A new way of looking at our business environment is here. It is no longer worth analysing what is happening now or has happened in the past. Only if we try analysing what is going to happen can we anticipate our customers’ needs when they request products and services. Because they will want them NOW. They cannot wait for us to design them and, if we are not able to meet their demand, they will look elsewhere.
The professors Antonio Dávila and Patricio Rojas have studied the new way of looking at the market, the Landscape Monitor.
To quote the economist Josep Schumpeter (1893 Moravia-1950 Salisbury): “Quite often capitalism is understood as the administration of existing industrial structures, when their essence is how these structures are created and destroyed”.
The essence of the market is to understand how value is created and destroyed, how businesses spring up and then disappear. Managing is intrinsic to them. We have to realize that, until now, management has focused on managing and not on creating, in other words, the focus has been on implementing the strategy.
We use our companies’ information systems, in many cases, not really as a competitive advantage, but as a tool that makes the work of managing our business easier, of implementing the strategy.
Our ERP indicators indicate how we are doing and will turn red when there are deviations from the tolerance margins that we have set as a reflection of the monitoring of the business plan.
The strategy, in most companies, is based on an insular idea, looking at what happens within the company, in the coordination of the different departments and levels of the company, in maintaining the Status quo, knowing at all times what happens when we have sold a product in a branch and the margin reported to us.
However, we have no idea that in the building opposite, there is a start-up that is developing a business that will eat 30% of our cake in under two years.
This is what is happening to the traditional market with Amazon, Alibaba, Uber, Airbnb, Tesla., not to mention the “veterans” such as Google, Facebook…
Furthermore, if something sets these “new kids on the block” apart, it is that their strategy is based on technology, in other words, they exist thanks to technology and use it to create business. The rest however, with sometimes much higher investments in technology, use it only to manage. And sometimes, being a brake more than an accelerator of the business.
Therefore, the new competitive advantage is not in developing the strategy better or more quickly than the competitor, it is about realizing in advance what is coming, identifying the new business opportunities and putting them into practice before others, with the ability to execute.
Here’s the thing: How little we look outwards. And if we do, only at our clients and competitors. Not much beyond that.
Do we know what our client’s client thinks and feels?
In addition, when people are hired, their talent is used merely in the excellent execution of the strategy, but their creativity is rarely used efficiently and very little of what these people bring and contribute as a culture.
The company’s culture must change from introspection and isolation to being a “sensor” of everything that is happening around it, in order to take advantage of it for their own benefit as well as society’s, anticipating and seeing the opportunities that will arise before they happen. A holistic and not a reductionist method of perception of the environment is sought.
Here is where the competitive advantage is: In anticipation, in the need to see change before anyone else, in foreseeing.
In order to change the culture and adapt to the new context, companies need to rely on new models.
The models from the 60s don’t work anymore. For more than a decade a group of Swiss researchers have been developing the Landscape Monitor model, a system based on analysing the ecosystem in which the company does business, both inside and outside its walls.
In the words of Dávila and Rojas:
“The Landscape Monitor offers a framework to map the environment in a way similar to how the Balanced Scorecard and other management systems monitor the inside of an organization. Although it shares some characteristics with existing management systems, it is unique in its ability to perceive the evolution of the external environment. The Landscape Monitor moves the information through the organization at the same speed at which the world changes, identifying weak signals and allowing the members of the organization to determine their relevance. This enhances the managers’ perception capacity, helping them to detect in advance the changes that are coming and the emerging trends.”
The Landscape Monitor is nourished by the information and experience of all the people of the organization, proposing a kind of crowdsourcing to collect and analyse the opportunities and threats of the environment, which would otherwise go unnoticed.
The design of this model is specific to each company but, basically, it is based on the application of four common principles, namely:
MAPPING THE ENVIRONMENT
In the same way that process maps are made to identify indicators and understand the internal management levers, analysing the environment requires a map.
- Who are the actors that create opportunities in the environment in which the company does business?
- What actors can inspire you to change your technology or your business?
The map helps to share perspectives that were not previously clear.
USE AS MANY EYES AS POSSIBLE
A company’s wealth is its people. This is always said but it is rarely applied.
We should not only be interested in what the person does in the company, but how they spend their free time, how they have fun, what they listen to, what they watch, because that is a reflection of what is outside.
- What people in the organization can provide interesting observations and analyses of the environment?
- Is there a group interested in innovating?
An example of this is in the Google project groups, where workers are free to manage themselves, in which leadership roles are taken on by the most appropriate person at all times, which does not have to necessarily be the person who holds the most senior role.
USE TALENT TO CREATE
- In the organization, is it explicitly communicated that observing and analysing the environment is part of the job?
- Do people who observe the environment meet at least once a month to share their ideas?
- Is time spent analysing what external actors do and the opportunities they generate?
The paradox when we hire talented people is that we use talent to implement the strategy and we do not take into account that they can also observe, analyse and project the future. Applying the Landscape Monitor allows you to take advantage of their ability to create.
CAPTURE INFORMATION FROM BOTH PUBLIC SOURCES AND PERSONAL EXPERIENCES
- What sources of external information will help you understand the actors in your environment?
- How do the people on your team communicate their experiences and observations of what is happening around them?
Analysing all types of information in real time and the perspective of having been observing what is going on outside for months, gives us the feeling of knowing what is really happening out there.
Information, both quantitative and qualitative, gives us a more accurate view of reality than we have seen until now with our traditional methods of analysis.
Ultimately, the companies that don’t adopt new methods of analysing the reality in order to adapt their offers of products and services, anticipating and not tailgating others, are condemned to a slow death.
Going back to what Schumpeter said, the future means creating and destroying. But we must be the actors and not passive subjects, as nobody is going to “re-create” but they can certainly destroy us.
Sources: Antonio Dávila. “Look Outside Your Firm: A Tool to Sense What’s Coming: The Landscape Monitor”, IESE Insight, April 2015.