Can you be vigilant to forces of CHANGE? Know more about this return-driven insight! [Tuesday: Return Driven Strategy]

From the desk of Miles Everson:

Welcome to today’s edition of “Return Driven Strategy (RDS)!”

I hope you’re having a great Tuesday so far.

RDS is a pyramid-shaped framework with 11 tenets and 3 foundations. When applied properly, these principles help businesses achieve their organizational objectives.

Today, let's delve deeper into the 2nd foundation of RDS: Vigilance to Forces of Change .

Continue reading the article below to better understand the importance of this foundation in establishing successful businesses.

Can you be vigilant to forces of CHANGE? Know more about this return-driven insight!

Are you familiar with the meaning of the word, “Delta” ?

In the Greek alphabet, Delta is the fourth letter and stands for “change.” When you write it in uppercase, the symbol is a triangle.

According to Professor Joel Litman and Dr. Mark L. Frigo in their book, “Driven,” the backdrop of the Return Driven Strategy (RDS) framework is a triangle for this very reason.

After all, change is the second of three foundations that return-driven firms should consider with every RDS tenet and in their overall strategy to achieve high returns and wealth creation.

Besides, business environments are incredibly dynamic!

However, high-performance firms take advantage of opportunities and avoid threats in each of the tenets that are brought about by changes.

Historically, forces of change can be viewed through three key lenses as per Professor Litman and Dr. Frigo:

• Scientific and Technological Breakthroughs

  Change can be seen in scientific and technological breakthroughs.

  For instance: The invention of the printing press. The advent of readily copyable and thereby available newspapers and books changed the very fabric of society.

  Additionally, new businesses cropped up as the new technology took hold because new services were required to meet this technological breakthrough.

  Other examples of change in this area include railroads, automobiles, the personal computer, the Internet, wireless networks, and broadband connectivity.

  As these technologies arose, a ripple effect occurred through each of the tenets of RDS. New ways of understanding customer needs took shape, along with new ways of fulfilling them.

  New customer groups also became targetable, with new ways of dominating them.

  Simultaneously, previously successful business models begin to fail, just as the horse-drawn carriage became obsolete.

• Population and Demographic Shifts

  Other sources of change can be viewed through shifting demographics. As rural areas became urbanized, new modes of transportation were required, and the culture of the population changed.

  Other examples include an increased need for convenience as people complained of having less time in the day. The Age Wave describes population levels across age groups and its effects have been well-researched by author Ken Dychtwald.

  It is found that population “waves” can alter entire economic landscapes.

• Statutory and Regulatory Change

  Financial services deregulation allowed for the very existence of firms like Charles Schwab and has impacted its growth opportunities over the years.

  Other actions of the government such as airline deregulation, utilities deregulation, and anti-trust acts also meant life or death for a particular business strategy.

So, given these types of changes happening in the world every day, what should businesses’ response be?

By being vigilant to forces of change .

According to Professor Litman and Dr. Frigo, forces of change don’t necessarily mean problems if a business is vigilant and adjusts strategies accordingly.

As any potentially disruptive change is in sight, high-performance managers know when to change their targeted customer groups, offerings, how they hire employees, and every other aspect of a firm.

On the other hand, management teams that cling to outmoded strategies and techniques are doomed. Here, there is a distinct human characteristic, a flaw in judgment, and an inability to let go of the past despite signs telling a manager to do so.

As former CEO of General Electric (GE) Jack Welch said:

So, the bottom line?

Control what you can AND understand what you can’t control .

Sure, forces of change can rock the business from all directions. Some forces of change are slow and predictable, while some are sudden and unexpected.

Others appear to be random.

… but here’s the thing: Forces of change drive the risks and opportunities of all businesses.

It’s in how well a management team understands and manages these risks and opportunities that will determine a firm’s success or failure.

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If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo.

Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.

Hope you found this week’s insights interesting and helpful.

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Stay tuned for next Tuesday’s Return Driven Strategy!

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