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6 major forces affecting a business and determines how competitive a company is.

1. Power, vigor and competence of existing competitors
2. Power, vigor and competence of potential competitors
3. Power, vigor and competence of complementors
4. Power, vigor and competence of customers
5. Power, vigor and competence of suppliers
6. Possibility that what you business is doing can be done in a different way [substitution]

Your business is at much greater risk:
* If your competitors have deep pockets or if there plenty of competitors.
* If your organization has limited number of suppliers and you have limited choices.
* If you have limited number of customers or if they are very demanding or if their business is at greater risk.
* If there is a possibility of new potential competitors getting into your business and if they better skilled, better funded or more aggressive than your existing competitors
* If there is a possibility that your product or service can be built or delivered in a different way or the same [or better] value delivery that your product is offering can be delivered through completely new or different alternatives. [as pagers were replaced by phones]
* If there is a possibility that a complementary product supplier decides to get into your product market [complementors are other businesses from whom customers buy complementory products. i.e. software providers are complementors to computer suppliers]

It is imperative to assess your business on all these aspects along with PESTEL Analysis (kindly google for this).

'Become hypervigilant leader'

It is observed that the person at the top is often the last person to know that the industry has changed, that the old ways of doing business are replaced by new rules. The first one to know this is the front line team that is interacting with the customers and the entire eco-system on daily basis.

The lesson is, we all need to expose ourselves to the winds of change. We need to expose ourselves to our customers, both the ones who are staying with us as well as those that we may lose by sticking to the past. We need to expose ourselves to the lower-level employees, who will tell us a lot that we need to know. We must invite comments from people whose job is to constantly evaluate and critique us.

Be watchful about competitors, trends in industry and constantly ask about what we should be most concerned with. As we throw ourselves into action, our senses and instincts will be rapidly honed again.

In today's highly disruptive era, ignorance or losing touch with right people at grass roots can be fatal.

Be vigilant and 'change before it's too late'

When your business or industry is into disruption phase or is facing Strategic Inflection Point [SIP] the rules of doing business changes. These new rules are often very powerful enough to kill your business.

The trouble is, not only we fail to realize that the rules have changed-even worse, we don't even know what new rules are we supposed to follow. It's chaotic and confusing.

All businesses operate by some set of unstated rules and sometimes these rules change-often in very significant ways. Yet there is no flashing sign that heralds these rule changes. They creep up on you as they crept on others, without warning.

Sometimes these changes affect only a company, other times they affect an entire industry. So the ability to recognize that the winds have shifted and to take appropriate action before you wreck you boat is crucial to the future of an enterprise.

Disruption of employment

Strategic Inflection Point [SIP] are about fundamental change in any business. They are like cataclysmic change that sweeps through any industry and engulfs the company you work for? Who knows if your job will even exist and, frankly, who will care besides you?

When companies no longer have lifelong careers themselves, how can they provide one for their employees?

The harsh reality is, nobody owes you a career. Your career is literally your business. You are it's sole proprietor and you have only one employee: YOURSELF. You are in competition with millions of similar individuals: millions of other employees all over the world.

You need to accept ownership of your career, your skills and your moves. It is your personal responsibility to protect your career from any harm. Nobody else can do that for you.

Constant learning is an imperative

We live in an age in which the pace of technological change is pulsating ever faster, causing disruption across various industries. This increased rate of change will have an impact on you, no matter what you do for living. It will bring new competition from new ways of doing things, from corners that you don't expect.

They are inevitable. Whatever can be changed, will be changed. We can't stop these changes. We can't hide from them. Instead, we must focus on getting ready for them all the time.

No amount of formal planning can anticipate such changes. Which means we have to plan and prepare ourselves the way fire department does: It cannot anticipate where the next fire will be, yet they develop an energetic and efficient team that is capable to respond to any unanticipated event. They maintain their team in great shape with constant training and preparations all the time.

The Solution Box is been conceptualized to provide practical solutions to the most pressing problems of MSME enterprises

Today was the 5th meet and we discussed about improving financial performance in business

This is a weekly meet format where entrepreneurs bring their problems to the table and seek solutions through open discussion and brainstorming

The themes for previously heald 4 meets were:
1. Putting Business on Automode
2. Developing Right Team
3. Streamlining Business Operations
4. Data Driven Decision Making

Key takeaways of today’s discussion:

A. Improving capital turnover is very important because that makes your business lean, reduces liabilities and improves profitability. To acheive this; we need to constantly find ways to reduce our inventory (all 4 types) and also reduce market receivables. which means, if you are getting cash payments by sacrificing few percentage of profits, you must opt for it.

B. Each enterprise must develop ‘Financial Performance Framework’ as part of their annual business plan. Business performance must be monitored and measured on the financial performance parameters too

C. Improving ROAC (return on applied capital) is far more important than net profits earned on each transactions

D. Business model plays an important role in improving ROAC. Get your model right

Strategic Inflection Point [SIP] is a time in the life of a business when it's fundamentals are about to change. That change can mean an opportunity to rise to new heights or a signal about the beginning of the end.

SIP can be caused by technological change or can be caused by the competitors or due to various other factors associated to the business environment [kindly search for the details about PESTLE analysis]

They are full-scale changes in the way business is conducted. thus; simply adopting new technology or fighting the competition as you used to may not be enough. SIP can be deadly when unattended to. Companies that begin to decline as a result of it's changes, rarely recover their previous greatness.

But it does not always lead to disaster. When the way business is being conducted changes, it creates opportunities for players who are adept at operating in the new way. For them the SIP mean an opportunity for a new period of exponential growth.

'Only the paranoid survive' Andy Grove

Business success contains the seeds of it's own destruction. The more successful you are, the more people want to chunk of your business and then another chunk and then another until there is nothing left. Therefore; the prime responsibility of entrepreneurs is to guard constantly against other people's (competitors) attacks and to inculcate this guardian attitude in the team members of your organization.

You have to worry about product getting screwed up, and you have to worry about products getting introduced prematurely. You have to worry about factories not performing well, and you have to worry about too many factories. You have to worry about hiring right people, and you have to worry about morale slacking off.

And, of course, you have to worry about competitors. You have to worry about other people figuring out how to do what you do better or cheaper, and displacing you with you customers.

'Be Vigilant'

360* competition

In the capitalist world, it is not the (price) competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization etc....

This kind of competition does not strikes at the margins of the existing firms but at their foundations and their very existence.

Disruption is constant. Therefore; Flexibility and Adaptability are imperatives.

Instability is chronic, uncertainty is permanent, change is accelerating, disruption is common, and we can neither predict nor govern events anymore. Therefore; it is wise to assume that there will be no 'new normal.' There will only be a continuous series of "not normal" times.

The dominant pattern of history isn't about stablity, but instability and disruption. Those who came of age amidst stable prosperity will find it extremely difficult to adapt to these "not normal" times.

People Matters

If we cannot predict what's going to happen in these uncertain times, we need people who can respond and adapt successfully and quickly to whatever changes and challenges we face.

Right people in the right culture would lead to great outcomes. Therefore; it's better to invest heavily in the right people.

Bill Gates said in 1992: "Take away our 20 best people and i tell you that Microsoft would become an unimportant company"

Building Right Team is one of the most critical challenge you face as an entrepreneur

CHOSE GREATNESS

We sense a dangerous disease infecting our modern culture and eroding hops: an increasingly prevalent view that greatness owes more to circumstances, even Luck, than to action and discipline-that what happens to us matters more than what we do. It is deeply debilitating life perspective, one that we don't want to teach young people.

Do we really believe that our actions count little, that those who create something great are merely lucky, that our circumstances imprison us?

Do we want to build a society and culture that encourages us to believe that we aren't responsible for our choices and accountable for our performance or actions?

Greatness is not primarily a matter of circumstances; greatness is first and foremost a matter of conscious choice and discipline. It is not mainly a matter of what happens to you but a matter of what we create, what you do, and how well you do it.

We are not imprisoned by our circumstances, by the good luck or bad luck we get, or by the unfairness of life. We are not imprisoned by crushing setbacks, self inflicted mistakes or our past success. We are not imprisoned by the times in which we live, by the number of hours in a day or even the number of hours we're granted in our short lives. Inspite of all the limitations, we are still free to chose, free to become great.

In the end, what matters is our CHOICES.