A boom is coming. With the economy awash in cash from fiscal and monetary policy, savings stored away due to pandemic inactivity, and a burst of optimism with Covid fading, consumers are starting to open their wallets – big time. Business spending is following. We can’t say how long this will last, but we can know for certain that it will transform companies ready for this moment. How should you prepare your brand or business for the boom?
Questions To Ask Of Your Business
Before you take steps to prepare, you need to assess your situation and your industry’s links to this economic cycle. Among the questions to ask yourself are these five:
How will a burst of business and personal spending affect us?
This isn’t limited to just buying new products with excess cash. Both business and consumer confidence have feedback loops, and in a boom that feedback is consistently positive. As confidence grows, how does that affect when people will buy, how premium their purchases will be, and how ready they are to experiment with new offerings? Will they fund their spending differently, taking on more cheap debt while rates are still low? When people eventually start over-spending, how will that first show up?
Where will shortages affect you?
Booms create shortages. In our last boom, during the 1990s, skilled labor was in particularly short supply. That could happen in this boom too, but what else affecting your industry might start getting constrained? How will you deal with that? Can you have a Plan B to maintain resiliency when it occurs?
What changes has the pandemic created for your growth opportunities?
Undeniably, the world is different now. What changes will stick? How is the competitive playing field different? Now that companies are shifting en masse from defense to offense, what does that mean for your offensive plan as you prepare for the coming boom?
What’s your plan for sudden changes and disruptions?
Clayton Christensen coined the term “disruptive innovation,” but he never thought our current time would be titled the Age of Disruption. Yet we see the term more and more. As it becomes ever-easier for entrants to upend industries, what steps can you take to become more flexible to respond? If we needed proof of the need for resiliency, the pandemic delivered it in spades.
How much should you invest in growth options, how broadly, and where?
Without a portfolio plan of how to invest for growth, it’s easy for firms to gravitate towards a bimodal strategy: lots of small bets close to the established core, and a tiny number of big initiatives. Think of your retirement portfolio; I hope your investments don’t look like that. Neither should your company’s. Rather, think carefully about how broadly to spread your investments, what the right mix of aggressiveness should be, and what payback periods are realistic. What’s your plan?
Steps To Take Now
To get ready, here are four steps you can take to get moving. Do them fast but in sequence.
Separate the Facts from the Assumptions
What are you certain of, what are known knowledge gaps, what other relevant knowledge might exist elsewhere in the organization, and what are the hidden icebergs – the unknown unknowns? Use the Uncertainty Matrix to organize your thinking and the action implications. You don’t want to run into planning with a jumble of assumptions, facts, and blind spots. Bad inputs will yield bad outputs.
Determine Coming Behaviors
How will your world be different in your planning horizon? Between the pandemic and its aftereffects, e.g. greater comfort with changing behaviors or doing anything online, much has happened to shake up business-as-usual. Add in the impacts of industry disruptions, and our vulnerabilities to future shocks, and it becomes clear that you can’t drive ahead through looking exclusively in the rearview mirror. Get specific about what will be different. Break your thoughts into categories and try to lay out at least three ways that purchase and usage behavior will be different going forward. You can use tools like Jobs to be Done to get you thinking in new ways.
Develop Alternative Futures
While we can plan for the boom, we can’t assume omniscience. The world is moving in too many directions all at once. Instead, you can develop clear alternative futures for your industry. These are not worst/middle/best case scenarios (people always choose the middle one) but rather detailed views of how business dynamics could work in very different ways. Then determine what you would need to do today to thrive in each one. Try to find what action implications might be common across these alternative futures, so you’re prepared no matter which way your industry evolves.
Create your Portfolio Plan
Now that you have a clearer view of the future, and the actions you should take now to succeed tomorrow, you can decide the shape of your portfolio plan. How many investments should you be making? How diversified should they be? What type of risks are you most comfortable taking on? How can you neutralize the biggest hazards to your success? How prepared will you be to double-down on winning bets? Know this now, before the swirl of events in a boom inevitably skews your perspective.
Booms can create fortunes, but they also produce rapid change which can trip up the unprepared. Plan ahead!
Contributed to Branding Strategy Insider by Steve Wunker, Author of JOBS TO BE DONE: A Roadmap for Customer-Centered Innovation