Towards “20/20 vision” in 2020

It’s hard to believe, but already the third decade of this century is around the corner.  This certitude had me reflecting this week as I commuted to the optometrist.

Most adults have an annual ritual of going to an optometrist for an eye exam. They emerge with a prescription for new lenses or, in some cases, reasons for laser eye surgery. Stated another way, they benchmark their vision against an established standard and take corrective action when anomalous outcomes develop. They aspire to achieve 20/20 vision. They want a clear focus on the world around them.

This makes good sense. In this case, their eyes are changing relative to the established standard; however, in many change scenarios, it is the world, the benchmark, that is changing.  It makes little difference which is changing as in either case change management is required to keep up.

Change is ever present. I have written about this in previous blogs but to save search time, the critical ideas are:

  1. Everything has been accelerating since the beginning of time
  2. If plotted as a graph with time as the “X” axis and rate of change on the Y, the curve accelerates upwards to the right. (see graph)
  3. If today it takes you some amount of time at point “A” to respond to a competitor’s move, you must hustle some amount to get back on the curve at point “B”
  4. If a competitor makes a move at Point “C” and your way of working has not changed, your ability to hustle will not be enough to get back on the curve. Your response time must shorten significantly to let your hustle get you back on the curve at point “D” or you’re done.

Many have felt this pain. According to the 2018 Corporate Longevity Forecast Executive Briefing by Innosight, the 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027. Further, the Small Business Administration reports that 30% of new businesses fail during the first two years, 50% during the first five years and 66% during the first 10. It’s true that not all failures are a result of change readiness but look around at how disruptive innovative companies have been to the status quo.

Why did these companies not see what was coming and if they did, why did they fail to act? Clearly, they were resistant to change when change was the right medicine. Likely by the time they overcame the resistance it was too late. In the early 1900s, the ice industry got decimated by refrigeration. I guess the ice cutters spent too much time on the frozen lake, rather than visiting an appliance store and seeing what a refrigerator could do. (See The art of innovation | Guy Kawasaki | TEDxBerkeley  https://www.youtube.com/watch?v=Mtjatz9r-Vc).

Frighteningly, this parallels what is going on with our political leaders approaching climate change, water and other environmental issues.

The recent announcement from Texas Instruments about ending its Avnet relationship is another example of the shifting sands of change. Technology has made multi-customer order management practical and logistics have improved. Changes in design practices and outsourcing have shifted the locus of demand creation. All of these create new challenges for distributors.

Change can transform companies and industries. It can even shift the economy.  Andy Kessler, in July of this year, reported in the Wall Street Journal about his belief that perfecting the Just-in-Time (JIT) supply chain (https://en.wikipedia.org/wiki/Just-in-time_manufacturing) is responsible for the long period of expansion in the economy. He argues that JIT has taken the wild inventory cycle out of the equation thereby smoothing the troublesome expansion and recession cycle of the past.

The eye exam and JIT are two examples of things that shorten time to knowledge. Knowledge in this sense is gaining the perspective that allows appropriate corrective actions. Fast and meaningful corrective action is critical for staying on the rate of change curve. You and your company can be a driver of change or a fast adaptor when a change ready culture is required. Either way, to survive one must change.  We see how companies like Amazon can adapt to transform an industry and set new customer expectations.  Delivery in 7 to 10 business days used to be commonplace. Now it’s next day or next hour delivery. Being slow puts everything at risk. Stagnation is death.

Frequent benchmarking – sampling what’s going on around you in a controlled way with rapid access to meaningful knowledge – is now a cornerstone of competitive advantage. Managing without these puts one in jeopardy, particularly when it comes to electronics! In the words of Rick Page, a Senior Supply Chain executive, “Benchmarking is just good supply chain hygiene”.

Whether its benchmarking purchases to real market prices through Lytica or some other key aspect of your business to a recognized standard is as important, if not more so, as the annual eye exam to provide clear insight and the knowledge you need to act. Don’t let these disruptors pass you by.

Ken Bradley is the Chairman/CTO & founder of Lytica Inc., a provider of supply chain analytics tools and Silecta Inc., a SCM Operations consultancy.

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