This blog is the third in the series of Discovering Opportunities.
What we are looking at is most likely not going to be reviewed in a management report or discussed at a monthly executive meeting. The purpose of the blog is to create questions, provide some examples but the answers for your business could be in front of you. The questions are to encourage you to think, examine, learn and take action.
Discovering opportunities are not taught in business schools but there are professionals who are successful at it. Is your company as effective to identify opportunities, leverage for future revenue and profits, conduct due diligence, pilot, scale, commercialize as improving the profitability of the existing business? If not, why?
Peter Drucker in Innovation and Entrepreneurship identified various categories to uncover opportunities. The next area to look for opportunities is from your industry, market, process. The general category is incongruities.
Incongruities, these opportunities are more visible to your company’s industry, market or process. According to Drucker, “it is in front of them but overlooked.” Drucker outlined some general areas and provided examples of opportunities, identified and commercialized.
What is incongruity between the economic realities of an industry? This incongruity relates to if demand for production or service is growing steadily then performance should improve. A lack of profitability in a growing industry suggests incongruity. Several examples were identified and how it was taken advantage.
One example, large steel mills lacked profits in an industry that only made profits in time of war. The opportunity “mini mills” concept emerged and changed the steel industry footprint and process of the large steel mill with success. Over that past decades another opportunity was discovered from the brick-and-mortar retail model to the e-commerce model. The latter continues to unfold with new technologies all on a cell phone. You may think of others.
What is “the incongruity between the reality of an industry and the assumptions about it?” This is about the misconception of reality based on incorrect assumptions. We all make assumptions in every aspect of the company’s business model. Here is one example of an incorrect assumption.
Ocean going freight companies concentrated on reducing operating costs and increased speed while in transit. This created congestion in ports and longer delivery times and ships idled longer. The exact opposite of what ocean-going freight needed. Then, a better solution surfaced – “concentrate on the costs of not working (ship is idle, debt and interest still there) rather than on those of working. The answer was the roll-on, roll off ship and the container ship.” (p 63). Does this cause pause for you to step back and re-examine what your company is doing to increase productivity? Will you re-examine the assumptions in your business model or product offering?
The best results for this incongruity from Drucker, “be small and simple, focused and highly specific,” (p 64).
Another incongruity to look for is what “incongruity within the rhythm or the logic of a process?”
Processes are built from logic; one observes a working process and identifies an opportunity. For example, in the early years of lawncare, companies’ “products were promoted based on research, science and testing to ensure their product was the better choice for the best lawn. There was a difficulty with this scientific approach that growing the best yard at your house is a precise, controlled and scientific process,” (p 67). Until O. M. Scott and Company developed the Scott Spreader, no tool was available for the customer to apply this precise, controlled and scientific product. Without the tool an incongruity existed in the logic of the process and customer. As Drucker promoted, this tool fit the formula of small, simple, focused and highly specific.
This type of opportunity identification like all opportunity identification requires an organized and systematic approach, (p 68). In your industry or market, now what are you going to look for that according to Drucker is in front of you? Do monthly reviews include an opportunity focus, innovation focus or are they related to operational performance only? Without a focus on opportunities, how successful do you think that you will be?
Now, what action will you take to identify opportunities? It could be as simple as changing your monthly reviews to incorporate an opportunity session. According to one executive, allowing an opportunity focus in the monthly process allowed for an entrepreneurial mentality to develop and spread in the company.
All the best in your opportunity journey. Check out my website for more information on the existing business, discovering opportunities and innovation.
My next blog on Discovering Opportunities is on – process need.