Posted by: DrAlanRae | May 27, 2008

What’s the weather like?

It’s no use having a good story if no-one wants your product. You have to be in tune with where the market is and you have to organise your resources to deliver where you have the most leverage.

Sun Tzu says in the “Art of War” that if you know yourself, know your enemy and know the terrain in which you’re going to fight you’re more likely to win than if you don’t.

However in today’s business world we don’t have a stable terrain.

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It’s more like the weather map. It doesn’t stay stable. The peaks and troughs wander about all over the place and your task as a business owner is to thread your way through this landscape on a stable path – tricky!

Large organisations are like highs – they progress in a stately fashion in a more or less straight line across the landscape. Lows are like small companies that have to scurry round the outside. Where systems collide you get turbulence and thunderstorms. It’s constantly changing and you have to be alert to be in the right place at the right time in the business landscape.

But there’s another lesson we can learn from this. You can see that there is a pressure difference between high and low – 1030 vs 991 in the picture. This means that there is a potential that exists – for a while before it evens out. This is like a market’s window of opportunity. You’re task as a small business leader is to identify the next gradient to surf that will take you forwards.

This is an accurate description of what we do when we look for the next wave of re-invention. In today’s business world the pace of change is such that we have to re-invent ourselves every 2-3 years.

Market opportunities follow an Iron law of commodification. When the idea is new there is money to be made. You can behave informally and suit yourself as you will be likely to be selling to fellow innovators. However as time goes on more people come into the market, the product becomes a commodity depending on slick delivery mechanisms to secure the ever thinning profit. If you stay with it you’ll eventually go over the back of the wave and go bust. The most complete explanation of the dynamics of this is Geoffrey Moore’s Inside the Tornado which I strongly recommend to you.

However you don’t have to go over the back – you could look out for and catch the next wave. You see, as a small business, you will have acquired a team of people whose skill-sets work profitably at a particular sweet spot on the curve. In our own case usually where bleeding edge becomes leading edge. Much of what we do is to spot the arriving trend and civilise it for just-after early adopters. Where you can profitably do ad hoc, interesting original work.

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If you stay too long you become increasingly uncompetitive as the corporate thought machine moves in. However if you can move from wave to wave you can cope with this. Just don’t leave it too long – if you miss a wave you’ll be in deep trouble. Been there!

But if you’re good you can grow by incorporating successive waves.

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