Firm capacity to manage new trends

Business model innovation can increase resilience

Major trends and their impact

Regular emergence of new socioeconomic trends often means that organizations have to
change their business models (BMs) in order to remain competitive. Modification becomes
even more imperative with the arrival of what commentators term ‘megatrends’. In these
instances, effects are more profound and can also endure for much longer.
Demographic shifts, climate change and globalization are obvious examples of trends with
proven capacity to significantly influence behavior at both individual and firm levels.
Analysts also point to technology, with the more recent digital transformation having
considerable implications for companies. In addition to BMs, this major technological shift
additionally impacts on operations, employee competencies and the experience of product
and service users.

Business model innovation

Various definitions prevail but most regard BMs as offering a framework to guide how
organizations can create and deliver value to customers. Certain scholars propose models
which incorporate a range of different ‘building blocks’. It is argued that the impact of trends
on these elements necessitates that companies adapt their BMs more swiftly and frequently
than before. The effect is often greatest on a firm’s key resources and value proposition.
The pace of change is such that more creative approaches are becoming widely
advocated. This has increased the importance attached to business model innovation
(BMI), whereby different components are tailored to align with demands associated with a
specific trend.
Shrewd operators recognize that trends usher in fresh patterns that persist for greater or
lesser time and help generate new businesses and opportunities for existing ones. To
exploit, companies must find alternative ways to meet consumer requirements as they
evolve in the changed environment. Adding value to offerings is clearly wise, not least as it
might boost sales and persuade customers to pay higher prices. However, it is critical to
monitor the value proposition and adjust it accordingly to ensure it remains relevant.
Opportunity rarely comes free of risk, though. New trends invariably mean new challenges
in many facets of business. For instance, communication and efficiency suddenly become
more complex and unpredictable. A more comprehensive approach which incorporates a
diverse range of methods is therefore required.
Like in many other situations, a swift response can help the cause no end. One advantage
of acting quickly is greater likelihood that resources will be acquired and utilized more
effectively. For example, a new trend often demands different job skills. Companies can
thus ensure that employees are equipped with the necessary competencies and
qualifications.

DOI 10.1108/SD-01-2021-0009 VOL. 37 NO. 4 2021, pp. 15-18, © Emerald Publishing Limited, ISSN 0258-0543 j STRATEGIC DIRECTION j PAGE 15
 Collaborating with new partners via digital platforms is a potential way of achieving this.
Furthermore, such associations can:
䊏 help broaden the firm’s overall capabilities; and
䊏 facilitate engagement in new critical activities.

In terms of the latter, use of big data to generate more accurate demand forecasts is one
possibility. Another option might be to exploit digitalization to clearly define customer
segments and appropriate channels.
Leaders must remain alert to the potential for these developments to change the cost
structure of their BM. Analysts believe a shift from established pricing models to alternatives
like freemium or dynamic pricing.

Organizational resilience
Plenty evidence exists to show that resilient firms are more capable than most to face the
uncertainties inherent in change. Such entities become much likelier to respond to
challenges posed at individual, group and company level.
Resilience has been explored in many different fields and broadly viewed as the ability to
bounce back from adversity and quickly restore equilibrium. Some scholars believe that a
resilient organization can reach a state superior to the one which existed prior to disruption.
Organizations can become more resilient through:
䊏 focusing on core internal values that include trust, commitment and empowerment;
䊏 strong emphasis on risk awareness;
䊏 effective leadership that helps build a culture within which sensitivity to change is the
norm; and
䊏 frequent communication to ensure everyone remains alert to challenges and
uncertainties.

Such measures are proven critical drivers of resilience. And with a genuine team effort,
firms can become flexible and agile enough to galvanize responses to the inevitable
disruption when a new trend makes its appearance.
Capacity for changes to present opportunity or risk is determined to some extent by how
they are managed. More specifically, academics believe it is the choice of resilience
strategy that can shape the outcome.

Proactive is best
Now various organizations are somewhat cagey by design. For them, the preferred
approach is to wait and see the impact of change. No action is taken beforehand. Sitting on

Shrewd operators recognize that trends usher in fresh

patterns that persist for greater or lesser time and help
generate new businesses and opportunities for existing
ones.

PAGE 16 j STRATEGIC DIRECTION j VOL. 37 NO. 4 2021

 A more comprehensive approach which incorporates a
diverse range of methods is therefore required.

the fence until after the event is risky to say the least though. Levels of communication and
integration are typically inadequate and can seriously harm the quality of customer
relations.
The one saving grace of adopting a reactive resilience strategy is the chance that
important problem-solving can be developed and fortified. Nonetheless, this is
arguably scant consolation for it becoming much tougher to differentiate the firm from
market rivals.
Such companies show minimal interest in any initiatives aiming to predict trends in advance.
Accusations of that nature certainly can’t be leveled at those adopting a proactive resilience
strategy. Indeed, the mantra that prevention is better than cure is fundamental within these
firms.
Various measures are used in the quest to remain one step ahead. Chief among them are:
䊏 methodical analysis of looming developments to ascertain potential impact on
business;
䊏 engagement with a wider range of stakeholders to help boost firm agility and resilience;
䊏 development of close relations with customers; and
䊏 making knowledge exchange with partners a top priority.

The strong emphasis on preparation and planning is palpable in these cases

and dramatically raises the prospect of achieving differentiation and performance
goals.
But perhaps the jewel in this particular crown is when proactive resilience strategies
also incorporate foresight methods. This increases the systematic nature of an
organization’s approach and enables earlier identification of trends and possible
implications.
The rationale behind choosing foresight methods is usually driven by issues related to cost,
applicability, time needed and the intended purpose. However, it’s feasible to assume that
impulse or intuition occasionally play some part too.
Advocates of such methods point out the scope to enhance the potency of proactive
resilience strategies and permit more appropriate BMI. Since BMI can prove a major source
of value and competitiveness that is difficult for others to replicate, the importance of this
should be recognized.
Companies must therefore ensure that the requisite knowledge, skills
and enthusiasm are in place so that BMI can be effectively implemented. Used
as part of the overall proactive approach, the measures reduce the possibility of
getting caught off-guard when change occurs. Certain observers even claim that
firms can be in a position to actually shape the future as opposed to merely reacting
to it.

Comment
The review is based on: “Organisational resilience: a qualitative study about how
organisations handle trends and their effects on business models from experts’ views”

VOL. 37 NO. 4 2021 j STRATEGIC DIRECTION j PAGE 17

 by Granig and Hilgarter (2020), published in International Journal of Innovation
Keywords:
Science. Emerging trends often demand changes to existing business models in order
Business model,
Resilience, to help alleviate inevitable risks involved. Firms which respond with proactive strategies
Business model innovation, are likely to prove more resilient in the face of significant change and exploit
Future trends opportunities enable by these trends.

Reference
Granig, P. and Hilgarter, K. (2020), “Organisational resilience: a qualitative study about how
organisations handle trends and their effects on business models from experts’ views”, International
Journal of Innovation Science, ISSN 1757-2223, doi: 10.1108/IJIS-06-2020-0086.

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