Ride The Rogue Wave!
How do you prepare your business for black swan events like pandemics, wars, supply chain shocks, and out-of-control inflation? The book “Rogue Waves: Future-Proof Your Business to Survive and Profit from Radical Change” by Jonathan Brill explores how to prepare for and profit from systematic threats and turn them into outsized opportunities. The book includes tools to help:?Run and understand your current state and the forces that keep you stable?
To respond to radical change, you first need to know your current state. Many organizations collect past data to predict the future, but they don’t test the present. If your present model is wrong, your future predictions will also be wrong. In step one of Jonathan Brill’s rogue framework, leaders need to reality test their current state. Brill recommends asking questions as quickly as possible to challenge your assumptions and discover what you don’t know.?
A lack of information about a potential customer segment might indicate an over-served market. For example, when the US outdoor gear retailer REI researched Millennial’s attitudes towards wilderness equipment, they were surprised by a lack of information. They rightly suspected a market gap and piloted a new sub-brand that addressed a whole new audience. The second step of the road framework requires execs to organize or model the forces that keep your system stable. For example, when COVID-19 hit, Amazon hired 175,000 employees in just 90 days to handle the increased demand for shoppers stuck at home. Amazon could act decisively to scale its delivery capacity because it had a comprehensive system model with detailed scenario planning. Amazon could do this because they employed the highest number of economics PhDs in the United States to run simulations and prepare for any possible future. Leaders might not have an army of PhDs, but with the right tools, you can use simulations as a risk-free way to generate and analyze a range of possible futures. This is how Amazon knew to hire more at a time while others were firing millions.
The next step of the rogue framework is to uncover opportunities from future threats. First, identify trigger points that are sensitive to change. You can nudge these triggers towards your advantage through four strategies. Either accept them and move forward, avoid them with enough foresight, mitigate their damage with resilience, or experiment and innovate around them when you can’t do those first three. Make failure cheap and carry out small-scale experiments. Conduct three types of tests at the same time.?
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A well-balanced portfolio of experiments increases the probabilities of success and minimizes the downsides of failure. How do you spot the next rogue wave before your competitors do??
First, identify the most prominent economic, technological, and social undercurrents that could impact your business today? List the highest impact changes in politics, markets, and consumer behavior they could cause. Pay attention to events that could yield two or more undercurrents to interact. For example, trends like changing demographics in the West, the rise of Asia, and the impact of emerging technologies are some of the most significant impact events this decade.
As birth rates decline in highly developed countries, people with advanced degrees will be working-age people. By fall by 2030. The only major country with a labor surplus will be India, and the surplus will barely cover the shortage of 1 million college graduates in California alone. Wealth production and power are also shifting from Europe towards Asia. By 2035, over 2 billion people will earn the global equivalent of $35,000 per year, and 87% of this growth will be in Asia. Build systematic awareness throughout your organization about these changes so that everyone can scan the horizon for critical indicators of when they will occur.
On average, companies are disrupted by rogue wave events like wars, financial crises, and natural disasters every seven years, bigger and more frequent. Rogue waves are not only threats. They also contain immense opportunities. For instance, the most successful businesses like Amazon see this pent-up enforces and prepare themselves to ride the wave. With the proper frameworks and organizational processes, you can be prepared to ride the rogue wave.?
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3 年The best way to maximize your chances of success in any kind of economic climate is through Category Design — the design of an entirely new category (market). Great roadmap in the book, Play Bigger: How Rebels and Innovators Create New Categories and Dominate Markets.