Business strategy: Hunker down or pivot?

Businesses everywhere are facing new headwinds and constraints - conflict in Ukraine and geopolitics elsewhere are having enormous impacts on financial markets, consumer confidence, and supply chains.

In times like this, it's easy to be fearful and hunker down to protect yourself from the coming storm... but is that the best thing you could do? What if there was a smarter move to make - one that would see you ride the wave instead of duck and cover?

Why do we do this?

In times of uncertainty, we generally have a tendency to run towards the known, or the controllable. Many of us avoid or fear the unknown, and shun exposure to the difficult.  If we can’t control it, we tend to create the illusion of control over it:  I think back to the early days of COVID restrictions, when the fear and tension was palpable and even supermarket shopping could trigger severe anxiety or panic attacks for some. Interestingly, it led to people creating some more than unusual home-made protective clothing in the hope that it would keep them safe.  It was an attempt to control the uncontrollable. Running a business is clearly much harder than shopping in the supermaket in a pandemic, and there are many more things to think about, plan for, and develop strategies for. It’s hardly surprising to see businesses scale back, cut costs, stop projects, cancel product launches in the face of fear or uncertainty about what’s to come, or the early effects being felt already which feel harsh, unwelcome, and difficult. Similarly, these decisions feel like an attempt to control the uncontrollable, as opposed to an attempt to ride the wave of change.

Everything costs more.

Whether you are in construction, FMCG, energy, telcos, or professional services, the vital assets needed for your supply chains are squeezing the bottom line, and as consumers are hit in the pocket, their willingness and ability to buy your products and services will diminish. Many organisations are already feeling the pinch, and a focus on cost-out has started with relentless pace and anxiety-inducing scale.

Whilst I’m a fan of efficiency, minimising waste, leveraging economies of scale, and finding opportunities to cut costs, I’m not a fan of cutting back in the areas that will play a crucial part in ensuring that an organisation can navigate the challenges ahead.The problem as I see it, is that businesses are largely making binary decisions…. to cancel or to keep. I genuinely believe that there is a third option - the best option - to adapt.

Cancel- Scale back on expenditure- Cancel all-together

This creates ADDITIONAL constraints in an already constrained situation! It makes things HARDER, not easier, for your people to perform, get results, and win. The additional headroom in $$ might feel nice, but the dip in morale, engagement, productivity and output will likely do more damage. Keep- Push on ahead with plans as they areThis is likely to be well-intentioned and celebrated initially by your employees for courage and positivity, but it’s important to flag that a failure to course-correct and carry on without addressing the prevailing conditions is likely to result in initiatives or products not landing as intended -  potentially at an even greater cost than anticipated.Adapt- Be deliberate in making changes or refinements to ensure that projects and initiatives or investments can be successful in the changed environmentThe best course of action - to fully analyse and explore the challenge and talk openly and deliberately about where changes could and should be made to pivot for a better chance of success.Worryingly, many organisations have invested very little in deliberately developing organisational adaptability - even after living through COVID. Those who have embraced agile ways of working will be reading this thinking “we have!!!!”. Hooray - that’s awesome… you stand a good chance of being able to navigate what’s to come. If you work for a gin distillery, it’s also highly likely that you’ve recently seen your entire industry pivot as a result of market conditions.. and back again. There’s SO MUCH to learn from these organisations.How can we get better at adaptability?First things first - it isn’t going to be free, or easy. Nothing good ever is, unless it’s the sunshine. There are some crucial levers you can pull as a business leader to make necessary changes to give yourself a better chance of success:- Invest in making your people more awesome by growing their capability, confidence, decision-making authority, wellbeing and resilience- Invest in examining and shifting beliefs and mindsets - the way we think about things determines the way we behave, react, and perform. - Invest in developing curiosity skills and mechanisms for exploring different perspectives - Changing the way we look at problems, can change the problems we pay attention to. For example, is it a lack of cashflow, or is it a lack of creativity? Is it a change in buyer behaviour, or is it that our products haven’t kept pace with client expectations? - Invest in experimentation and innovation - rarely does the artefact of the past solve the problem of the future. It’s INCREDIBLY difficult to get new, or shiny, or edgy, or funky, or different, or resounding success from scaling back. Make it safe for people to try new things and learn from failure. Give resources, time and space for the development of the new.- Invest in celebrating effort - not achievement - not all ideas will work, and not all new approaches will fly. Instead of celebrating only those that are successful, celebrate efforts that are part of the journey towards success. People need to feel as though they are a step closer to the goal, and that their efforts are valued.- Carve out time for work - not meetings - not only because it’s a good thing to do, but because what’s typically lacking in difficult conditions is TIME. A crisis, a challenge, headwinds or a recession will increasingly lead to MORE meetings. More meetings means less work. By all means, come together as a team, but come together to do work together or solve problems together.Feel free to cancel or scale back everything that doesn’t align with the organisation’s strategic priorities, that isn’t valued by your customers or employees, that doesn’t build a culture that will help you achieve those strategic aspirations, or the things that don’t grow the skills and capabilities of your employees that will help them be better, faster, stronger, smarter, more effective, happier, and more likely to stay with you.Doesn’t sound like cancelling or cutting back is the best idea anymore, does it?