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Understanding the Speed of Market Change


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Managing change is like a Formula 1 race. To the person in the driver’s seat, goals remain distant even when the pedal’s on the metal. But to the spectators, the acceleration is violent.

Change is Subjective

In the laboratories, innovations take years to move from the drawing board into the market. The detail, the peer review process and the criteria for sound empirical progress make it slow. But entrepreneurs mostly notice the innovations that already crossed over and went viral in their niche. To them, it seems as if everything changes faster and faster.

On average, new technology takes 20 years to reach a market of substance. It did twenty years ago, and it does now. However, the number of inventions and innovations is growing exponentially. More and more innovations have reached the market almost simultaneously, and even more will arrive in the future. It’s the sheer number of innovations that’s fooling us. It’s not the speed of change.

At the races, you experience speed when the race car is driving in front of you. The moment is gone in a second, bringing fleeting sensations or roaring winds, screeching tires, burning rubber, and heat. In contrast, you’ve seen the car approaching for some time, and then you watch it slowly disappear in the distance.

Market disruption is like that brief passing moment. There’s a complete process preceding and following it. The role of Futurism isn’t to predict what follows. It’s to find early warnings in the process before the disruption. Like finding the first moment the race car drives into vision. [inlinetweet prefix=”” tweeter=”@barstweets” suffix=”#future #disruption”][/inlinetweet]Futurism is tracing the trajectory of possible disruption backwards.

The early signals of change are waiting for us in the laboratories. If we meet change there, we’ve created time to bring our business up to speed, before the wave of disruption hits. The slow progress in the labs grants us time to prepare.

Market Change is Situational

Contrary to the race track, it’s not just racers and spectators on the streets and roads. Other participants join the traffic there too. Pedestrians, cyclists, car lovers and haters, people of various ages and abilities, with dogs and bags and cellphone conversations. Each of them has a different perception of the speed of the race car, depending on their relative position, speed, experience, and attitude towards speed. Because the whole system is moving, relative change rates do change.

When your business is tech savvy, you’ll have a different perception of change than laggard competitors have. While when your customers are geeks, they may think you’re the one who’s lagging behind. Change rate isn’t objective, it’s a perception, that depends on your unique situation. Therefore, the only one who knows the rate of change impacting your business is you.

Calculating the Change Rate in Your Situation

You probably review management information periodically: profit, loss, ROI, churn, the sales funnel, and so on. If you’re like me, you’re also interpreting market trends: the percentages of new entrants, bankruptcies, takeovers, joint ventures, new customer behaviors, and preferences. Those are the factors that also underlie the calculation of your perception of change.

Just list those factors you usually consider, include trends and developments, and answer two questions:

  1. How often did a factor change in value in the last three years?
  2. How often haven you take new and different factors into consideration during the same period?

A rough count is enough. Here is how you interpret your answers:

  • If more than 50% of the elements hardly change at all, you’re in a static situation
  • If more than 50% of the factors change little, but you have to consider new and other factors each time you’re making this decision, the situation is dynamic, but still rather predictable and manageable
  • If more than 50% of the factors change very often: dynamic and surprising
  • If more than 50% of the factors change very often, AND you have to consider new and other factors each time you’re making this decision, the situation is turbulent

Change Rate and Strategy

Each cell of the matrix has its strategic counterpart. In stable, static markets, competitive advantage flows from positioning, scale, and aptitude in making or delivering an offering. In other words, you must be really good at doing some particular thing.

In dynamic markets, companies must be superb at learning how to do new things. You have to experiment rapidly, frequently, and economically—not only with products and services but also with business models, processes, and strategies.

Alternative strategic paths, showing switch moments and endings of effect

Finally, in turbulent markets, a policy framework is advisable.

It takes several alternate strategies, that —depending on the changes in question, stop or begin to be effective. Preparing for all policies and monitoring tipping points carefully, allows companies to keep up and profit from turbulence.

Turbulence isn’t to be feared or detested. It’s a chance to realign the business and make it better. Burning platforms make change easier to implement, but the course is harder to set. I hope that this post has helped a bit to put change rates into perspective.

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