Over the last 24 months I had the honor of meeting with 100s of customers in over 35 different countries. Many of our discussions evolved around the economic crisis. No matter which country, companies across the globe felt or are still feeling the crisis. Granted: you can’t really compare the Ukraine that was forecast to post a 20% GDP contraction for 2009 with say a Qatar that even during the crisis still managed to grow at over 8 %. The interesting thing, however, is the fact that almost all companies are struggling with the same basic issues. And these issues have started building up over the past ten or so years:
- Increased speed: The speed of business has increased tremendously. Customers require ever more innovation at a faster pace. The Internet has opened up new channels and we need to keep our business open almost 24*7. There is no quiet period anymore.
- Increased volatility: With speed typically comes volatility. Indeed, reports show that global market volatility has increased tremendously. Just look at the oil price! Further there seem to be a great number of major events that impact certain economies (e.g. SARS, Tsunamis, Swine Flu, Lehman crisis).
- Increased risk & opportunity: Anybody who is familiar with options pricing understands that volatility creates tremendous risk & opportunity. Companies often come and go these days.
A recent example reminded me of this: The GPS market. Since the early 2000s innovative companies like Garmin, TomTom etc. have grown to multi billion USD businesses within just a few years. One could debate whether these businesses could have grown that quickly 20-30 years ago. In mid-October of 2009 Google announced the availability of GPS like services on their Android-powered smartphones. Indeed, the demos Google revealed showed that consumers can indeed potentially drop their separate GPS unit and rely on their mobile in the future. The effect on the stock price of the GPS manufacturers was dramatic: An average drop of 20% during that particular week. Investors were worried that more and more customers will rely on their smartphones in the future. Speed, volatility – risk, opportunity.
The implications for companies are clear: faster and smarter decision making is required. No longer can we afford to wait for a few weeks to get our sales numbers or to close our books. 6-months planning cycles will leave you behind the competition. 4-6 week forecast cycles will not allow you to react quickly enough to mitigate that risk or to seize that unique opportunity.
Time to upgrade our Performance Management processes & systems!