Resilience + Relevance: the two keys to survival

A lot's happened in the last few years, Covid, Ukraine, and now they say we're heading into some kind of recession.

All this contributes to increasing uncertainty in the marketplace generally and things aren't going to get any better.

That means it's going to get harder and harder to predict future trends. Now I'm not sure where your particular business is headed, but I do know one thing, which is that you can't keep relying on what used to work.

So, if you've got a business making widgets for the last hundred years, that doesn't mean that's what you'll be doing ten years down the road.

What's the consequence of that?

No organization can think of itself as being in a place of safety ever again because technology is just going to keep sweeping away the foundations of whatever you try to put in place. So, you have to keep moving because there always will be something bad coming down the road — that's just the reality.

Many CEOs have cottoned on to that — which is why a McKinsey study is showing that?nine out of 10 businesses reckon their business model needs to change in 2023.

And even if knowing we should be doing something different, that doesn't necessarily mean we know what you should do exactly.

I see this when I talk to some business leaders. These aren't the ones I call 'visionary leaders' who have decided what the future is for them, but those who are either playing a 'wait and see game' or just caught like a deer in the headlights. It doesn't really matter because they're losing out by not taking any kind of big action at all.

When technology's changing the market so much, you have to be doing something different.

Have you heard that slightly lame gag about a tiger?

Two men are walking through a forest when they see a tiger in the distance. It suddenly spots them and starts running in their direction. So, the men turn and start running the opposite way. But then one suddenly stops, pulls a pair of running shoes from his bag and puts them on.

“What are you doing?” says the other. “They won't make you run faster than a tiger."

"I know," says his companion. "But I don't have to run faster than the tiger, I just have to run faster than you. Bye.'' And off he goes.

Do you see my point? If there's trouble brewing it's better to take action of some kind because that's always going to put you ahead of those who do nothing.

And here's a fun fact for you.

During the last recession, a study by Bain, the global management consultancy, found that?over 20% of firms in the bottom quarter of their industries came out of it in the top quarter.?That's twice the percentage as in 'normal' times.

In other words, many 'losers; were able to overtake the more complacent leaders in their sector.

What's the lesson here? Recessions shake things up and create windows of opportunities for those who are ready for them.

So, how can you get prepared?

Pay attention to two things: resilience and relevance.

At the back end of September last year, Hurricane Ian hit the US. You probably remember that. I certainly do, because it hit Florida hard, which is where I live. Storms don't easily scare me but this one did. When you've got wind speeds of 155 mph that's something different.

But do you know what, most of the palm trees that grow around here stood up to Ian because they've got 'woodless' trunks that allow them to bend. That gives them resilience and that's a prerequisite for survival.

It's the same with businesses. They need the ability to flex and adapt to sudden change.

And then you've got relevance.

Now in nature, no matter how strong a storm has been, it stops and dies down. But in today's business environment that's never going to happen. In fact, the storm's only going to get worse because of the technological change that will continually disrupt every sector by collapsing almost overnight the barriers to entry that used to protect your markets

Let's just take one kind of storm that could come your way — the emergence of a competitor with a better offering than yours. One by one, your customers slip away because you are no longer relevant to them.

This is why one of the first questions I ask when I meet a prospective new client is how do you intend to stay relevant to your customers? The answer they give me tells me a lot about whether we're going to be a good business fit.

Let's say you make a high-value asset, like large compressors, pumps, or motors that cost over $50,000 apiece, and your current model is to sell them for an upfront one-off price. You take the money and metaphorically run. That's the way many manufacturers still do it right?

Your customers stick with you because they don't know anything else until a new kid on the block comes along who works to an 'Equipment-as-a-Service' model. Now your customers have a choice, they can for an expensive pump buy a service based subscription, so there's no upfront investment from them to hit their cash flow. What's not to like for them?

So, by helping your customers stay flexible and more financially resilient (they get to keep their cash in the bank), you make yourself more relevant to them so they keep buying from you and not someone else. That's a win-win.

And if you're a mid-sized manufacturer looking to stay in business long-term, then I reckon the Industrial Internet of Things could be what you're searching for. Maybe we should talk about that.

Resilience and relevance are two really big topics I'm going to be writing about some more, so please watch out.