An organization must identify if the change they foresee is strategic or operation and respond accordingly
The global economy is witnessing a massive change cruising in from all sides. Disruptions and dynamics induced by it have impacted the business environment massively. On one side, we have a major uncontrollable shift manifested by the unprecedented global pandemic, and on the other side, we have technology evolutions, such as digital transformation, marking another firm's footprint over the last few years. And there is more yet to come.
A business enterprise needs to brace up to tackle these revolutions to survive and flourish. Most of the time, the effort must be on piggy-backing on this wave and turning it to the advantage of an organization. However, what we see today in terms of evolution is very similar to the Strategic Inflection Point (SIP). It is characterized by changes from all sides, compelling an organization to adapt to thrive or perish.
Business models across the industries are staring at a massive revolution at the SIP. Many of these changes are dictated by the market forces where the end-customer is becoming more tech-savvy. There is a domino effect, but that seems to be in reverse order of progression, or we could say it's regressing. Since the customer adopts the new technology and thereby shows a renewed buying behavior, enterprises across the industry have no choice but to embrace a complete business transformation.
Business transformations are seen both at the strategic level and the operational level. Let us look at a real-life example to understand this better.
There are two major types of responses, viz:
- Disruption that impacts day-to-day operations and requires operational response
- The disruption that has a more profound business model level impact and requires a strategic response
Software organization bring innovative software solutions to automate, optimize, and control different business processes in various industries. At this point, their target market faces a disruption that marks a disturbance in the product firm. The intensity and nature of turmoil the target industry or market faces determine the intensity of change for a product firm.
The derivative change witnessed by a product firm due to disruption in its target market determines if it will be an operational change or strategic one. A functional change in a product firm comes from its operating environment, primarily from its product life cycle. These changes are essential operational milestones to which a product firm must respond to enable it to complete its required tenure in the market. It allows a firm to realize its revenue goals connected with the product and the overall business.
A strategic change is a disruption that requires a shift in the business model. The new business age presents a variety of disruptions that may affect the core of a product firm. It needs businesses to relook at their business strategy and adapt to the plans of the New Normal.
The combined forces of these disruptions also help build competitiveness in the business. It enables enterprises to create an edge over their peers in the industry. While a product firm braces up to respond to the change, it must keep business fundamentals intact to stay afloat. The internalization of transformation takes time, and the business revenue and profitability cycles should remain robust in the process.
An enterprise that confronts the forces of change and disruption may need an ecosystem of enablers to ensure that the transition does not affect the high performance that it has been delivering until the change presents itself. For instance, it may need to re-evaluate its partners and stakeholders' ecosystem to ensure that they are poised to support its response to change.
There are several parameters against which it can evaluate its business environment to ensure it is robust and up to mark to match the transformation velocity. Traditional partners who are used to doing the business in a particular way can seldom brace up. If required, a software product firm must look to rework its partnerships in its enormous interest.
An organization must identify if the change they foresee is strategic or operation and respond accordingly. Moreover, they must build the right partnerships, which will help play the right role. Business leaders must keep the fundamentals of their enterprise in place even while they evolve.
The author is CEO & MD, Cybage