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What is Business Performance All About? Anticipating Market Changes
Starting with the Basics on What is Business Performance
A business thrives with the right knowledge and the ability to use that knowledge to affect beneficial change. Making any significant changes to your own business must take a myriad of factors into consideration. Any of these can affect business performance. And in order to find what is business performance, we use a number of indicators for business health.

Perhaps the most well-known of these is the proverbial bottom line—profit. But is this the best indicator for business performance? In the short term, this may seem better than most, but it can prove to be misleading or even damaging in the long run, if taken as the sole indicator of a company's health and future prospects.

Strategic Profit or Greedy Madness
A perfect example of this was the short-sighted greed of Wall Street bankers to take on risky collateralised debt obligations (CDOs). Insurance giant, AIG, found this out when they overloaded its level of risk by insuring not only the investment bank's CDO, but also by taking on speculators betting on those same CDOs. It was like an insurance company covering a house for its owner and also for a dozen speculators taking out duplicate policies on the same physical property. If the one house were to burn down, then the insurance company would need to pay 13 claims!

AIG agents made handsome commissions. There was no incentive to exercise caution or restraint. It was a feeding frenzy. Profits for the banks looked incredible until something went wrong. The banks had been building a bubble, but seemingly ignorant of the possibility that it might burst. The 2008 failure of so many companies stands as a warning to us all. Want more facts? The Academy Award winning documentary, Inside Job, tells this story in chilling detail.

Indicators Everywhere
For any business or industry, there are internal as well as external indicators. And sometimes the indicators cannot be packaged so neatly or reduced so succinctly into a simple number. And numbers can be misinterpreted. Gauging the future remains a fine art, not a cold, calculating science.

At Applications Developer, naturally we develop software. The industry seems secure, and for good reason. For more than a generation, software has remained a strong and in-demand trade. Software products are everywhere. Software development services have surrounded the globe. As technology changes, demands for new software continue to grow. So, the future looks good for software creation.

Developing software is a detail-oriented activity, and there are a great many details. That can make any development project cost more than mere pocket change. That's why it would be nice to anticipate market changes before solidifying the plan on a development project, especially if that project affects the entire enterprise.

Here is where a crystal ball would come in handy. But short of any such magic, we can look at existing conditions and trends, no matter what the industry, and give an educated guess, not necessarily on specific events or specific dates, but more of a qualitative and educated guess on the direction of an industry segment.

Case-in-Point
No one can predict everything that will affect the future of your industry segment, but some indicators can be confirmed as fairly reliable. From the mid-1970s to the mid-1980s, phototypesetting proved to be a booming business. Computer microchips had made such things possible. Printing firms and graphic artists were investing in the technology in massive numbers. The companies which developed and sold the equipment grew exponentially. In the late 1980s, however, computers had become cheaper, smaller, faster and more powerful. Combined with the advent of laser printers, the phototypesetter had suddenly turned into a dinosaur. This should not have come as a surprise. The steady progress of technology should have made such an eventuality obvious, and yet the industry had not prepared for its own demise.

By understanding the nature of the market segment and the market in general, we can anticipate some kinds of future changes. The specifics will remain unknown, but the general direction of current changes will tend to predict the overall effect of those changes. The phototypesetting industry should have anticipated that plummeting computer prices would likely make their $60,000 front-ends obsolete. The development of laser printers may not have been fully anticipated, but it doesn't take a crystal ball to imagine such things.

Improving Your Own Business Performance
When you ask yourself, "What is business performance?" you can include such things as positioning in the real world, not only within your industry segment, but of the segment itself in relation to the world-at-large. Will the segment grow stronger, or will it disappear as did phototypesetting near the end of the last century?

When it comes to making changes to your enterprise, like commissioning a software development firm to build a new and better system, you want those changes to work not only for the current state of your business and your industry segment, but also for future conditions, as well. You want to anticipate every meaningful dimension of change that might affect your business.



What is Business Performance All About?

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