Yesterday I commented that the business world is changing more rapidly than it used to. That’s obvious to all of us. The implication for companies is that reacting to change is no longer enough for survival. For a company to survive – and certainly to thrive – it must proactively adapt to change. It must spot trends before and as they emerge, and innovate in order to enjoy success in the future.

How can a business do this? It isn’t as mysterious as having a crystal ball. The great innovative companies that I’ve seen do it through these four tools:

1. They use customer insight and competitive intelligence tools that work, and they try new ones as they emerge.  (I’ll write about some cool new competitive intelligence tools in my next blog.)
2. They have internal and external feedback mechanisms to track customer and employee satisfaction and capture ideas.
3. They have structures that are lean and nimble so they can innovate and implement new ideas quickly.
4. They are open to the possibility that they don’t know everything, and build structures to allow them to tap into market movements that are difficult to foresee.  One tool for this is a Gambling Fund.  I’ll also write about this in a later blog.

The media and business community love stories of rapid growth. But this Canadian Business article sheds some light on the downside of overnight success – through interesting examples like Krispy Kreme and Megan Fox.  Turns out that business trends are being adopted – and becoming extinct – faster now than in the past.  A study from Wharton shows that it isn’t the products that are the problem – it’s the speed with which they grow. The study found that once something reaches a certain level of popularity, people no longer want to be identified with it. They’re happy to join when it’s on the upswing, but loathe to do so on the other side of the curve.

The message for business: don’t turn your good product into a trendy item that may have a great ride up, just for the glory of it – because it may mean an unnecessary and untimely ride down.

Yesterday we did a Growth Strategy Session with an entrepreneur who has a very successful business in the fashion industry.  She’s spent the last 12 years building up a brand, reputation, and enviable client base. But now she’s bored!  She’s mastered what she does and is looking for a new challenge.  The problem – she’s identified 4 different opportunities for growth and can’t decide which one to pursue (she’s smart and experienced enough to know that she can’t take on all 4).  We see this problem with a lot of early-stage companies and entrepreneurs: too many opportunities and no focus, which results in resources being spread too thin and no success in any area.

Here’s what we did to help get clarity on which opportunity to say YES! to, and which to say NO to.

a)      Define goals.  For the fashion industry CEO, it was the classic entrepreneur goals: autonomy, impact, challenge, flexibility, decent financial income, and the ability to build an asset that is one day saleable.

Whatever your goals, everything you pursue has to start here.

So lay out your goals and constantly refer back to them when evaluating opportunities.

b)      Define each of the opportunities.

1. What is the business concept?
2. Who is the target market?
3. Why do they need it / why will they buy it / what’s the value to them?
4. What will it take (time, money, people) to deliver the concept
5. What are the economics of the concept
   • Revenues minus Costs equals Profits

You may not have all the answers to economics question – that’s ok, do a thumbnail, highlight what numbers you’re least certain about, and do follow up research if you need to validate your numbers

c)       Evaluate the opportunities relative to your goals.

Last night, of the CEO’s four opportunities, it quickly became clear that 2 would be a huge amount of work, for meager returns.  It was easy to toss these out.  A third offered reasonable potential returns, but the risk of it not working out was high.  The fourth looks very exciting.  It is clearly differentiated, the market opportunity is strong, the company is in a unique position to be able to deliver it.

This was a great process for the CEO.  She had come into the session with a ‘gut feel’ that the opportunity we eventually identified as best was the best, but she didn’t have any way to articulate that or quantify it.  And that’s a challenge in the business world:  intuition is valuable, but even more so when you’ve gone through a process to validate it.

So the next step is to figure out the steps to pursue that opportunity.  This is where the CEO wanted to be all along, but before we went through this process, she didn’t have the ability to commit to this one opportunity and throw her all into it.  Now she does!

If your organization faces numerous opportunities, I encourage you to go through this kind of process to winnow the ones that aren’t worth your while, and to help you give it your all to the ones that do.