Issues & Risks (IIR Dashboard) that were identified by analysing your current Business Model (including feedback from employees and customers). Also, consider general market trends, rivals/competitors in the environment, and other regulatory constraints.
- A Preferred Future Planning exercise should be facilitated to develop a clear and concise picture of what the future should look like for your organisation, and the feasibility of this preferred future should be measured/assessed against all internal and external factors / influences.
- Implement detailed strategic objectives with associated metrics for monitoring progress.