Thursday, 26 May 2016
Zoom out to understand your process
by Marcus Powe, RMIT's Entrepreneur in Residence
What on earth happened? Have you ever wondered, “How come I did not see that”? The reason for this is often you are too close to your process, product, service, device or instrument and have not zoomed out for some time. If you do not zoom out you will miss the big picture, the driving forces and opportunities.
Let’s zoom out and use the PESTTG analysis. The PESTTG analysis is comprised of Political, Economic, Societal, Technological, Mega Trends and Globalisation Driving Forces. They are dynamic forces that create and destroy opportunities instantly and constantly. The Driving Forces are connected and a change in one Driving Force will affect all the others.
Entrepreneurs stop, think and zoom. If you can zoom out and see the whole game, and your competitors can’t, who do you think will win?
The PESTTG analysis is forcing you to stand back from your organisation, stand back from the market place and out into the Environment. Each Driving Force creates an Industry Critical Success Factor (ICSF). Industry Critical Success Factors are those things that you need to meet or exceed in order to play the game. For example, an ICSF for a restaurant that sells alcohol is that it must be licensed in order to sell liquor to the public, if you don't have the licence you cannot open your business.
The Forces – Miss one and you will be blown away.
Political: These are the rules and regulations in the market place in which you are playing. If you don't know the rules, don't play. The ICSF is your ability to comply with all the rules and regulations. Most government policy (and change of policy) is discussed prior often for months and in some cases, years. A smart player will get ‘connected’ and move from a reactive position to be proactive and try to either avoid or embrace the changes proposed by government a lot earlier than the competition.
Economic: Economic Driving Forces consist of gross domestic product (GDP), interest rates, disposable income, discretionary income and other key economic indicators. How is the economy performing in your market(s)? Up, down, flat or recovering, or is it about to burst? The ICSF are concerned with the notion of Value, and more importantly, consumers’ notions of value. People, like Driving Forces are constantly changing, and so too is their notion of value. Now there are two sorts of Value. Tangible Value is where you compete on price and Intangible Value is where you compete on service, quality and innovation.
Societal: Societal Driving Forces are all about fads and fashions, what’s hot and what’s not, what’s in and what’s out. The ICSF of Societal Driving Forces are all about setting the trends, fashions or fads or keeping up. There is nothing wrong with either of these two strategies. Both have their advantages and disadvantages.
Technological: Technological Driving Forces are all about faster, lighter and stronger or a convergence of these. The ICSF of the technological Driving Forces are in many ways similar to those of Societal Driving Forces – either set the trend or follow it.
Mega Trends: Mega Trends are those things which, at large, society is doing. These include living longer, having an improved quality of life, adopting new age medicines and health practices (the wellness movement) and being more aware of security, both personally and nationally. The ICSF are either is reactive or proactive. If you fight (react) you will lose.
Globalisation: Globalisation is a topic that upsets some people, though it is nothing new. If we take a look at the great civilisations throughout history and remember the Egyptians or the Romans, it is clear that globalisation has been going on for thousands of years. They globalised – or colonised – the world. The internet and social media have just speeded things up. The ICSF's of globalisation are will you be proactive or reactive?
The slightest change in any one of the Driving Forces can irreparably damage you or your organisation or create a wonderful opportunity. If you are always aware of this environment, you have a greater chance of surviving and thriving in the market place. The more attuned you are to your environment, the greater your level of success will be in any current and future ventures.
Use the force, use the force!