Capital Ethiopia Newspaper

Prepare for change

Designing for the future, being the period between eighteen months and five years from now, consists of three steps:
Envision: carefully articulate a clear vision about where you want to drive the industry you are in.
Prepare: Find the shortest route between where you are now and where you want to go.
Deliver: Determine on what basis you will compete, once you have arrived at your new destination.
Last week we looked into the first step and we looked more in detail into developing a vision. If you want your company to be a market leader and one of the best in your field, you will not only constantly be improving your current operations, but you will be committed to creating a new competitive position in the future. What exactly that vision is, only you will know. You must come up with your own vision, unique to the kind of business you are in. To develop this vision you will begin with scanning the horizon and environment of your industry. In doing so, you will identify opportunities. You will anticipate demand and to be able to do this you must develop insight in trends in technology, demographics, regulation and lifestyles, which will help in creating a realistic vision for the future. Having donees this well, the foundation has been laid to prepare for change.
Your company must identify the gaps between its current competitive strengths and tomorrow’s competitive requirements. Once these have been identified, the next step is to determine how the gaps will be closed. Will you develop the needed skills and technologies on your own? Will you do it through collaboration with others? Or will you do a little of both? Most companies choose the last approach, as they soon discover that they cannot create the future single-handedly. They build their own new core competencies and then build alliances with others.
Core competencies are the skills and technologies unique to an organization. Building new core competencies requires management to adopt a whole new perspective on how it will manage its future. The company is now forced to take a proactive role in creating its own future. This begins with a good understanding of the differences between today’s customers and those the company is likely to be serving in the years ahead. This is followed by a detailed examination aimed at unearthing the core competencies that currently underlie the company’s competitive performance. Once the existing core competencies have been identified, the focus shifts to the future and the following questions come up:
What new skills and technologies must we develop or acquire in order to get to the future first?
Which of these core skills and technologies should we develop internally and which should we acquire from outside?
The next task is to strategize how each can be realized. Now because of the costs and risks involved in building leadership in a core competence area, few companies normally want to go it alone. Most find it necessary to join forces with others, who offer critical complementary resources. This means forging new strategic alliances, something that is not quite common yet in the Ethiopian context. We should however open our eyes to developments around us and understand why we see more business networks developing. Reasons include:
Globalization. The competition is no longer only local, but also international as time and distance become less important. Even small companies must be ready for international competition even though they do not have any intention of being international. Small firms need therefore to forge alliances in order to extend their reach and achieve the same benefits of scale as larger competitors. 
Sharing the risk. Where new opportunities are identified and the potential rewards are great, so are the risks, which is why few dare face them alone.
Filling the gaps. Few companies are able to master all of the required skills on their own. Most focus on their own unique core competencies and then network with others who have the competencies and resources they lack.
Organizational learning. Learning is indispensable and joint ventures help strategic partners to learn from one another.
Establishing new technical standards. In emerging industries, where a common standard has yet to be established. There is often a fierce completion to develop that standard. The winning standard often determines who makes money from the future and who doesn’t.
There are many different ways in which alliances can be forged, ranging from temporary and weak to long-term and strong. There are networks of individuals, joint ventures and partnerships. Many companies feel the need to simultaneously participate in different kinds of relationships, while playing a different role in each.  Next week we will look into the third step in designing for the future: Deliver.