Leverage Uncertainty to Your Advantage
Today’s constantly changing convenience landscape presents a myriad of challenges to convenience store owners and operators. As stores begin to thrive again after constricted consumer spending during the recent recession, the environment is increasingly volatile, complex, ambiguous and, most of all, uncertain.
Channel lines are blurring across retail environments. Competition is increasing from emerging players in related industries such as dollar stores and fast-casual dining. Technology is developing at breakneck speed. Consumer preferences are constantly in flux. All of this makes it a struggle for operators to keep up, let alone get ahead.
To capitalize on ever-evolving market conditions, leaders must learn to leverage uncertainty and master the art of adaptive planning. Yet, most plan as if the world were predictable. They develop point forecasts, budgets and initiatives that will succeed if the external environment cooperates. However, history shows that is rarely the case.
Companies that fail to evolve these efforts will be steamrolled by game-changers who see sooner, scan wider and learn faster. Consider the cases of Kodak, Blackberry and Blockbuster. Not long ago, these businesses were at the top of their industries.
In a recent study conducted by our team at Decision Strategies International (DSI) and Wharton Executive Education, 60 percent of leaders admitted their organizations had been blindsided by three or more high-impact events within a five-year period. Of those leaders, 97 percent said their businesses lacked an adequate early warning system, leading to unforeseen impacts to their core business or product lines. Eighty-one percent felt their organizational capacity for strategic anticipation did not match future needs, resulting in missed market opportunities.
To avoid falling victim to disruption, c-store owners need to embrace planning as an ongoing exercise that is continually revisited and refined. Operators who embrace this model will lead the industry.
Three crucial components are necessary to create an adaptive, more strategic plan that acts as a living, breathing guide for change:
1. Approach the planning process from the outside in
Many leaders find comfort in sticking with what has worked well in the past. However, this static approach leaves businesses vulnerable to value-destroying disruption. Simply analyzing the strengths, weaknesses, opportunities and threats (SWOT) of an assumed future based on past success will result in a plan that is outdated, as the industry requires new, fresh thinking.
Rather, c-store owners must adopt an outside-in approach that hinges on monitoring external conditions and uncertainties. By monitoring and sensing weak signals that foreshadow major shifts in the market and hypothesizing plausible scenarios for the next three to five years, leaders can proactively anticipate potential opportunities. Then, they can determine how to best prepare and respond.
2. Embed adaptability into company DNA
Many leaders mistakenly view the future as a fuzzy, predetermined point in time. In reality, it is the ever-changing result of an active environment that constantly ebbs and flows. Leaders and their strategies need to be equally flexible. Adopting and promoting a mindset of adaptability across an organization helps fundamentally embed this capability deep into the fabric of the business.
The key is to empower senior executives to view planning as a tool to foster a learning culture — not just a map for the future. Leaders who value learning from both success and failure can leverage insights from both and adjust business plans accordingly. Some of today’s most successful business leaders, such as Elon Musk and Sir Richard Branson, document the breakthroughs they achieve by overcoming failure.
3. Develop a skill set to manage uncertainty
Effective planning is inherently tied to leaders’ strategic-thinking capabilities. These skills are mission critical when it comes to staying nimble and competitive in an increasingly complex marketplace. In fact, a 2013 study by Management Research Group found that 97 percent of senior executives said strategic thinking is the most critical leadership skill for an organization’s success.
There are several key disciplines that, when practiced in concert, can boost strategic aptitude. They include the ability to anticipate, challenge, interpret, decide, align and learn. Each of these elements encapsulates diverse yet complementary aspects of critical thinking, which we will explore in more depth in my next column.
Regardless of how the future unfolds, there will be winners and losers in the c-store space. Forward-looking operators who embrace adaptability and internalize strategic behaviors will be better equipped to lead, course correct and remain competitive when, not if, disruption rocks the industry.
Editor's note: The opinions expressed in this column are the author's and do not necessarily reflect the views of Convenience Store News.