Why businesses need to be ready to change or risk being left behind

That sounds very philosophical. Have you been raiding the Chinese fortune crackers again?

Oh very funny. Excuse me whilst I churn out one of the most repeated business mantras of modern times and good old Jack Welch's line that if the rate of change going on outside your business is faster than the rate of change inside your business, then chances you’ll soon be going out of business. Or words to that effect. It might sound like classic US management speak, but how many businesses really are able to adapt and cope with changing times?  It is one thing saying you have a flexible business model it is another proving it. But there has arguably never been a more important time for companies to look and change what they are doing.

How do you mean? 

We are living in such disruptive times. Be it politically, economically or socially. The wine trade, for example, is still coming to terms with last summer's collapse in the pound which continues to wreak havoc across the sector, not just here in the UK but around the world. What's more we've not seen anything yet. The UK has not even triggered the infamous Article 50 and we are already seeing the impact the forthcoming Brexit is having on the economy. 

OK I’m all ears... 

What is particularly crippling for business is uncertainty and we are up to our neck in it. Talk to any UK business chief, big or small, good or bad and they all say the same thing. The current trading conditions make normal business planning impossible. Particularly for an industry that is 99% reliant on importing the goods it sells from around the world. Goods that are bought not just on how good they are but how much they cost due to the relevant strengths of the currencies where they come from. Drop the equivalent of a bomb on the value of those key currencies and you have the nightmare scenario we all find ourselves in. Yes, currencies move up and down all the time, but not to this degree and over such a length of time.

So what's all this about the need to change? 

Well, it stands for reason that if the trading conditions you are operating in have changed completely then it does not make sense to carry on doing business in the same way. It is striking how polarised the wine industry has become in the short period of time since the referendum vote. Split between those companies that have carried on as normal and those businesses that are dramatically changing the way they work. This is not just a post Brexit trend, but it has helped intensify and shine the spotlight even more on how companies are choosing to operate. 

 

In what way? 

It is all about taking more control, to coin a phrase, of your own supply chain. In particular taking steps to do all you can to manage the costs at each stage of your own trading circle and where possible put in measures that make them most efficient. That might mean going out and working with producers to make and blend your own wine. It could be bottling more wine in the UK and creating more exclusive labels. Or it might mean looking outside your current markets and opening up new areas, moving in to exports, or shipping wine direct from producers to other customers around the world. It could even mean moving exclusively out of wine and start sourcing, shipping and selling spirits, beers or soft drinks. Standing still and being tossed one way or another based on the whim of the currency markets does not seem the best place to be. 

But are you not just advocating change for change’s sake? 

Absolutely not. There is no point changing your business model if you are not sure a switch in direction is going to work. It might mean just re-evaluating what you are already doing and making sure every part of the business is operating as efficiently as possible. Tweaking 5% to 10% of what you do could have a much bigger impact on the overall business. But spreading your risk, working in different channels, selling different types of wine or alternative drink categories, gives you flexibility and protects you far more from being over reliant on one channel or a limited number of customers. It might even mean we are not all fixated by any movement in the rate of sterling, the euro or dollar. And there is more change going on there than even Jack Welch could handle. 

* This article was first published by Grapevine the fortnightly insights, news and views publication I produce for the London Wine Fair.