When the economy tanks as it did in the recent recession, that’s a strong signal that things have to change, and it’s hard to miss. But most of us in business have to deal most of the time with weak signals, or change that is happening in a far more subtle way. These changes can be cultural, like the increasing need to be social, spawning Facebook and a hundred others, or technological, like the explosion of mobile devices around the world.
No business or startup wants to be the next Myspace, or even the next RIM (BlackBerry), where changes in the marketplace were subtle. Recognizing and interpreting weak signals into timely decision making is critical to your business, and it takes skill and focus.
The challenge is knowing what to look for, and how to react. I saw some real guidance in a new book by Loc de Brabandere and Alan Iny, “Thinking in New Boxes.” While the focus of the book is really on business creativity, the following triggers were outlined as weak signals which should not be overlooked in your efforts to think outside the box, or think in a new box:
1. A changing value proposition. For example, if it’s getting harder to charge a price premium for the product you’re marketing, or others are offering your subscription service for free, it may be time to start thinking in a new box. Another example is seeing substitute versions of a product, like eBooks, for a low price displacing hardcover books.
2. New unmet consumer or customer needs. Perhaps you own a consumer products store and see that following the introduction of the new iPad, there are no attractive protective cases for them yet available. Or you notice that people are getting overnight delivery from Amazon, but your retail store offers no home delivery options.
3. The entry of new competitors and new suppliers. You are selling several successful computer video games, but notice more and more new ones popping up on smartphones. Or you notice that your line of high quality tools is being undercut by cheap knockoffs manufactured in other countries.
4. The advent of new breakthrough technologies. You are still providing conventional digital wristwatches while a crowd-sourced new company is offering a high-tech new version that syncs with your smartphone. Or you are still delivering coupons via the local newspaper, while new entrants are loading them onto your loyalty card or smartphone.
5. Changes in your organization’s core performance metrics. For example, quarterly sales on one of your most important products suddenly decreases, or your inventory across a whole category has surged. If one metric changes, it may not be significant, but someone needs to monitor whole categories for fluctuations that may be a weak signal.
6. Unfulfilled business and other potential opportunities. Sometimes you might be astonished to notice something that has not yet occurred, and therefore signals to you an opportunity, like new transportation alternatives. Taxi or bus companies are often slow to recognize a new popular travel location based on population shifts or resort communities.
7. Broad disruptive events. Everyone notes macro changes, but the weak or secondary implications are often overlooked. Look hard for unanticipated consequences of events like new government regulations on financial processes, changes in environmental patterns, or sociological changes in other countries. First responders are the winners.
8. Premonitions, anxieties, and/or intuitions. Weak signals may be even more subtle or insidious. Perhaps your assistant mentions that your phone has been ringing much less lately. Or you sense that some of your best people are getting bored. Such inklings and realizations can be valuable warnings of significant impending change.
All weak signals need to be treated with a continuous innovation mindset and urgency, to stay competitive and current. Here is the recommended five-step approach to thinking in new boxes:
• Doubting everything you think you know.
• Probing the possible issues to fully understand what is happening.
• Divergent thinking to create many new boxes, concepts, and hypotheses.
• Convergence through testing and validating back to a small number of viable changes.
• Re-evaluating relentlessly for the agility to survive.
New entrepreneurs are notoriously great at capitalizing on new opportunities, both weak and strong. But nurturing this ability after the first burst of creativity, to accomplish the necessary pivots, and keep from getting seduced by their own initial success, is a more rare commodity, even in the startup community.
If you aren’t reacting to weak signals almost every day in this era of fast-paced change, then you are missing opportunities and falling behind. What new boxes are you implementing these days?
CEO & Founder of Startup Professionals, Inc.; Advisory Board Member for multiple startups; ATIF Angels Selection Committee; Entrepreneur in Residence at ASU and Thunderbird School of Global Management.