New economy may require that you take a new path

This is a brand new economy, and succeeding in it will likely take a very different path. The last few years have shown that a company that can’t change with the times will most likely be left behind and eventually struggle to survive.  With the seeds of recovery beginning to take root how can your business return to growth and prosperity. Understanding how we arrived in our current situation is an important piece of being able to construct a future strategy.

As recently as 2006 very few were able to forecast that the next 36 months would bring the largest economic downturn since the 1930’s and underpinned by a near collapse of the global financial system. Economic principles work as simply as mathematics in truth and with hindsight the stages are very distinct. The banks facing a financial crisis put major restrictions on credit,reduced credit made trade dilute which created the economic downturn, which by months 6-12 saw a huge spike in unemployment which has only recently seen a plateau. Faced with global instability an unprecedented response from governments throughout the world has returned the market to a sense of relative stability. Concerns however remain about the solidity of the recovery and whether the banks have cleared their books of bad loads. Unless the banks are stable and act accordingly caution will remain. The fiscal stimulus pumped into the system is finite and the months ahead will be watched closely and cautiously.

So what does a business owner need to be aware of in the immediate term?

Not all markets are equal – Patience will be key. Accepting that the recovery in North America will not occur at the same overall rate as other regions. Research takes on even higher importance than before as finding and anticipating changes in your industry will be more critical than in the past. The market will continue to evolve at more rapid rates then experienced before.

Balance short and long term – For three years many companies have made staying solvent and minimising contractions the day to day priority. Short term planning took over the agenda in executive offices in almost all sectors of business. Realignment of strategy to include mid and long term objectives must return for you to be successful. An integral part of long term business planning now should include strategies to make your business as flexible and fluid as possible. The ability to seamlessly transition your internal capacity to allow for market developments and demands will often spell the difference between winning or losing new business.

Competition & Technology – Forget much of what you knew about the marketplace in 2005. The events of recent years have resulted in the competition and the tools being very different. As companies merged, splintered and reformed you will find that your rivals are not automatically the same as they were – as importantly the technologies being used are evolving on an annual basis. The principles of how you do business need not alter too much but the application most certainly will. R & D are back in the front seat – understanding your industry and your new competitors will be key.

Client Focus – In a turbulent market the greatest beneficiaries are often the consumers – it remains the vast majority that are in a position to invest in a purchase or a service. Your consumers and your clients will be shopping with far more acumen than in years gone by. Don’t assume price drives loyalty as strongly as service, service expectations are to be clearly laid out. If your client wants to partner with a green service provider, you need to make that change (as needed). If your client demands 24/7 support then ensure it is an option. If your client knows your rivals have certain technology be prepared to offer the same.

Much of what we’ve written are not new principles but there has never been a better time to assess how well you follow these basic guidelines. At Miratel we seek to partner with businesses who are as prepared for growth as we are. Our partnership is based upon helping your business succeed.

Consumer power

New markets are emerging such as smart grids and intelligent infrastructure – old ways of operating are changing as physical banks are superseded by mobile banking applications in many developing countries.

New economic relationships are possible for the first time. The traditional boundaries between customers and manufacturers are becoming blurred, as innovation and product design tap into contributions from stakeholders around the world.

Consumers can use new technology to share information about products and services in open and global online forums where the objective is to increase knowledge or economic wellbeing.

As more and more information can be accessed by consumers, we see two powerful shifts: the power of consumers relative to manufacturers increases, and emerging markets become the strategic focus for companies with global aspirations to grow.

New skills required

These forces have big implications for business. Companies have to master a new complex eco-system where customers, suppliers, competitors and other producers are increasingly interconnected and interdependent.

This requires new skills: managing networks of third parties, competing with new market entrants and protecting proprietary information and data.

So as we get ready to don the snow boots and meet in Davos, as we contemplate the title for this year’s World Economic Forum meeting : “Rethink, Redesign, Rebuild” the challenge for those present will be to work out how to move forward in a way that is speedy, effective and sustainable.

The economic landscape that lies ahead will seem foreign and forbidding to many business leaders. The economic, political and regulatory landscapes are changing but beyond global governance there are fundamental shifts happening in the way of doing business.

Holding on to old notions of competition, linear value changes and the old definitions of customers will not work.

Companies will have to recognise the speed and scale of change. The successful business leaders of this new decade will be able to bring a global lens to a world of new emerging rules and increased uncertainty to provide the strategic clarity and operational flexibility required by their operations and staff.

Now more than ever we need political and business leaders with the skill of global orchestration.