Many years ago I was walking down a long street in Brazil. It was warm and a little humid. It began to get a little dark and I looked around me. Behind me and fast approaching was a dark cloud with a sheet of water pouring underneath. We hadn’t planned for rain let alone a monsoon. We started to run as fast as we could for shelter. The wall of water hit us just as we were reaching a store front with an awning. It was too late. We were drenched and laughing and amazed that it could rain without raindrops.
We had thought we could out run it. We couldn’t. It came too fast. Because of where we were, we couldn’t avoid it either.
In business we are faced with all sorts of challenges that come quickly and without warning. We may be lucky to see it getting dark around us giving us a little time to get a head start before we get wet. Technology is changing so fast. Markets are changing faster. We are bound to experience some disruption in our lives.
What do we do about it? Joey Havens, a fellow CPA, in a recent article I read said he takes time to ask five questions in his accounting firm every week for an hour and uses the answers to change and tweak what he and his firm does. I wanted to change the questions slightly to apply to a broader business base than just CPAs. So here are five questions you should ask yourself as a business leader every week:
1 – Are you moving fast enough? Growth is a blessing and a curse. It brings with it problem solving revenue but also begins to burden our operational systems. The pace of change in business and industries is fast and often we cannot move fast enough to keep up. When that happens, so does disruption.
2 – What would have to be true for me/us/you to change our direction, assumptions or mind? This is a good follow up question to the first. It helps us identify the assumptions we have made that we are using to drive our business and question whether or not they are good assumptions.
3 – What are you measuring right now that slows you down? Often times we set key performance indicators (KPIs), setup monitoring systems and watch them. We should ask ourselves if what we are measuring is still important in our business today. One of my favorite Demotivators® posters from despair.com is Tradition showing the running of the bulls and someone about to be trampled by a bull with the caption “Just because we have always done it that way, does not mean it is not incredibly stupid.” If we are measuring the wrong thing, we will get the wrong results.
4 – Does your price reflect the value, worth or impact of the products or services or advice you sell? It is the nature of economics to always put downward pressure on price while costs generally increase. Is your price keeping up with your costs? Are you priced well enough to out serve and outperform your competition?
5 – Will my present business model survive exponential change by new competitors? We have watched and benefitted from disruptive competitors throughout our lives. Video killed the radio star. Netflix killed Blockbuster Video. Uber and Lyft have disrupted the taxi cab. AirBNB has upset the hotel industry. What are your competitors doing? What are the new ones doing? How are they using technology to change how you have done business in the past. How can you be more innovative and creative in bringing your offerings to your customers?
These questions allow us to monitor the direction of the storm and hopefully keep us from getting too wet. There are opportunities on the horizon if we are looking for them. Joey Havens closes his article with, “Relevance is hard work and it takes hard questions.” Irrelevance is easy.
This blog allows you to experience the raw, gut wrenching drama of human conflict through accounting in each of its three stages: preparing to do battle, the thrill of victory and the agony of defeat.