There are many different ways of viewing a business. Some view it as an empire, some as a culture and some view it as an organism. Those who view it as an organism tend to have greater success when facing external pressures because they understand that their business is constantly changing and nothing stays the same. This is tricky for many business owners to grasp, especially as human beings are naturally oriented to reject change. So, if you’re a typical business owner, when do you need a change in strategy? Read on to find out.
First and Foremost: When You Understand the Potential Dangers
Strategic change needs to be carefully thought through for one simple reason — overseeing business change can lead to destructive effects on productivity, efficiency, and long-term performance when you haven’t supplemented the change by using change management techniques. According to inpulse.com, the stability of your employee experience is essential to avoid reasons for turnover, managerial missteps, and low productivity caused by confused employees. Before you change anything, make sure you understand the repercussions.
In Response to Competition
You should have a good awareness of your competitive advantage, as well as keeping your eyes on all your competitors’ moves. If you have good reason to believe that one of your competitors is catching up with your advantages, you should seriously think about changing your strategy to either take away that competitive advantage or advance your own so that they are perpetually playing catch-up. You might also need to change strategy in response to a new player who disrupts the industry and enters the market in a different and threatening way.
In Response to Technological Shifts
Technology evolves at hugely rapid rates. You need to be aware of significant technological advances, as these can either destroy or enhance your competitive advantages. If they enhance your pre-existing advantages, a change in strategy is not always needed. You can just take on this new technology and use it to your advantage, changing either one department or a few key team members. However, when technology effectively gives competitors the potential to equal your advantage, your competitive advantage is either destroyed or no longer sustainable, which means you should think about changing your strategy.
In Response to the Regulatory Environment
The regulatory environment changes relatively frequently. It is something which you should always be aware of but keep an eye out for significant changes that level competitive advantages and impact your industry on a wide level. Sometimes these regulatory changes can eliminate the incentives that you offer customers, in which case you have little choice but to change path and build up competitive advantages in different directions.
Socio-Economic or Geopolitical Events
There will be some events that take place on a national or international level that can greatly impact how you run your business. A recent example comes from JPMorgan, who had a leaked memo earlier this year advising a change in strategy away from fossil fuels in order to avoid reputational damage due to global changes in climate change awareness.