The first half of 2017 has presented a complex picture in terms of strategic planning, operating framework and investments to sustain and gain new business opportunities. The low global economic growth, combined with the political uncertainty coming from the United States and Europe, are issues of concern to the board members of Mexican companies. Many businesses have faced the dilemma of stopping everything or continuing with their business development plans in terms of productive investment, innovation and market development programs.
This uncertainty has traditionally been linked to variables such as economic volatility, changes in interest and or or exchange rates, among other factors. However, the equation has now been complicated by the appearance of additional variables such as international geopolitics, the short and medium-term electoral framework, the pressure of the NAFTA negotiations, the aspects of the new governing administration of the USA, the effect of Brexit on the European Union, China and its development framework, and finally the Mexican presidential succession in 2018.
Despite the uncertainty, Mexico continues to be a competitive economic force in comparison to other emerging countries, as shown in recent exchange rates, the MEXIPC and the strength of the Banco de Mexico’s reserves. Furthermore, Mexico has recently replaced Canada to become the second largest exporter to the United States, behind China.
Nevertheless, the concern in the business world is focused on public finances, due to the increase of the historical balance of the public sector financial requirements (SHRFSP), which is the most inclusive method of calculating the public debt. The increase in debt could affect the sovereign credit rating, with a consequent effect on the total cost of the public debt, impacting on the Mexican Government’s various strategic investment programs.
This all suggests that 2017 will be a challenging year. In fact, the majority of large business leaders are expecting this year to be even more challenging than 2016, coupled with a weak sales growth of a single digit.
Customer-centered innovation
Faced with this outlook, boards and CEO’s need to remember what the main objectives of their businesses are: increase profitability, ensure regulatory compliance and keep sustaining results.
To achieve these objectives, it is crucial to adapt or find new business models and focus on new, more diverse opportunities. This implies that the company needs to become an ambidextrous entity. A company, which maintains and maximizes the current business with one hand, and introduces crucial innovative factors with the other by using disruptive technology and business practices to impact on:
- Productivity and efficiency (in operations, finance and human resources)
- The improvement of client interaction (with direct messages and social networks)
- An increase in the products and services on offer
Additionally, companies should encourage the use of Customer Centric methods such as IDEO’s Design Thinking, and promote a general action framework as seen below:
The introduction of new business arenas will allow for newer and more important business opportunities in other areas of the market, which will complement the current ones.
Experience has taught us that this plan of action is more current and suitable when operating conditions are limited in traditional markets, by integrating areas of additional growth into a market where the traditional competitors are already busy managing the crisis conditions that we have previously described.
Now is not the time to try and apply former economic or business models, which are usually limited by the environment’s conditions. It is the time to open up new areas of opportunity, which in normal business conditions would not usually be attractive in the short term.
Now is the time to apply a real disruptive innovation strategy that promotes the search of new business opportunities while also keeping a critical eye out. The time is now… when many of your competitors are sorting out their crises. It is a historic moment, we must trust in our business abilities and always be one step ahead. Go for it and good luck.
