There is a better way to manage organisations during tough times, than by undertaking crisis-driven activities.  It is by creating opportunities and managing them to the best advantage of the organisations.

An organization’s ability to survive and prosper in a crisis requires hew ways of thinking.  For a start, it is important for organisations to differentiate between crisis-driven change and opportunity-driven change.  before we explore the strategies, let us first understand what these terms mean.

Crisis-Driven Change

Crisis-driven change tends to be reactionary.  Thus, an economic recession leads to a slowdown in a company’s sales.  To prevent a company from going into the red, the normal reaction is to cut cost.  And to cut costs, a company has to take steps like cutting down on its advertising budget, which causes sales to drop further.

It will then lower its production or carry a lower number of product lines.  As a result of lower production or lower sales, the company will cut down its number of employees.  This will be followed by the training budget.  It will then chop the training budget.

The morale of staff will take a dip, customer service deteriorates and sales performance goes on a downward spiral.  This later affects the company’s image among customer and the vicious circle continues.

The message is that crisis-driven change, if implemented on its own, is a self-fulfilling prophecy which will eventually cause the collapse of the organization.

Opportunity-Driven change

Opportunity-driven change, on the other hand, is proactive.  It seeks, creates and capitalizes on positive and productive change, improvement and growth.  This requires a new way of looking at a crisis or difficulty.  It is an approach focused on looking for the opportunity in every crisis, instead of being immobilized by the though of the difficulty it presents.

Francis Bacon said: “A wise man makes more opportunities than he finds.”  Likewise, successful organisations are those that create more opportunities than currently exist and capitalize on them.

An opportunity waits for no one.  Many leaders wait for opportunities and when they find one, they analyze, analyze and analyze until they become paralyzed!  Managing opportunity-driven change is about liberating oneself from this paralysis.

Managing Opportunity-Driven Change

Managing opportunity-driven change goes beyond restructuring and reengineering.  It is about innovation and creation, and taking the lead and building a future.  It is about constantly seeking and creating favorable business conditions for a company, and string to secure as much of a competitive edge as it can.  In our consulting work with our clients in Asia, we have developed a framework for organisations to manage opportunity-driven change in the most effective and productive manner.

There are six critical components that a company needs to manage to capitalize on the opportunities in the business environment, as shown in the accompanying diagram. 

Creating The Future

Crisis-driven organisations wait for the future to come while opportunity-driven ones visualize the future they desire and go ahead creating it.  Companies that fail to anticipate and participate in opportunities in the future will be victims of change.

Opportunity-driven organisations know that the surest way to create its own future is to move away from being customer-led to leading customers.  Opportunities arise from customers who have unarticulated needs about certain products and services.  Opportunity-driven companies identify these unarticulated needs and create new products and services and educate their customers about them.

Opportunity-driven organisations understand that the key competitive edge for the future lies in competing for “opportunity share” rather than market share.  Creating the future begins by expanding the opportunities either by seeking or creating them in the marketplace.  The companies that possess the largest opportunity shares are those that create their own future in their respective industries.

Building New Competencies

How can organisations position themselves so that they can capitalize on opportunities around them?  By building core competencies that provide a distinct capability in their production and the delivery of their products and services.

Gary Hamel and C.K. Prahad, authors of Competing For The Future, defined core competence as a bundle of skills and technologies that enables a company to provide a particular benefit to customers.  They pointed out that a core competence represents the sum of learning across individual skill sets and individual organizational units.  And hence, it is unlikely to reside in its entirety in a single individual or small team.  For example, at Sony, a core competence is miniaturization and the benefit to customers is  “pocketability”.

At Wal-Mart, superiority in logistics is a core competence and the benefit to customers is choice, availability and value.  At EDS, a core competence is systems integration and the benefit to customers is seamless information flows.

Organisations which are building core competencies have to create a conducive environment to encourage learning, skill-building and knowledge-sharing in an integrated fashion.  Building the right core competencies fast will enable organisations to compete in an environment of rapid change.  organisations need to replace obsolete competencies with new ones to enable them to compete in future.

Encouraging Innovation

One aspect of managing opportunity-driven change is encouraging product innovation.  World-class organisations today are knowledge-creating companies that thrive on continuos innovation.

Companies need to constantly assess the threat of their existing products becoming obsolete.  The products of services that make an organization very successful today may be the ones that bring them down tomorrow.  To be able to see new opportunities, leaders in organisations need to become detached from their past successful products.

Developing new products or undertaking product enhancement and modification to suit the changing needs of customers in an opportunity-driven change.  innovation in new systems and processes utilizing technology to increase speed, reduce cost, shorten cycle time, maximize effectiveness, minimize risk and provide valued to customers are also desirable opportunity-driven changes.

To tap into opportunities for improvement and growth, leaders must use leverage on innovation as their competitive edge.  However, leaders need to realize that innovation comes with the risk of failure.  But then, failures do provide opportunities for discoveries and new inventions.  In fact, history has provided enough examples about how many innovations and breakthroughs came from mistakes or by accidents.

To encourage innovation, allow people the opportunity to experiment, take risks and make mistakes.  Reward successes in innovation but do not penalize mistakes.

Finding New Markets

The imperative for growth is not just creating new products but finding new markets for them.  Great opportunities arise for companies that constantly search for new markets for their products and services.  New markets can be developed in many ways.  In way is through changing the way it defines its markets.  redefining markets in terms of specific customer types in a changing market-place will ensure that organisations can capitalize on opportunities that arise form the changes.

In an increasingly global environment, finding the markets that provide a company the edge, i.e. where it can have the greatest competitive differentiation and positioning, becomes the key.  By understanding customers and potential customers intimately, companies can also see the potential of new markets.  to find new markets, companies need to understand the market size and trends.  They need to review their strategic position, product by product and customer by customer, to assess their strengths and weaknesses in both their products and their relationships with existing customers as well as potential customers.

Companies need to gather market intelligence and explore potential markets and untapped territories.  They need strategic understanding of the changes in the market-place to help them identify where the demand is in emerging markets.  to expand their opportunity in the market-place, they should build and efficient distribution system and infrastructure to serve customers in superior fashion.

Helen Keller provided a powerful lesson of seeking opportunity when she said: “When one door closes, another opens.  But we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.”  Companies seeking opportunities in new markets should remember that with accelerating changes in the market-place, they will find some doors of opportunities closing.  They should not be fixated on these closed doors but explore the newly-opened doors of opportunities.  And they must do so by constantly exploring new and potential markets.

Developing Global Brands

The opportunities provided by a global brand are far-reaching.  A company develops a global brand to increase the opportunity base of a company so it can capture a global “share of mind” regarding a company’s products and services.

A global brand adds tremendous value in the customer’s perspective.  A well-developed global branded product sticks in a customer’s mind and is pre-sold way before he or she sees the product.  Have you ever wondered why some companies purchase or merge with each other?  There are many reasons – growth opportunities, synergy, political, etc.

However, one strategic reason is for the company’s brand.  For example, Colgate-Palmolive bought Darkie (later renamed Darlie) because of the value of the brand, it being the leading competitor.  Brand value is an emotional and psychological value which consumers attach to product.  It is the result of many years of advertising, public relations and promotion.

Strong brands are developed through consistency and persistency in communication.  Many successful brands convey a strong, lasting impression of their core values.  For example, Singapore Airlines means superior service.  Campbell comes across as nourishing soup.  Rolex is prestigious. 

Forming Coalitions

The forming of coalitions or alliances between companies or groups can create opportunities in the market-place.  Not every company possesses all the requisite resources and core competencies to develop new products or new markets.  these alliances could be in the form of a joint-venture as in the case of IBM and Apple which created Kaleida to capitalize on multimedia opportunities; or Welcome with Glaxo Holdings, who work together to manufacture and market over-the-counter versions of its partner’s well-known prescription drugs.

The concept of forming coalitions is based on the concept of synergy whereby the benefits arrived at will be more than if these companies were to operate by themselves.  This is the case of two plus two equals five.

Victor S.L. Tan is an international consultant and authority on change management.  He is the author of 4 books and the CEO of KL Strategic Change Consulting Group. He can be contacted at 603-90741129 / 90742219 or email: victorsltan@klscc.com