“FFS Tristan, how can that work? If I make 1% changes every day I’ll have a different business in three months.”
Trump – Brexit – Covid-19 – War in Ukraine…
It’s trite to suggest that these mega-events are on the same scale as decisions you and I make in our everyday lives. What they have in common, though, is the fact that they were readable. Yes, there was a degree of uncertainty before they actually happened and the timing was a bit vague, but the likelihood of these things happening became slowly more certain.
The lie of £350 million a week going to the NHS and 100,000 troops standing on a border probably signalled the thing happening even if you didn’t want it to.
I don’t know of anyone who had a contingency plan in place for any of them.
One or two companies had a scenario map, but not a plan.
So, with the benefit of hindsight, what happens next?
The signals of change are visible for those who choose to look. room44 looks all the time and what we do is connect less obvious trends that are signalled ahead of time.
Let’s have a look at a few UK-specific signals:
- Some EU countries are dependent on Russia for their supply of gas. Russia is at war: it will take a long time to recover and while it does it will increase its export prices for energy supply.
- The economic sanctions against Russia will have wider ramifications that to prevent Russians from buying western goods.
- Ukraine’s output of wheat is devastated for 2022 and for an indeterminate period into the future.
- The cost of diesel fuel in the UK has jumped from something close to £1.20 a litre to £1.90 over the last few months and fuel prices are on the rise anyway. £3/litre won’t be a surprise.
- All UK local authorities have targets to hit that will see an improvement in air quality.
- Charging per mile is on the legislative agenda for motor vehicle journeys.
- UK new building planning permissions now come with environmental improvement requirements. For commercial properties, it is often necessary for occupiers to commit to an ongoing programme of carbon reductions.
- Urban domestic planning permissions do not automatically stipulate residences need car parking spaces as part of the deal.
- Food prices have risen since COVID. Some foods aren’t always available. 15% thgis year is forecasted.
- Bank interest rates are rising.
I could go on.
Everyone reading this can probably see ways in which these factors will affect the cost base in their business and the options to mitigate the effect aren’t so many now. It’s going to be very difficult to hold your overheads steady through cost management, which gives you two choices: sell more or sell for more.
The benefits of incremental marginal gains
One of the roles I play when working with clients is to bring insight to the conversation on a regular basis. The benefit from seeing trends laid bare is to see them in the context of your business.
Viewing shifts regularly gives you the opportunity to aggregate the information and to adjust your working assumptions in small ways, rather than waiting for the big market change to hit and force you to react.
We apply the benefit of marginal incremental change. The idea that you can step forward by making little adjustments to the way you do business is proven to work time after time.
It’s an odd conflict of opinion that we’ll buy into Toyota Business System, Eric Ries or ‘Lean’ principles but the idea of making 1% improvements we can see for ourselves doesn’t get the same traction.
Hence the client who said, “FFS Tristan, how can that work? If I make 1% changes every day I’ll have a different business in three months.”
Future thinking. Future proofing. It’s what we do.
If you want to talk about this, here’s my diary. Pick a time that suits you.