Welcome back to another episode of Monetization Nation with Andy Goldstrom. In the last episode, we discussed Andy’s entrepreneurial journey and lessons he learned about being a good leader, such as why leaders should always speak last. In this episode, we’re going to discuss four tectonic shifts Andy sees today and three actions leaders need to take to adapt to change, such as tectonic shifts.
4 Tectonic Shifts in the Market
Tectonic shifts are trends and changes in the market. Andy explained four tectonic shifts that are happening right now that we should be aware of.
In the United States, there are two key demographics we should focus on.
“There are two rats going through a snake,” Andy explained. “They are the baby boomers, who are either retired or getting closer to retirement, and the millennials, who are going to make up more than a quarter of the workforce within a year or two.”
As baby boomers move into retirement, there is going to be a need for more retirement homes, financial services, health care, etc. As millennials move into the workforce, they are going to want to live in cities and want more convenience and accessibility. We need to know who we are catering to. “If you can point your arrow at either of those things, chances are you’ll have some opportunity,” Andy said.
Technology is an obvious tectonic shift we have all seen.
As more and more technology is created, prices have dropped significantly, while the need for competency has gone up. “The changes in technology have allowed new businesses to pop up because the barriers to entry are lower, but also it’s allowing all these businesses to scale,” Andy said.
Technology makes it easier for businesses to connect with a community. From their home, they can reach millions of people from across the world—essentially anyone with a computer. Technology provides fast ways to communicate, deliver information, arrange payments and meetings, and more.
With the increase in technology, regulation has become an increasing shift.
“Because the competency [of technology] has gone up and the cost has gone down, the [next] trend is regulation,” Andy said. “With more technology, there’s more ability to create fraud or create problems, and you’ve seen this well with all these scammers . . . So regulation from cybersecurity to monitoring technology is going to change quite a bit.”
Finally, recurring revenue has become very important within businesses. Instead of relying on single payments from a product, subscriptions and recurring revenue give companies consistently and almost guaranteed income every month.
“Subscriptions [are] the revenue amount that you can count on which allows you to invest more in your niche and determine where you’re going to make your investments,” Andy explained. “What your company is going to be worth is so much higher when you have recurring revenues.”
It is essential for leaders to adapt to these changes and tectonic shifts. McKinsey created a recent study that looked at what the new normal is. In this study, there were five key elements that stood out to Andy.
1. Uncertainty is the new normal.
2. The winners are those who can adapt the fastest.
3. Leaders need to envision new opportunities.
4. You need to leverage talent.
5. Companies need to operate more efficiently.
With uncertainty as to the new normal, it is crucial for leaders to know how to adapt. Along with adapting, they must also be able to envision new opportunities as things change. These five takeaways from the study shows just how important it is to know how to accept and adapt to change.
3 Actions Leaders Can Take to Adapt to Change
Andy gave three things a leader needs to do in order to adapt to change.
1. Develop A Changing Mindset
A strong leader needs to have a changing mindset. “It’s [about] changing your mindset of the way you lead,” Andy said. “People are used to leading in the same way [they did] five years ago. It doesn’t work the same.”
We must have the mindset that change is inevitable and necessary. Change is often a good thing, not a bad thing. Once we recognize this, it will be easier to accept feedback and make the changes we need in order to grow our businesses.
According to Andy, there are four different biases many leaders have: Quantification bias, adrenaline bias, sophistication bias, and opportunity bias. These biases often get in the way of a changing mindset and must be overcome.
A quantification bias is disregarding good ideas or an opportunity because we can’t reliably calculate the return of investment (Source: Chief Executive). This often gets in the way of success as many great opportunities often require intuition and taking a risk.
An adrenaline bias is a lack of patience. It is thinking we don’t have enough time to accomplish everything we need to and defaulting to the method that works the fastest.
Someone in this bias is “drawn to solutions that will have the most immediate impact, even if those solutions don’t address the underlying issues in the organization.” (Source: Chief Executive) Change often takes time. Once we escape the adrenaline bias and realize this, we will be able to make more effective changes in our businesses.
A sophistication bias is favoring the more complicated solution over the simple one. Someone with this bias thinks that better solutions always take more time and investment, but this isn’t always the case.
An opportunity bias is pursuing an opportunity based on instinct or an opinion formed without enough information. Andy explained, “They choose opportunities based upon what somebody tells them—the shiny object or what I call gut instinct or conjecture—as opposed to actual opportunities that really lead to business fitness.” Opportunity isn’t only based on gut instinct; we also need to prepare scientifically.
A changing mindset can’t get caught in these four biases. We need to always have an open mind and be willing to try new ways of doing things. There are limitless paths to success. Once we understand this, we will be much more open to change and new ideas. “A mind shift change can help leaders move forward,” Andy said.
2. Prepare (Scientifically)
As leaders adapt to change, they must prepare. “You have to prepare scientifically as opposed to based upon your gut instinct,” Andy said. This means we have to do our “homework” and research.
While there is opportunity found in “gut instinct,” it always requires preparation and research. Taking a business risk doesn’t mean leaping off a cliff and hoping for the best. It means researching the best method to get down the cliff and trusting that it works. Taking a risk still requires research, time, and effort.
“The best way to do your ‘homework’ is to talk to your existing customers,” Andy said. “Say, ‘I’m having to adapt my business’ or ‘I want to expand my business and you’ve been a great client. . . What’s your feedback on it?’ That’s the best way for new and prospective customers.”
While adapting to changes we can do primary and secondary research. Primary research means conducting our own research while secondary research involves looking at the research of others. Primary research often includes surveys, focus groups, and interviews. Secondary research often includes looking at research papers, academic journals, and other published works.
Once we prepare and do the research, we will be much more ready to adapt to change successfully.
A good leader needs to be able to execute.
“You have to be able to pull the trigger. You have to know when to move forward when to manage the risk appropriately, how to measure it, and you have to know how to say ‘no’ or how to . . . pull the plug on something that’s just not working, rather than continue to fortify it,” Andy said.
A good leader must be decisive as they make the final decision. After recognizing change and undergoing the preparation for change, it eventually comes down to a choice. Is it worth it? Will the change be profitable or will it fail? Adapting to change requires the ability to weigh the pros and cons when making the final decision.
Thank you so much Andy for sharing your stories and knowledge with us today. Here are some of my key takeaways from this episode:
1. There are at least four tectonic shifts occurring today: demographics, technology, regulation, and recurring revenue.
2. A good leader needs to be able to adapt to change as we live in a world where uncertainty is the new normal.
3. In order to adapt to change, a leader must have a changing mindset. We must recognize that change is often a good thing.
4. Adapting to change requires preparation and research.
5. Ultimately, adapting to change comes down to a final decision. Will the change be beneficial? A leader must be able to execute the final decision.
Connect with Andy
If you enjoyed this interview and want to learn more about Andy, connect with him on his LinkedIn. If you want to learn more about his company, Midcourse Advisors, you can visit his website at midcourseadvisors.com.
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