Lessons from the Crimea?

Recent political events in the Crimea erupted rapidly and appeared to have surprised Western Governments. Hindsight will no doubt show that the Russian annexation was predictable, if the decision makers had heeded the warning signs that were there to be seen. Political events often change quickly and apparently unpredictably, but in fact this is rarely the case, as vigilance in the observation and analysis of indicators can usually predict the likely chain of events. Can the commercial world draw lessons from that of the political?

In the commercial world, change may be regarded as the only constant. Predictable change can be managed, but it is the unpredictable change that usually causes problems. For the commercial manager, responsible for producing profitable income for a business, trying to anticipate the future , will always be difficult. Changes in demand, resulting from fashion or technology are just two of the problems that confront the commercial manager. But there are also events which may not be obviously predictable, but which may give rise to new opportunities or alternatively, produce unexpected threats to the income supply or to business operations in general.

Commercial managers are responsible for producing the necessary profitable income for their business. As managers, they will be assessed on how much income they produce and how efficiently they mange and use their resources in its production. But to be effective and to maximize the opportunities for income , commercial managers need to be aware of the threats and opportunities that continually arise from events and developments in the business environment. Opportunities and threats may arise internally from within the business, as well as externally from the business environment.

Internal changes in a company’s performance and capability tend to be those over which the commercial manager may have some control or influence. However, the same cannot be said for the majority of threats and opportunities which stem from external factors that directly affect the business environment. Companies may initiate what is called a PEST analysis, to assess the effects that Political, Economic, Social and Technological factors have on business operations. But to be comprehensive, any analysis of the business environment should also include assessments of competitor activity, new competitive products ,as well as the business and financial strength of customers and the customer base as a whole

While business and general media may be a prime source of information that outlines potential threats and opportunities in the wider business environment, some emerging trends in selected internal performance measurements, may also give timely alerts to potential change and development in the organisation’s specific market. Such indicators are likely to be directly related to sales performance and analysis. Variances from projected levels of enquires in terms of number, type, market segment, location and product group may all indicate developments in the business environment providing both threats and opportunities. Similarly, other useful indicators may also be derived from changes in buying patterns from new and existing customers. Ideally, commercial managers should delegate specialists to monitor and analyse the potential threats and opportunities of the organisation’s business environment. However, they must be prepared to make decisions and to act on the advice of specialists and not ignore them.

Producing the business plan, outlining how investment and resources are to be used profitably, is the commercial manager responsibility. As part of the planning process it is prudent to prepare separate contingency plans to cope with various possible eventualities. This is especially important for large organisations, as their size and organization tends to preclude a rapid response to changing conditions. Whereas, smaller companies tend to have greater flexibility, enabling a faster reaction to changed conditions and opportunities.

What actions should the commercial manager undertake to prepare for the ”unforeseen” event?

* Continually analyse the business environment for threats and opportunities.
* View the trends, identifying potential indicators of change.
* Consider the possibilities
* Outline the best and worst scenarios
* Assess the probabilities of particular scenarios
* Prepare contingency plans to meet the scenarios with higher probabilities
* Maintain the necessary resources to meet contingency plans
* Identify the indicators that would initiate particular scenarios.
* Decide which indicators might call for immediate action
* Be prepared to act quickly

In a rapidly changing world, the successful commercial manager must be vigilant in identifying, observing and understanding those indicators that give rise to both opportunities and threats. The timely enacting of contingency plans can mitigate problems and exploit opportunities.

© N.C.Watkis, Contract Marketing Service 7 Apr 14

April 14, 2014   Posted in: business development, business efficiency, Business Marketing, business performance improvement, business performance indicators, business performance management, business performance measurement, marketing management, performance management