George Stalk notes early in this useful little book that all too often the media announce the next big thing long after cutting-edge companies have learnt about the change, dealt with it and moved on to the next innovation. High-profile stories trail real change rather than reporting it as it happens.
If you want to plan for change by following the mass media, you’ll be left behind. If you act earlier, you’ll have to discern the “fake” from the “faint signals” of major change. This leaves people with the difficult challenge of immediately addressing emerging changes. Stalk suggests tracking and categorizing the forces that reshape your market. Make sure your “watch list” includes areas where you need to be alert for new advantages and where it’s not obvious which possibilities offer the greatest profit. Finally, look for the signals that definitely mark change and as they strengthen, gauge their direction and move that way. Future change will affect business in five key areas: supply chain, scale, pricing, complex markets and unlimited bandwidth.
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The key to handling supply-chain fluctuations is information management. Your supply chain should be integrated to make tracking changes easy. Seek efficiency and examine tactics for smooth information flow. Find ways to speed up shipping, such as flying cargo or using “point-to-point” ocean shipping. Look for ways to reduce risk, such as completing assembly in proximity to distribution points. Examine all possible production locations.
The next major area of change is in scale. Many people believe that “bigger is better”, and in the manufacturing world, this means building larger factories. As the economy becomes more volatile, demand becomes harder to predict. Large-scale production is more likely to result in overproduction and unused capacity. One alternative is “just-in-time”, or JIT, manufacturing. This approach allows smaller factories to compete by being responsive to market shifts. In the contemporary marketplace, you miss opportunities if you set one price for all customers at all times. Use dynamic pricing instead and shift prices according to a range of factors. If customers want faster service, give it to them for a premium. If they want smaller than usual quantities, agree, but raise the price. In general, consider ways to gain an advantage with your pricing platform.
The usual response to increased complexity is to simplify things. The other option is to embrace complexity. Help consumers who are overwhelmed by the choices they have to make and the risks involved by reducing their “complexity anxiety”. Zappos does this with shoes and, more generally, with shopping online. People are afraid of buying shoes without trying them on, so Zappos offers free shipping and a full year in which to return purchases.
Technology constantly transforms business, but another, more sweeping change is fast approaching: Infinite bandwidth, whereby anyone can exchange unlimited amounts of information anywhere, any time, at essentially no cost. You can integrate the possibilities of bandwidth into your industry by tracking where information is transmitted (such as from customer to salesperson) and making the needed information universally available, enabling better service and smoother decisions.
Stalk’s text is speculative at times and his desire to write briefly means that he skims some areas. But that said, this is a more applicable treatment of the future than most books, and getAbstract recommends it to anyone planning realistically for change.
Rolf Dobelli is the chairman of getAbstract.