Discover more from Strategy Patterns
Is Your Core Business Under Threat? Look for These Signals
In this article I will share some of the ideas that Andy Grove had developed while leading Intel through two inflection points that threatened Intel’s Core business.
BUT FIRST, WHY PAY HEED TO THE SIGNALS AT ALL?
Because these signals point to unprecedented changes like changing the structure of your industry, weakening customer loyalty, and growth stalls that are going to dilute your core business and it’s competitive advantage. Andy calls these changes inflection points.
“a strategic inflection point is a time in the life of business when its fundamentals are about to change”
Inflection points are not just turbulences that your industry experiences due to economic conditions or new regulation introduction, they alter the very fundamentals assumption that created end value in the first place. Most businesses are often struck with surprise when this happens.
“Because inflection points undermine the very assumptions on which a business is based and which have come to be taken as “facts” by most decision-makers, it is often difficult for leaders to imagine a different world. It is this failure of imagination that so often leads to strategic surprise” -
SECOND, WHEN DO THESE SIGNALS BECOME POTENT?
Andy Grove pursued reading and studying inflection points with a certain relentlessness he described as paranoia. The signals are relevant before major shifts in the industry take place because that is the time when you have:
Enough information to make the right decisions
And better insight into the second or third-order effects
Initially, these signals are low and it is very hard to know the exact point at which you have complete uncertainty, but if you are pursuing the signal with paranoia you will be in a position to make strategic bets before major industry shifts happen. This gives you a competitive edge in capturing new markets in time.
THIRD, WHERE TO LOOK FOR THESE SIGNALS?
“When spring comes, snow melts first from the periphery, because that is where it is most exposed.” - Andy Grove.
What you are looking for are changed fundamentals, patterns, or unusual cycles. For businesses, the most exposed parts are where there is the most number of conversations happening and there is open sharing of ideas that are taking tractions in the industry.
There are 4 major areas to look for signals:
Your salespeople who can give you a sense of customer perspective:
How are they chalking out future plans?
Is our competitive positioning still relevant to our customers?
Your customer service who has a pulse on customer sentiments:
Recurring complaints and issues
Evaluating customer love
Your product owners and technologists who understand your capabilities:
Are we building the right product/service?
Has our technology stack run obsolete?
Your investment bankers and VCs who have are a judged on your valuation:
Are they ready to invest in your business?
Is your business future-ready?
What are new disruptive startups in your market?
FINALLY, WHAT TO DO IF YOU HAVE A GUT FEELING THAT SOMETHING IS WRONG?
If you establish a gut feeling about something is wrong, do the following:
See the numbers that back your feeling
Identify the growth or decline rates
Make an estimate about when can major shifts take place
Talk to the stakeholders and gauge their response
Identify future bets
Thanks for reading Strategy Patterns! Subscribe for free to increase your Strategic IQ.