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Critical Thinking

2017 Will Be a Year of Market Disruption

By Critical Thinking FOXBusiness

The pundits predict that 2017 will be a year of volatility and uncertainty. It’s hard to argue with that prognosis.

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The incoming Trump Administration is poised to shake up the regulatory landscape in virtually every industry, from healthcare and banking to energy and technology. Trumponomics is also likely to bring massive change in tax and fiscal policy. That could be good or bad, depending on how business leaders prepare for and react to it.

It’s a CEO’s job to make good decisions in the face of chaos and complexity. That’s why they’re paid the big bucks. Smart business leaders learn early on that turbulent times spell opportunity for savvy risk-takers to disrupt markets and outpace competitors. For 2017, the key is to be among the disrupters, not the disrupted.   

The best way to do that is to plan often and adapt quickly. I know that sounds counterintuitive. What good is planning when everything’s up in the air? If you do it right, smart planning will help you prepare in advance for different scenarios so you can be more proactive and react more nimbly when conditions change.

There’s a French culinary term called mise en place. It literally means putting or setting in place, but what it really means is preparing the components of a dish or meal in advance so, when the order comes in, it can be completed as quickly as possible with maximum efficiency and minimal waste.

Business planning works more or less the same way by considering various strategies based on the most likely market and competitive conditions, staging plans and contingency plans, and then pulling the trigger at the optimum time.

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Successful business or strategic planning is based on three underlying factors: high quality intelligence, brutally honest assessment of your competitive situation and trusting your instincts to make the right call at the right time. 

Luck is when opportunity meets preparation. Successful people make their own luck. Smart planning is how they do it. Of course, nothing ever goes according to plan. Ironically, that’s exactly why planning is so important.

If you’re banking on reduced regulations and lower tax rates to aggressively scale your business but there are bumps in the road that slow that process down, you’ve hopefully thought that possibility through in advance and have a contingency plan ready to roll.

Likewise, if your competitor launches an innovative product sooner than expected or implements a cunning new strategy, advance planning will help you react more nimbly.  

The most adept strategist I’ve ever competed against was former Intel CEO Andy Grove. The man was a master planner, owing to a perpetually paranoid disposition. Grove was famous for coining the term “only the paranoid survive,” which later became the title of his most popular book.

When our company, Cyrix, launched a low-cost microprocessor chip that undercut Intel’s venerable but pricy Pentium II processor in the late 90s, we assumed the market leader would cede the low-end PC market, rather than cannibalize its own hefty profit margins. Not only were we wrong, but Grove had apparently planned for that scenario.

Within months, Intel rolled out a new processor, Celeron, which was simply a Pentium II chip with certain performance functions disabled. By segmenting the brands for specific markets, Intel managed to compete with us in budget PCs without eroding the profit margins of its full-function Pentium II chips.

The Santa Clara chip giant’s strategy and planning were brilliant. Ours, not so much.

We were the ones caught flat-footed. There turned out to be almost infinite price elasticity in the low-cost PC market, meaning the lower the price, the more customers bought them. Intel foresaw that and had the manufacturing capacity to supply that enormous growth. We did not. Lesson learned … the hard way.

Don’t get me wrong; there’ve been plenty of failed companies with killer strategic plans. there are lots of factors that separate perennially successful companies from the pack: execution, leadership, customer service and of course products, among them. But smart planning will always increase your probability of success, especially in uncertain times.  

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