Look Out For Business Disruptions In 2015

Perhaps your business or industry has recently experienced disruptions that may affect smooth continuity into the future. Even if not, there may be reason to consider the occurrences in the education sector, which seems destined for invaluable transformation.

The first quarter of every year presents great opportunities and threats for education oriented businesses in this nation. The outcome of the Kenya certificate of primary education and Kenya certificate of secondary education has traditionally been positive news for excelling students as well as institutions. It inevitably transforms to profitable businesses for the successful institutions.

Excellent results have freely advertised the respective institutions, thus leading to improved enrollments.  The performance differentiators have in turn led to constantly increased fees leading to acquisition and maintenance of high growth trajectories.

However, new policy guidelines affecting the ranking of students and schools have seemingly changed the equation, especially for high performers. Examination performance rankings will no longer be implemented. The immediate impact is that institutions will need to work harder to market their excellent performances. They will undoubtedly still need to maintain their status, through continued attraction of high enrollments.

Imperatively, abolishing just one attribute of the school examination system, has invaluably affected the conduct and performance of business in the educational sector.  Obviously, some will still thrive, whereas others will negatively experience, the full impact of this policy change.

Based on the same understanding, many other related businesses may adversely be affected. Even those unaffected by the dynamics in the educational sector, will be experiencing upheavals of one form or the other. Business dynamics no longer remain constant.  There are numerous attributes that cause disruptions, which variously affect routine performance.

Firstly, consumer behavior contributes substantially to successful business continuity. The customer is the reason for existence of any business. It is however said that some people venture into business, aiming to somehow occupy themselves.  Nevertheless, it is doubtful whether any business can continue operating without acquiring and retaining adequate customer numbers. Their consumption will naturally lead to sustainably successful business operations. Moreover, customers are known to continually change their preferences, in line with changing needs and market dynamics.

Conversely, there are two types of customers. On one hand is the external customer, who is essentially the consumer of goods and services. Alternatively, there is the internal customer or employee, who is supposed to keep serving and therefore attracting the external customer. Challenges attributable to the internal customer will obviously affect the external customer. Thus, any business that ignores the plight of the internal customer for whatever reasons can only be sabotaging its own successful continuity.

Secondly, business disruptions can be occasioned by new entrants in the market place. In a free economy like Kenya, venders and competitors keep coming from China, Europe, Asia and even other African Countries.  They are commonly referred to as investors and are easily embraced, especially where there are prospects of injections of dollars and other foreign currencies into the economy.

The third cause of business disruption is closely related products, also known as substitutes.  These products continue causing serious distractions in the economy. In a country where citizens are endowed with insatiable urge for imported products, all sorts of wares keep flowing into the economy. Most often, they disrupt existing consumption patterns, especially when cheaper products are involved. Many years ago for instance, we used to boast of our own vibrant textile industry. The same was eventually brought down on its knees by the importers of not only new, but also second hand clothes. What about the sisal industry?

The same was supported by expansive sisal farming especially in Thika as well as Taita Taveta Districts and outlying areas. A sudden surge of jute bag imports from the Far East saw the collapse of this once vibrant sector. East African Bag and Cordage Company closed doors in the late 80s. It seemingly regained footing upon re-emergence of sisal farming through REA Vipingo, a publicly quoted company. Nonetheless, sisal farming has never and may never regain its previous status.

The fourth category is the suppliers of goods and services. These ones are known to change their terms at will. They for instance prolong or withdraw the credit period to suit their own circumstances. They may also keep varying their qualities to the detriment of business. Prices and other terms may also be changed at short or no notice. The banking industry for example is known for its propensity to change the terms of credit to varying customers.

A fifth force of disruption is business rivalry. We have no doubt witnessed serious business rivalry amongst companies operating in the same sectors. The rivalry results from desire to wrestle customers from each other. Weak rivals are occasionally driven out of business. The extremely hostile case of East African Breweries versus Castle Breweries is still etched in our minds, many years later. Castle Breweries was eventually wrestled out of the Kenyan market. Business rivalry continues being experienced routinely sometimes on small, but highly disruptive scales.

Technological advancements also contribute immensely to business disruption. The tragedy is that they are dynamic and therefore subject to rapid changes. Progression in information technology largely contributes to the technological advancements. Added to this is globalization of the marketplace. The business environment has continued becoming borderless.  Information explosion dynamics especially driven by the ever vibrant internet take great credit on this. There is enormous information available on literary anything. The challenge is making sense and applying the information to our specific needs.

Although these disruptions are not exhaustive, they form the greatest impediments to business continuity. They equally present worthwhile opportunities of business growth, for those able to identify and exploit them. Their dynamism imperatively compels the business sector, to be constantly on the lookout for the threats and opportunities at the same time.

The need for strategy and strategic management can no longer be downplayed, especially in a highly competitive and dynamic business environment.  Specifically, application of strategy will always guide innovation and continuous improvement.  It will no doubt lead to discovery of intrinsic drivers that propel successful performance, in total disregard of need to compete externally. That will in turn yield sustainable competitive advantages for all businesses focusing towards continued growth and progress in competitive environments, during the year 2015 and beyond.

That should no doubt be applicable in the education sector as well. In the absence of the intrinsic mechanism described, it would have been difficult for Safaricom to maintain its status as the most profitable and dynamic organization, in the East and Central African region. If external driven competition was the benchmark; it would certainly have slackened the performance of Safaricom.

Inevitably, intrinsic competition is what leads to exploitation of full performance potential rather than the alternative.  Intrinsic competition therefore, needs to be encouraged and embraced by all, whatever it takes.  Seemingly, it not only ensures continued progress, but also guards against disruptions.

Meanwhile,

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