Growth of a Venture:
Dominating The Market through Management and Contingency planning.
The business market,
whether being observed by a Mixed Market Capitalist, a Laissez-Faire Free-Marketeer or a Command System Stalwart, all will admit to the difficulty of predicting the troughs and ridges of the Business Market. In addition to strong management and contingency planning, the ability to exploit market trends for growth is the dream of any venturous enterprise. Ironically, it takes strong management and contingency planning to ride the waves of market flows.
Business Analysts typically use economic principles and group macroeconomic statistics under one of three headings: leading, lagging or coincident - literally speaking, Looking Forward, Looking Back or Live Observation.
Indicators are a strong tool for identifying market trends but coincident and lagging indicators provide decision makers hindsight which is only good for creating empirical models. The trick or goal is to look at the leading economic indicators. The hungry enterprisers are trying, like Wall Street traders, to find the next big wave.
To put a finer point on it, gor a predictive value investors and business managers use lagging or coincident indicators to analyze previous successes and failures. They must be current, must be forward-looking and must discount current values according to future expectations. For leading indicators or new waves, meaningful statistics about the direction of a company start with the major gauges and the information they provide about:
- A Tested or Proven Concept
- Stock and Stock Futures Markets
- Changes in Regulations
- Product Demand, Overseas Sales, Success in Other Markets and Transferability
- Proprietary or Intellectual Values
- Commodity Prices, Production Costs and Tech Solutions
- Cost of Customer Acquisitions, New Products Requiring Customer Education
A business might not be viable until the right tech solution or regulation comes along. For example, The Accessible Health Care Act has created hurdles to jump but also business opportunities for insurance companies, consulting firms, and providers.
In investments these measures are crucial but aren't generally regarded as economic indicators necessarily. This is because investors only look a few weeks or months at most into the future. Conversely, business analyst attempt to see trends weeks, months and years into the future; they are called Futurists.
“I am a futurist. I can see what the world will look like and I can see what the world will need to make that future worth living for. I see what we will need and I invent the thing that will help us get there. That’s how I invented my armor. That’s how the avengers were born. That’s how every idea I’ve ever had in the worlds has come to be. I invent the solution.”
- Tony stark
The futurist is looking for the next iPhone, the next Facebook and the next wave. A futurist invents the solution before the problem.
On the other side of the same coin it is possible for a business to survive in a bad market given the right circumstances. It goes without saying vinyl is dead but a single quality record store which specializes in the finest records, in-store and online for collectors, can be very successful. There’s a tipping of the scale when the market becomes so bad, the wave is so long gone, only the best survive because all that’s left is the fanatics and the crusaders. Think of it as the calm water after the swell has passed.
Seth Godin refers to this as “the fringes;” in his lectures he draws a large circle with edges around it.
The larger center represents Mass Media or the “The Next Big Thing.” This is where the mega companies live and the majority of the consumers go, but the profits are spread thin. The surrounding areas are the borders where the really passionate people spend their money - Vinyl records, Classic Cars, Comic Books, and soon DVD’s and magazines. There is more money here but more risks to go along with it. Some businesses seek out the fringes as their target for that very reason but that’s a topic for another day.
The reason it bears discussion in a market growth discussion is because it takes an expert to operate in the fringes. It takes a passionate person who only wants to serve other equally passionate customers and be successful at it. It’s a viable strategy for a business IF the right management is in place.
The point of interest here is venture growth through market progressions. In order to be truly successful an entrepreneur must know where the next wave is going to be.
Good businesses know how to ride a wave, Great ones know how to get in front of one.
Ride the Wave and Stand Up
There is a great article found on the website Extreme Horizon titled “Learn How to Surf.” The article has no business references whatsoever but the metaphor is clear. Among the basic assumptions such as balance and essential equipment the author discusses the finer points of successful wave riding including “Choosing The Right Spot,” Paddling, “Duck Diving,” Catching The Wave, Standing Up and lastly Angling On A Wave.
An entire commentary could be dedicated to this metaphor however the points are not so obvious they don’t warrant some enjoyable explanations.
Choosing the right spot in business is identifying and capitalizing on trends or societal changes which will create new avenues for businesses or alter the way companies currently operate within a space. A past example would be Pandora, iHeart, Spotify and alike; these companies identified the trend of “borrowed music.” More listeners were getting there music from YouTube than iTunes and advertisers were biting supplying the profit center for each video posted. Streaming media was the future and venturist like Daniel Ek, Will Glaser, Jon Kraft, and Tim Westergren knew it; the result, these “music recommendation services” have changed how people listen to music all over the world.
In surfing there is a key known as “Catching the Wedge.” The Wedge is a surfing, bodyboarding and bodysurfing spot located at the extreme east end of the Balboa Peninsula in Newport Beach, California. During a south swell of the right size and direction, the Wedge can produce huge waves up to 30 feet (9.1 m) high.
The waves are a by-product of improvements to the groin (rock jetty) on the west side of the Newport Harbor entrance undertaken during the 1930s. When conditions are right, and a wave approaches the shore at the proper angle (most generally a south swell), an approaching wave will reflect off the jetty creating a second wave. The reflected wave meets up with the following wave of the set and forms a peak, and this pattern can repeat for several following waves as well. The combined effect of the reflected wave and the incoming wave creates a combined wave much larger than either of the two separate waves and occurs very rapidly and forms waves in a very unpredictable and "unstable" pattern, so that no two waves are alike and the exact breaking point is difficult to predict even for an experienced surfer.
Surfers like Dan Weikel know these waves are the most rewarding experience a die-hard surfer can have but also the most dangerous. He also knows you need a crew of experts to properly predict the impending monsters using weather, physics and triangulation. Pick the wrong spot and not only will a rider miss the wave; they could be seriously injured or worse. Much like an entrepreneur who picks and maintains a failing marketing plan, not understanding how to be in front a big movement in business can be massive cost.
Paddling refers to the endurance it takes to position the company in front of the wave. The business must have the stamina and resources to push into the pivotal spot necessary for maximum gain. This requires planning ahead, positive cash flow and financial management, problem solving and welcoming change. Surfers know they need to be prepared to paddle even when they are exhausted; they also know to be ready to changes direction on a seconds notice to readjust. Companies will claw their way through if necessary but when the next big move is happening all energies must be put into reaching the spot needed to be in.
Duck Diving is intentionally evading the bad waves or the ones a company wasn’t ready for. An entrepreneur cannot put all their efforts into a development their not fully prepared or do not wholly believe in. In surfing duck diving is most efficient way to move under a swell so as not exert precious energies. This can be large companies who will pause a season before jumping into a new space or a small business waiting to go to next year’s product expo.
Standing Up is about controlling the beast for fleeting moment in sun. The magnificent instance when an entity is climbing the immense force of something larger than itself, alone at the top looking back on the stragglers and ahead to the imminent ride. Jessica Alba’s Company, Honest Baby, has just reached its highest point with products dominating the marketplace for natural and attractive baby brands.
Finally, angling is the aim of traversing the wave for as long as possible. Surfers know the direction they want to go, left or right, in order to best catch the next swell. Sloppy companies will angle the wave right to the end without considering how to best situate themselves when the ride is over. MySpace was correct in capturing the social media craze but failed to see the direction it was headed in which was privacy and exclusivity.
Back to reality… How to Actually Do it!
Metaphors aside, a company must identify large changes in the market to be in position to play a key role in the development of the wave as well as profit from it. The only way small businesses and entrepreneurs achieve growth through market fluctuations is through proper management and prevailing contingency planning.
For how to manage your small business through market changes read Part 2.