Written by: Dr. Shahram Maralani, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Whenever the business environment across the world is not in its best shape, the questions on how to improve business performance, are asked more often by entrepreneurs as well as business leaders. As the Political scene, Economic outlook, Business trends, and Consumer trends show signs of strain in the society and the market, ways to improve business growth, sales, and profitability become more sought after. In this article, I will share some strategies on how to improve business during such gloomy times.
The Bad Times Will Come
If one thing is for sure, is that bad economic times will come. If there are no signs already around, be even more concerned, as troubled times can come out of the blue. The COVID outbreak and the consequences it had on businesses during the years 2020-2021 were for decades unheard of. Before businesses that were strong enough not to disappear, and survived those two years, could take a deep breath, the long-term market shifts of the post covid pandemic era hit them hard. The war in Ukraine and its impact on the global economy contributed and added to this hardship. Then the escalated tensions between Taiwan and China showed their impact across the globe, and when everyone was speculating what to expect next, the unrest in China resulted in more strain on the global supply chains and hence on a lot of businesses, small or large. Today, you can be Apple with more than USD 2.27 trillion market capitalization, or a tiny shop selling a couple of hundreds of dollars clothing, or other goods, you will feel the impact of the above situation on your skin. These developments are the major sociopolitical situations impacting millions of businesses across the globe, irrespective of their size and sector. Moreover, the pressure on these businesses as employers of billions of people, impacts consumer spending, putting these businesses in a double squeeze.
The data of the modern era shows that the economy goes in cycles. But irrespective of these cycles the long-term trend is always positive. The below graph shows the world GDP since 1960. Despite all the adversaries, the world has not only seen GDP growth, but also an increase in its share per person. That is why, there is a general belief among economic analysts that the long-term trend of the economy – as far as relevant for business planning ‒ will always be positive. The question yet remains, how to navigate economic hardship as a business, and how to protect and improve business performance during such challenging times such as during the years 2009 and 2020 (see third graph below).
How Not to Improve Business Performance
It is crucial to address how not to improve business performance during tough times, before investigating ways to improve business, or looking into innovative ideas to improve sales, growth, or profitability. The key point in this regard is to not use your intuition or business experience as the only tool in deciding your business actions. Challenging times can result in permanent shifts in the market and unforeseen market dynamics replacing the old ones. As a result, being simplistic about your strategic and tactical measures is the worst thing you can do to your business and to yourself. Multi-dimensional analysis on the world around you, the market and its permanent changes, persistent trends, but also transient situations, are some of the key analyses you need, to create enough breadth and depth in your insights about your current situation.
In addition, improvement of your business through adjusting and improving your business processes despite seeming natural thing to do, is another mistake you can do. Improving processes before necessary adjustments or even transformations that might be necessary, can result in suboptimal outcomes. In addition, bringing technology into the picture before a necessary transformation, may bring automation to an ineffective process. Only after the above considerations, should a business think of digitalization and re-organization of its business and its components.
How to Improve Business Performance
There are five ways you can improve business performance strategically, especially during challenging times. These strategies are not only useful during such times, but they become more relevant when the economy and market conditions are not favorable.
Business Process Transformation
The subjects of Business Process Re-Engineering (BPR) or Business Process Optimization (BPO), are not new. Both these concepts have decades old histories as business management strategies. Business Process Transformation (BPT) on the other hand can be claimed as a newer concept using state-of-the-art digital tools, what they enable, and the concepts they introduce, in rethinking business processes and decide on their elimination, automation, improvement, or adjustment. Business Process Transformation is usually a response to external pressure impacting the core conditions of the business, often demanding radical changes. Business Process Transformation can even result in changes in the business itself, resulting in Business Transformation (BT). Some of the examples of BPT are online banking, online shopping, and ride-hailing, which in these three cases have resulted in business transformation as well. BT can be utilized to transform an existing business (e.g., digitizing a traditional bank), establishing a new business using the transformed business as a template (e.g., born-online banks), or creation of new businesses who make the former businesses’ value proposition and offerings irrelevant (e.g., peer-to-peer online banking using blockchain technology). It is crucial to start your business improvement mission, by assessing the necessity for Business Process Transformation, before going into the next steps, to prevent investment in an obsolete business model.
Enterprise Application Landscape Analysis
To the corporate world is known. But to smaller companies and some non-IT professionals and entrepreneurs, Enterprise Application Landscape can sound scary. But do not worry. In its simplest definition, Enterprise Application Landscape is a list of all software you use across your organization. Being a multi-billion-dollar business, or a little shop, all businesses use one or more applications to be able to operate, and to deliver their products and services to their customers. Accounting and finance software as well as Microsoft 365 (former Microsoft Office) or a similar software suite from other providers, are usually among the first ones. But this list in today’s digital world is usually much longer, including sales and customer relationship management (CRM) software, marketing, and communication tools, and more. For larger enterprises, the overall list can be in hundreds and be shaped into visually comprehensible structures. Understanding your application landscape by visualizing it against your core business processes is the next step in improving business and its processes. It is crucial to take Enterprise Application Landscape review exercise, as your second step after evaluating and deciding on potential necessity for Business Process Transformation. This review should give you an understanding of what digital tools you use across your business, and why you use them, with the aim to eliminate, adjust, or upgrade them, as necessary. Delaying this process or doing it in the wrong order can cost your business a lot of money and time.
Technical Debt Analysis and Technology Review
It is not about technology, bullocks! Do not buy into this claim. This is the expression used by executives, managers, and entrepreneurs who do not have the knowledge or affinity with technologies of today. Every organization can benefit from looking into these two things: first, what are the digital technologies it uses to operate its business, and how these technologies have been utilized, with the aim of finding the areas needing upgrades or adjustments, due to bad decisions, or shortcuts taken earlier (technical debt), or due to not upgrading the software solutions in use as their newer editions have been released by their producer. This can be done, by reviewing your enterprise application landscape using an enterprise architect and the domain experts.
In addition to the review on your existing technologies you have employed across your business, it is also important to go into this second review. Look into the modern technologies available in the market, and how other businesses are using them to create value (technology review). This value creation can be through enhancing their customer experience (CX), generating new revenue streams, or improving the efficiency of their existing business processes (through BPT). Machine learning (ML) and other Artificial Intelligence (AI) solutions for example, are bringing a lot of new capabilities to the market including Contextual Analysis of text, audio and video, Recognition of people and objects in images and videos, Identification of patterns in data, and more. Only one of these new capabilities may be enough to revolutionize one of your core business processes (BPT), or your overall business (BT). Lack of awareness about AI and other new technologies, is like living in a remote forest or mountain area for generations not knowing there are phones, navigation systems, solar panels, and batteries which can make your life easier while not necessarily leaving your homeland. To me, it is unacceptable to talk about any business improvement, without learning and evaluating what the new technologies can do for your business. Technology may remove a problem altogether or give exponentially more effective ways in solving it.
Business Model and Value Chain Analysis
A Business Model Analysis can be mistaken assuming it is some form of business process review. But business model analysis is a much more strategic and high-level look at the business as a whole, before digging into various business processes who may have significant potential for improvement. While business process review studies will usually keep its hands off the business’s objective, value proposition, and market, business model analysis on the other hand can touch every component of the business to even the very existence of it, asking why this business should be the way it is, serve the customer it serves, use the enablers it uses, and generate the revenues it does. Business model analysis can provide an insight which can make business process review and transformation necessary, or go beyond and suggest the need to reposition the company to another part of the value chains in which it operates, or to leave some of them completely. Business model analysis together with value chain analysis are two powerful tools, when addressing a business’s potential future, especially when the economic and market conditions demand adjustments.
Use Innovative Ideas to Improve Business
Not claiming that innovation is always the last step in improving a business and its performance. What I am advocating is that in the digital world we live in today, Business Process Transformation, Enterprise Application Landscape Analysis, Technology Review, and Business Model and Value Chain Analysis should be part of your main strategic management toolbox, before embarking on innovation as the way forward. Use of innovative ideas to improve business is important and even the bloodline for the businesses, especially those whose success is dependent on their product and service differentiation. But it is important to understand the role of innovation properly preventing two mistakes. First, allocating budget to pointless innovation projects while not fixing the core of the business model, its processes, and systems. Second, using innovation as a buzzword or even worse as a scapegoat, to blame the lack of business performance to its nature, sector, or unfavorable market conditions, before doing the core analysis necessary using the first four steps above. Innovation can play a significant role in shaping a business improvement strategy, if applied properly, and after ensuring the first four steps above are completed.
Conclusion
Business improvement is a continuous business management practice which becomes even more important during challenging business and economic times. As the Political, Economic, Market, and Consumer trends show signs of strain, ways to improve business growth, sales, and profitability become more sought after.
Given the current world around us it is necessary to have a structured approach to business improvement to ensure proper return on investments done on such improvement initiatives. The five steps and their sequence described above, are crucial in this regard, considering a digital business world we live in today.
Business Process Transformation, investigates answers to the questions about the robustness of the business processes and how they are shaped, looking for opportunity to fundamentally adjust them by elimination, automation, improvement, or adjustment. Enterprise Application Landscape Analysis investigates the overall digital components used to enable the business, looking for opportunities for elimination, adjustment, or upgrading them, as necessary. Technical debt analysis and technology review, investigates the currently used as well as other potential digital technologies which may be used to support the business process transformation or even business transformation, with the aim to enhance customer experience (CX), generate new revenue streams, or improve the efficiency of existing business processes.
While the three above steps focus on opportunities for improving the business in the domain it operates, business model and value chain analysis takes a much more strategic look at the business, its objective, value proposition, and the market. Business model and value chain analysis can potentially touch the very existence of the business, looking into why the business should be the way it is, serve the customer it serves, use the same enablers it uses, and generate the revenues it does, with the aim to evaluate the need for repositioning the company to another part of the value chains in which it operates, or to leave some of them completely.
Innovation is a powerful business improvement tool and can play a significant role in shaping a business improvement strategy, if applied properly. In the digital world we live in today, Business Process Transformation, Enterprise Application Landscape Analysis, Technology Review, and Business Model and Value Chain Analysis should be among main strategic management tools, capable of creating necessary and intended business improvements, with higher chances of success, and often less investments. Use of innovative ideas to improve business is important. But it is crucial to ensure innovation strategies are applied correctly, and not as a way to ignore core business improvement opportunities. Each of these steps prepares the organization for the next one. Going into them in the above sequence is key, to increase chances of success, and to prevent investments with low returns.
Online Business Builders Club
Online Business Builders Club (OBB Club) is a membership program for people with passion to ideate, build, and transform businesses using digital technologies. Our mission is to enable consultants and advisors, as well as founders and owners of small businesses to build successful and thriving businesses. We help them understand the possibilities they have in creating digital businesses or digitalizing their existing businesses using available solutions and tools in the market. We educate certified business builders who can make an impact on their lives and the lives of their customers.
The Founder of Online Business Builders Club is Dr. Shahram Maralani who has more than two decades of experience as a Corporate Leader. He is also an Author, Public Speaker, and Business Mentor, helping entrepreneurs establish & digitalize their businesses.
His mission is “To help thousands of entrepreneurs shape, and operate online businesses", as part of their portfolio career, or as their main occupation.
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Dr. Shahram Maralani, Executive Contributor Brainz Magazine
Dr. Shahram Maralani is a Corporate Leader with more than twenty-five years of experience in a wide range of disciplines and across multiple industries and geographies. He is also an Author, a Business Mentor, and a Professional Speaker. Shahram is currently senior vice president and chief digital officer in Nemko Group A/S. In addition, he helps entrepreneurs to establish and develop Online Businesses. He is the author of the book “Build an online business in 24 hours”.
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