How much time do you spend thinking about your business’s future? Chances are, not much. For the most part, putting out fires and taking care of the day-to-day tasks consume most of your time. But to be strategic in your business, you must discover how to spot future opportunities as soon as possible. Yes, you do need to identify the immediate forces at work, but you also want to think about and plan for the future operating environment and industry trends. The value lies in anticipating change before it happens, instead of mindlessly reacting to whatever comes at you next. This is especially true in our modern world where the life cycles of goods and services are increasingly short. Technology and instant word-of-mouth by the Internet have created an “unpredictable landscape of instant markets that require new levels of speed and agility”.
Smart companies have learned how to adapt to the changing business landscape. David H. Freedman of Inc. magazine identified the “spin-up” trend in early 2005 when Apple launched the iPod and handed that company its first runaway hit in years. And we’re likely to see history repeat itself with the launch of the iPhone later this month. The basic idea is simple: Instead of thinking in terms of expanding the company as a whole, Apple has focused on new, fast-growth, “spin-up” business units with their own identities – even if it meant letting other parts of the company languish.
Hewlett-Packard’s photo-printer business likewise exploded, and the same approach works in other industries too. Savvy restaurateurs create entirely new concepts and occasionally even close or reinvent existing ones when their cachet fades. Smart fashion and sporting goods firms whip up new independent brands to “surf the fad of the moment”. According to Freedman, the “trickiest part of the spin-up is to have the flexibility to bring a promising new aspect of a business quickly to the fore without worrying about what gets left behind.” Unlike traditional businesses that tend to be so fixated on preserving the same core business that potentially hot new markets are poorly served (if at all), a “spin-up creates a new brand identity”. This way of thinking about a company encourages you to see the business not as a seamless whole but as a “fractured conglomeration” of potentially independent units.
It’s important to take a high-level look at your market when you need a complete picture of your company. Consider these steps:
- List the three to five main markets you compete in. Also list one or two that are new potential markets.
- For each market, determine if it is growing, shrinking, or staying the same.
- Determine the size of each market.
- Determine if serving the market presents an opportunity or if the market is not worth focusing on.
- Summarize the markets you want to focus on in your opportunities section of your SWOT.