External assumptions that can derail your business strategy
Leaders have a reasonable degree of control over what happens internally. They can set processes, goals, and finances to create plans and B2B strategies to guide their business. One aspect they cannot control is the impact of external factors. New regulations can cripple a plan and impact stability and profitability.
There is a whole range of events over which businesses have no control. Companies are challenged by politics, the economy, and even the weather. Change is inevitable. I have seen businesses survive and thrive after unexpected market changes. I have also seen companies fail to adapt and go extinct.
There are two key things businesses can do to prepare for unexpected external factors.
- Conduct an environmental scan. This scan is a way of gathering and analysing data about external threats and opportunities. It should include data related to politics and economic conditions. Your scan may also include technological innovations, ecological concerns, and legal requirements. The scan should also be repeated with a certain frequency – for example, on an annual basis.
- Know what your potential threats are. Simply being aware of possible threats helps you prepare for change that is out of your control. Next, create a plan of action that can be put in place if the threats are realised. Identifying external factors helps identify threats before they become problems.
Internal assumptions to avoid in your B2B strategy
Internal threats can be more demanding than those found externally. Managing the strength of internal operations is a crucial concern, often overlooked.
One important internal factor is your company’s leadership style and how it impacts an organisation’s culture. For example, leadership can be positive or negative or promote different levels of communication. Another equally important internal business factor is the strength of your employees – whether they are motivated and if they coordinate effectively between teams and departments. Satisfied employees are vital to running a successful company.
Operational factors can also have an impact on your business. Record keeping and outdated IT systems can interrupt service and create poor customer experiences. A lack of innovation is a significant risk – it can make your company stagnant and irrelevant. To stay ahead of the competition, it is essential to embrace new technologies and take innovative marketing, training, and employee welfare initiatives.
An excellent way to avoid creating strategies based on unfounded assumptions is to analyse the strengths and weaknesses of a project or business. These are internal factors you can control. In terms of strength: What are the features that make your company more effective than the competition? What makes you stand out from them? About weaknesses: What has led to problems or complaints? What could you do better?
Unlike external factors, most internal ones can be controlled and improved. Your success will depend on the business decisions and the changes your organisation is willing to consider.
Technical assumptions relevant to your strategy
A set of factors that can distinctly affect your company is technical circumstances. In business and otherwise, technology dictates how we do things. This can include computational power in digital endeavours or engine efficiency when it comes to production machines. Companies depend on internet connectivity to interact with their customers. Many of them are also challenged by the rise in automation, sometimes reducing costs for manufacturers and others putting jobs at risk.
It is essential to identify all assumptions you might be making about the technical aspects of delivering your product. Are the technologies you are using feasible? Could technical issues impact your strategic plan? And are dominant new technologies emerging?
Technological and technical factors can have a severe impact on businesses. You might be designing a solution that is not appropriate for a specific business need. Or the increasing number of cyber threats we see at a global level could be jeopardising your company’s safety and security.
As with other factors, it’s important to ask ourselves if there is anything we are taking for granted. For example, that the market will respond favourably to a new product without requiring large changes or that engineers will solve all potential compatibility and integration issues. In my experience, translating assumptions into risk is an excellent way to assess their potential impact and plan for their mitigation.
Getting your resourcing assumptions out of the way
All companies have a set of strategic resources that give them a unique advantage. Traditionally, these are an organisation’s enterprise knowledge, its financial strength, and its workforce. The three of them are equally important. A company differentiates itself thanks to its knowledge. It grows because it is financially strong. And it is efficient because it has skilled, motivated workers.
Intellectual property can help your business out-perform its competition. When patents and trademarks result in more efficient and cost-effective production lines, the value of the assets increases. Customers want the best quality for money, which in turn results in better brand recognition and loyalty. The assumption that customers will want to buy your product will need to be based on your company’s ability to provide good value.
To support the development of new products and revenue streams, companies need funding. A solid financial position allows businesses to take advantage of rising opportunities that might be unavailable to others. This can give them a unique advantage – however, it is essential to plan operations on more than just sales figures.
The ability to access and retain talent is also paramount to a successful business strategy. Motivated employees are also more innovative – they can help take your company to the next level. This includes skilled workers as well as talented leaders. But the assumption that key talent will be readily available can be a dangerous one. In particular after the COVID-19 pandemic, when the workforce has become more transient than ever and workers are looking for a sense of purpose.
Businesses can create competitive advantages by attracting more loyal customers, lowering prices, or offering better quality products. They can also benefit from a highly motivated workforce eager to be part of something bigger than profit-making. A solid strategic business plan should take all of these things into consideration.
RK is the Founder & CEO of Resonate.