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Accurate Estimations of Powerful Trends Leads to Profitable Progress

Mar 18, 2008
"The future isn't what it used to be."
--Variously ascribed

This article points out that knowing about the existence of irresistible forces, getting organized to deal with them, and seeking advantages from them is not enough to achieve breakthrough gains and irresistible growth. By being aware of the degree and frequency of each force's volatility, you select relationships with just the right irresistible forces as well.

It's that comprehension, stimulated by the contents of this article, that will enable you to choose which irresistible forces to pursue and which to avoid to your best advantage.

Underestimation is a stall (a bad thinking habit that delays progress) that is unique to those who are adept at identifying and seeking out advantages from irresistible forces. Before learning the irresistible force management process, you need to be aware of this potentially most dangerous of all stalls.

Irresistible forces are not only powerful, they are usually also volatile. This combination of power and volatility make for a very difficult management environment, even for those who pay a great deal of attention to taking full advantage of irresistible forces.

Remember that however good your navigation skills, some boats are simply too insubstantial to weather the most severe of storms. Pursuing irresistible forces that you think you can handle, but cannot, will often be your organization's worst possible choice, because you are unwittingly courting disaster. Those who focus on irresistible forces that are less powerful and less volatile will have a large advantage in achieving the full benefits of being an irresistible growth enterprise.

American International Group (AIG) is one of the world's most successful insurers as measured by growth and profitability. Much of its new revenues have come outside the United States, over a span of many decades.

At a time when many saw worldwide insurance markets as limited in size and too risky, AIG realized that the potential volatility could be managed as long as excess competition did not occur in the markets it entered. In the United States, there are major profit cycles in property-casualty insurance that involve rotating from taking on excess risk at too-low prices selling with firmer prices for taking on much less risk. Having a large number of tough competitors forces insurers to take on this challenge.

AIG found that in many non-U.S. markets in the past, the government regulators were quite concerned that insurers stay solvent. To help this be the case, the regulators kept the number of licenses for competitors quite small.

Thus, before considering the inherent volatility of the local market, the competitive sources of profit cycles were much weaker than in the U.S. As a result, AIG benefited from two irresistible forces that could help it -- both limited competition and more rapid growth in the local economies it selected.

A less careful organization could have looked at the same situation after World War II and chosen instead to go after the fastest growing countries, without considering the likelihood of growing competition. The fastest growth countries, all things being equal, will probably have the fastest rate of new competitive entrants and experience the widest swings in local economic growth.

This combination could be lethal to an insurer's solvency if the forces coincided in too many countries at the same time. AIG did not have to worry about that problem.

If local regulation turned against such controlled competition, the company had plenty of warning and enough time to reduce its position. It could merely sail ahead in the relatively calmer seas of favorable regulation, enjoying the tail winds of both forces.

Similarly, if a pole has lots of grease on it, few people can climb very far up it. But give them another choice for getting to the top, like using a crane, and they can do fine.

In the same way, your choice of irresistible forces to pursue and avoid for your advantage will play an enormous role in your future success. You need to carefully match your resources to the challenges you will face. This is your most important strategic decision as an irresistible growth enterprise.

Yet, in choosing irresistible forces as environmental partners, many companies will err by underestimating what could happen. A frequent cause of this mis-evaluation is a too heavy reliance on historical patterns of fluctuation, rather than analysis of the potential for future fluctuation in degree and frequency.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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