The earlier we spot a trend, the better we can ideate the possible solutions. It is critical to know what is driving these changes. Here are some of the common drivers:
Customer-led drivers: These trends are easier to pick. Customers insist on some features. They talk about the same problem. The more time the top management spends with the customers, the earlier they can spot this shift. Even a small head-start results in a big lead in the long run.
Technology-led drivers: When various technologies reach the tipping point, the business model needs to be updated. Most often, companies shy away from adopting newer technologies because of various reasons like:
Risk of failure
Higher CAPEX
Learning Curve
Resistance to Change
All changes are inherently risky. It is, therefore, essential to build processes and have a learning culture to evaluate and adopt newer technologies.
3. Capital-led drivers: A decade back, very few people were even aware of terms like EBITDA, Valuation, Market Multiplier. Today, it is common knowledge. The capital structure impacts several things, especially the ownership, business model, and scaling-up potential of an organization.
4. Government-led drivers: Government policies have a long-term impact on the business. For example, the Indian Government's recent emphasis on the indigenization of semiconductor chips will have a ripple effect on that and allied industries. Similarly, the EV and the Renewable Energy Policy will force many companies to change their strategic plans.
5. Competitor-led drivers: This is the easiest driver to identify. The salespeople constantly speak about it in the business meetings. However, by the time these drivers are recognized, it is often too late.
Make it a point to look at the trends and identify the drivers in your management meeting. With the current pace of change, a static strategy is like a lame duck waiting to be shot.
Subodh
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