Given the scale of this downturn, it is no surprise that corporate leaders find themselves in a defensive position. As Bob Marcus and Robert Weiler of Brimstone Consulting Group explain, once a company’s short-term cash needs have been met, leaders need to go on the offence by leveraging the changes in the market to their advantage.
The downturn has forced many companies to asses their short-term survival strategy. Below are five steps to consider when planning a plan of action.
Cut costs without losing sight of strategy
Getting costs in line with projected short-term revenues has to be the first order of business in this harsh economic environment. That said, your cost-cutting efforts also need to take into account the long-term strategic direction of your business. Contraction and growth cycles always create winners and losers so make sure you look ahead three to five years. This will help ensure that the operating and financial platform you are constructing will provide the right foundation for future growth.
A downturn also presents an opportunity to build into the culture of your organisation a mindset of continuous improvement, operating efficiency and cost discipline. Ask leaders throughout the organisation to assist you in getting rid of waste and inefficiencies. Kill reports that no one reads and meetings that burn time and do not accomplish much. Streamline the corporate calendar and create more process discipline. Make continuous improvement part of the leadership competencies you demand. The more you engage your key leaders in helping to refine your operating systems, the greater their sense of inclusion and control.
Simplify your strategy
In today’s remarkably complex marketplace, your job as a leader is to make your organisation’s strategy as simple as possible. Your people need to understand which opportunities to go after and which initiatives should be put on hold and why.
Accelerate the delivery of results by making your strategy development process open, transparent and engaging. Ask your entire executive team to help build a first draft. Strive to create a one-page document that articulates the four or five key strategies that you need to pursue; under each, list the key initiatives that need to be achieved to deliver on that strategy. Before locking down the document, ask the executive team’s direct reports to provide feedback, ideas and recommendations on how to improve the strategy. The dialogue will produce a better document as well as greater understanding, alignment and commitment among the leaders who will ultimately drive implementation.
When communicating strategy, consistency and clarity are essential. By sending the same simple messages every time, you will improve the likelihood that everyone in the organisation is pulling in the same direction. By being on the same page (literally and figuratively), leaders throughout your business will be able to see a clear path from your goals to strategy to action to results and understand the role they play in that process.
Focus on your customers
The tougher the economy, the more critical it is that you get everyone in your organisation to know who your customers are, what their needs are and how you can present a compelling value proposition. Take the time to get everyone in your organisation talking about your customers. Segment your customers; understand their individual needs, their current profitability and their long-term value to your business. As your own resources are depleted, you must find a way to focus your organisation’s attention on customers who can generate profit and ensure your long-term success.
Work to understand your customers’ needs. In bad times they are often willing to share these more openly. Engage them directly to better understand their priorities. Customers who used to put innovation at the top of their list may now prioritise pricing, payment terms or inventory flexibility. This approach applies whether your customers are external or, in the case of a functional organisation such as HR or IT, internal. By getting closer to customers when times are tough, you have the opportunity to increase long-term customer loyalty and build market share.
Engage your organisation
In a downturn, personal and professional uncertainty increases for employees at all levels. It is human nature. Leverage this insecurity by truly engaging your employees to drive results – your people are motivated to help the business succeed and you need their help. Start by increasing communication with employees and establish open forums where ideas and concerns can be exchanged. Put a process in place that gives them an opportunity to contribute. Ask all employees – especially those at the frontline – to help identify cost reductions through efficiency improvements, and then provide them with the opportunity to deliver on those ideas.
One of the best opportunities available to you in taking out costs comes from unleashing your employees in the effort. They know where operations are plagued by inefficiencies and giving them permission and a process can yield deep cost savings, generate additional revenue streams and build real engagement.
Upgrade your talent
In a downturn, tolerating mediocrity becomes indefensible. Use this opportunity to upgrade your talent pool through both development activities and strategic recruitment.
Start with an explicit assessment of your people, individually and collectively. Identify talent gaps and areas where you need to upgrade. Move out the players who can’t produce results and then use the challenging business environment to develop your key people. Get them involved in developing strategy, talking to customers, improving productivity and systems. Each of your strategic and operational challenges provide ideal development opportunities for leaders throughout your organisation.
Finally, recognise that some high-quality people may be on the street looking for work. It is also a time when star players may be recruited from other organisations as they seek greater career opportunities in stronger organisations. Take advantage: bringing in targeted external talent can help shake up old practices and develop current employees through exposure to new thinking.
