CEO Best Practices
Winning in a Downturn
Tactics to Survive and Thrive in Turbulent Times.
Rohit Talwar
CEO – Fast Future
I’d like to draw on our current research on 'Winning in a Downturn,'
to share a number of strategies and tactics that businesses of all
sizes can implement to survive the current turbulence and secure the
future.
1. Use scenarios to plan for an uncertain future
In this uncertain and turbulent economic climate, businesses can
no longer rely on a single business plan or set of assumptions. Instead
the most successful are tackling the uncertainty by using scenario
planning to prepare for a wide range of possible outcomes and to
identify the opportunities that could arise even in the worst case
scenarios. At the same time, they are asking themselves tough
questions under each scenario:
- Which market segments and aspects of our business would be most
at risk?
- What would the implications be in terms of products, pricing and
who our key customers would be?
- What resources should we keep or let go?
- What actions should we be taking under which financial climate?
2. You can still grow in a downturn
Remember, even in a downturn, there is opportunity. A 5% shrinkage
in an economy means that 95% of activity is still taking place. In a
worst case scenario of 25% unemployment, 75% of workers are still
employed, and their firms are still buying, trading and needing
products and services.
Some of the world's biggest companies launched in economic
downturns (such as Microsoft, HP and Tesco). Recessions create huge
upside opportunities. Rents are lower, raw materials are cheaper,
firms are keener to trade, capital goods are cheaper and labor is
more abundant. Under these circumstances, those with the right
mindset can really accelerate business growth.
If your rivals are focused on cost cutting, they are probably not
paying enough attention to their customers. This creates a
tremendous opportunity to step in, examine and enhance every aspect
of your customer offering, add more value, differentiate service,
make it better and easier for customers to do business with you and
increase their loyalty as a result.
3. Revisit the business plan regularly
Tight financial management is essential to ensure you have the
resources to continue in business. In a volatile economy, we have to
rework our business model on a regular basis to ensure we can
survive on smaller orders and lower revenues per transaction.
Cutting inventories and reducing your ‘environmental footprint’ can
play a massive part by eliminating waste and improving energy
efficiency.
4. Deepen the customer dialogue
Investing time creating a long-term dialogue with your customers
will reap long term rewards. The better you understand (i) how your
products and services are used by your customers, (ii) the technical
and logistical challenges they face and (iii) what their future
plans are, the greater the opportunity to provide genuine added
value solutions and deepen the long-term relationship. This kind of
insight helps you move from simply promoting what your products can
do to co-developing solutions and technological innovations for
‘what they want’.
5. Engage and support the supply chain
Maintain a constant dialogue across your entire industry supply
chain. Talk to your staff, suppliers, partners, competitors,
regulators and investors to understand how they are all being
affected and how they are responding. Use what you learn to identify
ways of adding value to your end customers and to your products and
services through collaborations across the supply chain.
Thinking out of the box about how to build long term supply chain
relationships can pay big dividends. At a time when your competitors
might be more internally focused, simple investments of time and
resources to help address issues for the supply chain will help
differentiate you. This might include lending staff time to solve
technical problems, helping with product innovation, co-marketing
arrangements, contributing to training costs and even mentoring new
managers in smaller suppliers.
6. Invest in your people
Investing in your people will pay dividends in terms of morale and
the positive impact on customers. Demotivated staff don’t generally
perform well or deliver good service. Low cost training options
include e-learning, accelerated learning solutions, secondments, job
swaps, inviting in guest speakers from the industry and promoting
involvement in physical and virtual social networks. Encouraging
staff participation in volunteering programs for good causes can
bring massive motivational benefits.
7. Embrace open innovation approaches
Many firms such as P&G and Kraft are adopting a more open approach
to innovation – encouraging and rewarding those outside the business
to contribute ideas. This approach dramatically expands your
research and development capability, accelerates new product and
process development, cuts costs and provides an effective way to
increase exposure to your brand. For smaller firms, it provides an
opportunity to be part of the larger innovation ecosystems for big
companies.
8. Implement changes quickly and decisively
Once decisions to implement changes have been made, act fast and
decisively, whether reworking your business model, closing down
inefficient operations, making redundancies or changing pricing
structures. It is critical that once a decision is made, it is
communicated and acted on rapidly so everyone can come to terms with
it and move on.
Emotionally, your people have to be in a place where they are
listening to, inspiring and energizing customers. If a company does
not innovate and if employees are worried more about internal
politics than serving the customer, business will inevitably suffer.
9. Focus on the vital few
Free up time and resource by focusing on the ‘vital few’ initiatives
that are critical to your business. Most companies run any number of
initiatives, both big and small. Cancel or postpone those which are
not considered core and those where you know you are unlikely to
receive the investment or support to proceed to full implementation
in the current climate.
10. Rethink your marketing tactics
Never neglect marketing as an effective tool even in an economic
downturn. The internet and social media tools such as Twitter are
proving to be powerful low cost ways of maintaining and enhancing
brand presence. Events can be very effective – particularly when you
can provide the kind of training and education that customers may be
cutting back on.
11. Be magnetic
Does your business generate opportunity while you sleep? It is
important to ensure that you are working in a smart way to attract
new business opportunities and ideas. The more your people are
visible in the market and out there communicating, participating and
adding value in physical and virtual social networks, speaking at
events, writing articles in key publications and keeping the brand
visible – the more ‘magnetic’ you become and the more opportunities
will come to you.
12. Build confidence for the future
Firstly generate trust by sharing your results and plans for the
immediate future. Secondly, demonstrate all the things you are doing
to create added value for your customers. Finally, make it clear
that you are not panicking but using the downturn to innovate, plan
for the longer-term future and review every aspect of your customer
offerings to ensure they are adding value.
13. Focus on the future
Sales and marketing approaches need to shift away from simply
promoting what you have to genuinely adding value for customers. A
really powerful tool is to develop and share scenarios for how you
see your market developing. Every customer that you serve needs to
ask themselves, "What's next? What's going to change in the future?"
It could be technology, new markets, environmental pressure or the
way businesses are operated. Everyone is desperate for such insights
but many don’t know how to gather and analyze the information or
free up the time to do it.
If you can share your views and insights about the
future, this can help clients determine how they would respond to
different possible scenarios. This sets up a platform to work
together to develop the strategic solutions to the different
opportunities they see emerging under each scenario. This helps lock
you in as a strategic partner, and provides critical insights on
what your key customers plan to do for the future. For smaller
customers, you could create half day sessions where they could come
to you to hear about your future insights and think about how they
should respond. It also creates barriers for your competitors as
customers won’t want to repeat the exercise with every supplier.
14. Listen
You need the insight of your suppliers, distributors, affiliates and
end customers and ultimate end-users to fully understand their
challenges, which will enable you to create the best product and
service portfolio.
15. Adopt a winning mindset
Give yourself permission to believe you can do things a different
way. You don’t have to follow the path of the rest of the industry.
You can be the first to try new approaches, innovation doesn’t have to
be expensive. Try to develop this kind of mindset throughout the
business.
16. Drive environmental improvements
Our environmental performance will be under increasing scrutiny. An
honest and pragmatic approach is required. Acknowledge that it is a
real issue, sign up for all of the key industry wide initiatives and
act fast to implement the solutions that emerge. Measure your
environmental footprint, benchmark against competitors and leaders
in other sectors and determine the improvement actions you will
take. Share your plans and progress with the supply chain and seek
their input. Work with customers to create the next generation of
more environmentally products that help address their challenges.
There is a lot of good practice case material to draw on.
Do not take a defensive posture. Establish solid measuring
systems and report progress in reducing emissions, waste and
resource consumption. Use your workforce and supply chain to come up
with ideas and innovations. Offer tools and training to help
customers and partners measure their footprint and how to drive it
down. Think of smarter ways to use energy, demonstrate more
environment friendly products, show people how they will save them
money.
Eventually new legislation will hit everyone and you do not want
your products to be affected, so it really is in everyone's best
interests to act now and avoid having to try and play a costly game
of 'catch-up' in the future.
Summary
To succeed now and in the future, I would leave you with three
key messages:
1. Invest in your people, customer relationships and innovation
2. Open up to ideas from outside the organization and think in ‘out
of the box’ ways about working with the supply chain
3. Give yourselves permission to believe that you can outperform the
sector and win in a downturn.
About the Author
Rohit Talwar is a UK based business futurist, award-winning
speaker, and consultant. He is the founder of Fast Future Inc a research and
consultancy organization. He focuses on scenario planning,
development of future strategy and driving innovation and change.
|
