As a youngster I really enjoyed dropping pebbles into the puddles on the street after a rainstorm and watching the ripples spread. Looking back, who would have thought that the “ripple effect” would become a metaphor for so many aspects of business and life.
According to Merriam-Webster, the definition of the ripple effect is:
“a spreading, pervasive, and usually unintentional effect or influence.”
Well, 2020 is certainly showing us that the ripple effect is alive and well in business. Both problems and opportunities result from the ripple effects of COVID-19 directly on an organization’s direct network and supply chain. There is also a compounding effect in the suppliers to your suppliers and the customers of your customers. Magnify this extra consideration because the impacts are being felt around the world.
A colleague from the U of Winnipeg sent me an interesting article on the ripple effect from COVID within the Canadian office rental space market. The article actually formed the basis for an assignment to my strategic planning classes. I am keen to see how they complete their analysis and how many ripples they uncover.
Good strategic planners know how and how often to conduct environmental scans, search for customer insights, and track competitor moves to uncover clues about possible trends or upcoming events/changes in their market. And if not in their direct market, can yours be impacted by the ripple effect from another?
Too often I have seen a focus on SWOT that is:
- too subjective
- viewed through corporate rose-coloured glasses
- not in tune with what is really happening in their direct and adjacent markets
Executives can fall into the trap that they know what customers and competitors are thinking simply by a couple of brief conversations. Discipline and digging is required to ensure the right data is being captured as part of this internal analysis (SW) to assist with capturing the external implications (OT).
Using “what if” scenarios is another useful tool to help planners identify the magnitude of impact resulting from a significant event. I prefer to use large scale events because the thinking in anything slightly beyond the current normal state is “we can handle something like that, and it won’t impact our operations.” A couple of examples are:
- What if your biggest customer finally accepted that you are substantially better than your competitors and is giving you all their business, which will double your business overnight?
- What if all your customers each reduced their purchases from you by 10 to 20%?
Working though all elements of your company value chain for these scenarios is a good, structured approach to assessing the real impact of each scenario and the ripple effects created inside and outside your company.
Great planners also seek insights from front line staff that have direct contact with customers and suppliers. Very often, these regular conversations have direct information, or enough hints are dropped, that the staff person’s spider sense is tingling about a coming event. Sometimes it is the hint of a price increase that will spur other thoughts and lines of questioning to determine the full extent of the pending event.
With the right employee culture in place the information is collected and proactively sent to the planner. If you do not have engaged employees, valuable insights may be left to wave in the wind, never to be included in important decisions. This is a valuable assessment leaders should employ to determine the level of internal trust that exists in their organizations and how much they need to encourage employees to come forward with key information.
Successful planning is not a “one and done” annual occurrence. Discipline and consistency are required to track the ripples and see where they lead. Only with regular insights being captured and shared can a great planner see around the corner or under the rock that is under the rock.
After all, if a big rock is dropped into your industry will you be ready to respond to the ripples or will you be quickly pushed to the edge of relevance?
P.S. I have had wordpress issues for almost a week. I am still waiting for one of their experts to respond and help me solve them. Oye Vay!!!