In today’s environment, businesses need to constantly assess and re-assess how the enterprise creates value for the end customer. This is particularly relevant today, in an environment marked by rapid disruption, volatility, and innovation. Businesses cannot rest on their laurels for very long, or else they risk being disrupted out of the marketplace entirely.
Due to this, businesses should be periodically looking at transformation within various elements of their business as opposed to just incremental changes. Incremental changes are not enough to win in today’s environment. The parameters of winning involve sustainable growth and an evolving operating model which adjusts to how optimal value is delivered to the end customer. To do this involves analysis of the underlying strategy compared to the customer’s value preferences and external environment, understanding existing and future execution capability, and then making necessary adjustments that matriculate down the organization at the process and system layers.
As a transformation executive, the one thing I enjoy is that every day and week usually brings a new challenge and I’m forced to stay agile in order to be effective. This has forced me to stay outside of my comfort zone and develop an eclectic skill set to execute in a wide variety of scenarios. In addition to my transformation experience, those of you who either know me personally or have been following me for a while know that one of my talents is in the investing/trading space. Based on that, I have found correlations between the skills required of an effective investor/trader and that of a successful transformation executive that were particularly of interest.
- Successful investing and trading involves a mindset which is based on data, triggers, and devoid of emotion. Strategy transformation has the highest probability of success by having the same characteristics. Both are only consistently successful by exhibiting patience.
- Successful investing and trading is all about effective management of risk and capital. This involves assessing the available opportunities in terms of risk/reward, time frame, and ROI and also developing clear entry and exit criteria before taking the trade. In the transformational situation, developing a potential list of significant changes across business, product, or operations should be accompanied by projections and the same predefined exit criteria. That way, when things do not go your way immediately after the business change (there often is a period of negative metric performance, stabilization, and then the true performance emerges), you can remain unemotional at monitoring the performance thresholds before taking any rash actions and preventing the change from coming to fruition.
- When a trade does not go in your favor immediately, you have three choices…cut the loss, ride it out, or average down in the trade. You would cut the loss if the threshold is triggered, ride it out if it does not hit your pain threshold, or average down if it has not hit the threshold and the leading indicators are indicating a reversal. Transformation change monitoring can be in a similar fashion. If the metrics hit your predefined threshold and indicate the trend will continue in the negative, cut your loss and reassess. If your exit threshold is not touched, but performance looks to be sideways, then exhibit patience and let your change stabilize. Lastly, if the performance has not hit the threshold and some of the leading indicators show a potential reversal AND capital is available, you can average down and increase the potential ROI of the change.