Invest Now, Emerge Stronger: Why the Recession is an Opportunity for Visionary Leaders
By David Cruise
The omens are grim.?
Most commentators predict a prolonged period of low growth, high interest rates and increasing inflation for the world economy. The UK is expected to be in recession for 12 to 18 months as it deals with the impact of Brexit in addition to global events.?
In such an environment, the sensible strategy may seem to be to preserve cash, lower capital investment and pass on as much cost to customers as the competition allows.
But I would argue that these tough times are precisely when businesses need to address the underlying constraints that have traditionally fallen into the ‘too difficult to tackle now’ box.?
Most organisations have healthy cash balances; the markets are not falling apart, and a recession will impact different organisations in different ways and to different degrees.?
Those organisations with the reserves to do so have four transformational opportunities to invest and gain ground while their more short-sighted competitors cut back.?
Invest in growth
Most executives would argue that their focus is always on growth, but now is the time to make it your top priority. This may seem counterintuitive, but growth opportunities are still out there; the challenge comes in finding them and choosing how many to pursue. A business cannot place its bets on a couple of initiatives. Business theory suggests that a large organisation should have no more than five major projects underway at any time.
Explore market opportunities that can present themselves in a recession. For example, Next has been selling its customer platform to other retailers, buying up failing retailers such as Made.com and Joules and continuing with other strategic initiatives. Is Next overstretching itself??
Time will tell, but my guess is Next will execute well on these initiatives by funding them appropriately, adopting a greater appetite for risk in pursuing long-term reward and applying its highly regarded management discipline.
Invest in your workforce
The trend towards ‘quiet quitting’, the?push by some businesses for a return to the office, and a job market that remains surprisingly buoyant mean a lot of very good people are getting itchy feet.???
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Employers willing to invest in their people and provide flexibility around how, when, and where people work have an excellent opportunity to strengthen their workforce.?
That is not easy to do in every business. Retail and hospitality need to be creative in addressing the challenges and will have to look at investing in pay deals that both reward and retain.
Invest in organisational transformation
Start now to transform your organisation so it is ready for the recovery.?
The temptation at the start of any transformation is to set up a programme or task force.
I’d encourage you to think differently.
True transformation needs the whole organisation to change. Focus everyone in the organisation on growth, not just a select few in a project group. Ensure everyone has a sense of ownership for their part in the transformation. And create scenarios and challenges that teams can align behind.?
It’s about building a long-term orientation towards growth and taking measured risks.
Invest in adaptability
Organisational adaptability will be a key feature of organisations that will thrive in the emergence from recession, so invest in it now. Use forecasts and modelling to help teams become more agile and responsive to different scenarios.?
Create a flexible resource plan that ensures the right skills are available in the right parts of the organisation to respond to opportunities for growth, emerging threats, and immediate crises. Ensure the plan includes roles and responsibilities, so when a situation needs a rapid response, every team member is clear about what they need to do.??
The idea of simply hunkering down and protecting the war chest during these straightened times may be difficult to resist. But those organisations that have the courage to invest in transformation now will emerge from recession stronger, faster, and better equipped to respond to new opportunities.??
?Let me know if we can help.?