5 hard won wisdoms to navigate uncertainty
Before I started my Digital Transformation journey, I was a turnaround artist focused on Organizational Transformation. After my first business workout, which was a $144m deeds in lieu transaction, I thought “wow, what an anomaly, I should write a book”. Fast forward, 2 years & 5 other consulting gigs later, apparently not so unique. Wisdom is always hard won.
We can all agree that change is a constant. Furthermore, economic change is a certainty. What we are seeing today has happened many times before. Sure the conditions are always a bit different, but the effect is very similar. Business does not stop in a downturn, however certain realities become amplified.
During a downturn, you need to do two things. First, get through it, and that is the focus of this article. This involves making hard decisions in the right window of opportunity. A good friend, who is also a Marine veteran, likes to say “slow is smooth and smooth is fast” and this perfectly encapsulates the movement and consideration that is required. Secondly, architect your business to respond better in the next downturn. And strangely, those safeguards turn you into a better and more valuable company. Pretty good bi-products if you ask me.
“slow is smooth and smooth is fast”
Accompanying most downtowns are increased costs, restricted or at least very expensive capital, consumer reticence, increased regulation, and a radical awareness that you need to keep and support your existing customers more than ever before. Yet, during this time period, people still launch companies, pivot to new products and services, grow, and ultimately find success. I have a great story about that circumstance and will publish it out as a form of inspiration.
As Marcus Aurelius said, “the impediment to action, advances action, what stands in the way, becomes the way”. This aligns with the stoic motto “Amore Fate” or the love of fate. Willingly accepting what has befallen you and getting on with business, like a good Roman! 🙂
“the impediment to action, advances action, what stands in the way, becomes the way”.Marcus Aurelius
So, if you are going to navigate this recessionary period in a way that moves you forward, makes you get better, and positions you for next, here are some thoughts:
Manage your cash and liquid resources
Step one is to form your own internally funded line of credit. Banks are odd creatures that typically lend money when you need it the least. Give yourself 6 months to wean yourself off of your bank LOC. As part of your cash management strategy move money to accounts that function as reserves that are ear marked for either operational projects, critical expenditures, or capital investment. This fund accounting mindset always lets you know what you have in the tank because cash is not conflated with multi-purpose needs. Also your balance sheet becomes even more readable by executives and stakeholders.
Understand the ROI nature of your cost structure
In a recession, dollar for dollar reductions are simple and fast, but often throw out the baby with the bathwater. Value based expenditures need to be the basis for discernment. Often this can be achieved through consolidating functionality on a platform. Remember, any spend that helps you get customers, keep customers, and reduce people churn should be prioritized and inspected. This is a time to pare down and measure lift.
Reduce Physical footprints and embrace remote staff
The more you can reduce your fixed cost structure the more elastic you are in terms of responding to both growth and downturn trajectories. What the office looks like needs to change and attempting to drive people back into the work zone, post Covid, is not landing well. And why not, the ability to avoid wasted travel and live in more affordable communities is in the best interests of employees. During a period where having the right people are critical, this perk is smart. Your goal as a business leader is to do a better job of measuring and incentivizing performance to motivate in new ways.
Concentrate Action into smaller teams
The tiger team approach to getting focused effort on critical operating elements is essential. Breaking things down into smaller problems to solve helps measure performance, concentrate effort, set order of operation, accelerates change, and brings about simplification. This also instills team ownership, pride of work, and personal satisfaction. When teams can be cross-functional, the more one creates flow between departments. This may require some of the traditional command and control structure to ease somewhat.
Double down on Customer Experience
Outside of return to shareholders, your business functions to serve customers and every person in your organization directly or indirectly contributes to that end. As a result, focus your culture on that end and architect your business around your customer, with an emphasis on reducing friction, improving personalization, simplifying process, and helping solve issues in a timely fashion. This means that you must be available all the time and everywhere with the right balance of human engagement and digital self service. This is a journey unto itself!!
My sense is that if you focus your efforts, like a Roman (per Marcus), on these navigational strategies, one can do more than weather the storm. You should be able to keep clients and grow, motivate and keep the best people, right size your operations, and build a better mouse trap.