Designing for superior business performance

A guide for technology, creative and startup leaders

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it..”
Ronald Regan

Choice 2: Where we play - Assess opportunities and threats

Assess opportunities and threats from the economic trends and events.

In this chapter

Assess economic factors that can affect the demand for your value proposition, influence the attributes of your value proposition to maintain relevance and demand.
Assess economic factors that can affect your costs of production or cost of supply or supply availability.

Introduction - economic factors driving change

Describes trends or events in Economic situation / state including interest rates, inflation, growth versus recession, currency exchange rate, employment rate. Rising inflation, economic slowdowns for example make consumers nervous about spending particularly on discretionary (non-essential items).
This nervousness spreads as businesses cut production in response the reduced demand, which in turn causes B2B suppliers to cut production in response to reduced demand.
Alternatively, a growing economy characterised by consumer, and business confidence is likely to drive demand for many products and services. Different industries can have different experiences at different stages of the economic cycle. Debt collection and credit evaluation agencies may do better in struggling economic environments for example. As part of considering supply and production costs capture expectations for how economic factors could influence suppliers and the cost of production.

Economic cycle

Identify the point on the cycle where it seems that the environment is economically.

Phase	Characteristics of the phase
Recovery phase	Stimulatory economic policies Confidence (business / consumer) starting to trend up Stimulatory economic policies Confidence (business / consumer) starting to trend up Inflation falling Unemployment has topped out Interest rates and supply of money is favorable Stock market is rising Commodity prices rising Property prices have ceased falling
Early upswing phase	Confidence continues to increase Healthy economic growth Inflation remains low Unemployment begins to reduce Interest rates and supply of money is favorable Unemployment has topped out Interest rates and supply of money is favorable Stock market uptrend continues Commodity prices strong Property prices rising
Late upswing phase	Boom mentality Inflation gradually picks up Monetary policy becoming more restrictive Unemployment levels low Stock market topping out Commodity prices rising strongly Property prices have been rising strongly
Downswing phase	Confidence suddenly drop Inflation continues to rise Monetary policy remains restrictive Interest rates rising Unemployment may have increased Stock market begins to fall Commodity prices falling Property prices topped out
Recession phase	Consumer and business confidence is weak Inflation peaks Production is low or falling Excess inventory levels compromise cash flow for many businesses Interest rates topped out and falling to initiate recovery Stock market bottoming Commodity prices weak Property prices weak

Economic assessment

Capture, investigate and sustain (journal style) the relevant economic trends and events from the characteristics above inflation, interest rates, property and commodity prices, stock market trend, consumer and business confidence trends.

Economic phase

Economic phase influencing demand, supply or production costs in this external environment.

Observations

Record your observations in here e.g. Inflation rising monetary policy tightening, with rising interest rates along with falling consumer confidence

What are you seeing?

Beliefs

What do you believe are the implications for the industry segment from these observations? e.g. Entering downswing phase

What are you believing?

Expectations

What are your expectations from this / these beliefs.

Example: Demand will reduce and there will be a need to reduce fixed costs in response to the reduction in demand.

What are you expecting to happen?

Continue your assessment

Continue on to the Next section to start with an assessment of what social factors could influence current and future demands for your value proposition or the cost to deliver it. You can do this for each of your where to play arena(s), or return the Guide home to choose a different option.

Guide home Next

Social assessment

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