When the going gets tough (2) -Reshape your Business before the Storm Arrives
In the world of business, as in life, it's often said that it's better to be proactive than reactive. Just like how we grab an umbrella before the rain starts pouring, reshaping your business before the storm arrives can make all the difference between weathering the challenges ahead or being caught unprepared in the downpour.
Picture this: Your business is thriving, profits are soaring, and everything seems to be running seamlessly. It's tempting to relax when times are good, but astute leaders know that change is inevitable. Rather than waiting for the initial signs of trouble to appear, forward-thinking businesses proactively take measures to adjust and evolve before external pressures compel them to act.
Making changes before they become necessary offers a significant advantage: avoiding the pain tied to reactive decision-making. Businesses that wait until they're in crisis mode often scramble for quick-fix solutions, leading to rushed investments, emergency layoffs, or hastily executed restructuring efforts. These reactive measures drain resources, disrupt operations, and result in long-term damage to the business.
Alternatively, akin to bringing an umbrella when the sun is still shining, preparing for challenges before they arise enables you to take a strategic and deliberate approach to reshaping your business. This means identifying areas for improvement, foreseeing potential obstacles, and proactively implementing initiatives to tackle them before they evolve into full-blown crises.
Consider Wolters Kluwer , a global provider of professional information, software solutions, and services. In the late 1990s, the company embarked on a divestment program to reshape its business portfolio and prioritize core growth areas while their historic stars were still attractive. This bold move enabled Wolters Kluwer to leverage the profitability of its print business and redirect the proceeds into digital solutions, such as online research platforms and professional software tools. As a result, Wolters Kluwer positioned itself for long-term growth and success in an increasingly digital landscape.
帝斯曼公司 has undergone a comparable transformation in the last decade. Through a series of strategic moves, the company divested its materials business at opportune moments, securing favorable prices. Concurrently, DSM capitalized on emerging opportunities by acquiring food technology businesses with high growth potential.
Conversely, FrieslandCampina serves as a cautionary tale. The company's delayed decision to sell Riedel illustrates the dangers of clinging to great legacy brands, such as 'Appelsientje,' despite emerging challenges. By the time FrieslandCampina opted to divest, concerns about high sugar levels in the products had already surfaced, diminishing the momentum for securing a favorable sale price.
What proactive steps can self-reflective CEO's take to reshape their business before a new season arrives?
1.?????? Plan strategically: Forward-thinking businesses embrace strategic planning and forecasting, moving beyond past performance metrics to anticipate future trends and challenges.
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2.?????? Divest wisely: Part with your past darlings, the once-shining stars, while they still hold allure and profitability.
3.?????? Invest in the future: Acquire scale-up and larger companies with technology and business models that align with anticipated client demands. While these future stars may not be highly profitable initially, their rapid growth potential offers substantial benefits in the long term.
4.?????? Future-proof your organization: Regularly rightsize your business and support functions. Further details on this strategy will be discussed in another publication.
In conclusion, reshaping your business before the storm arrives isn't just about weathering the challenges ahead—it's about thriving in the face of adversity. By proactively anticipating and addressing future challenges, businesses can position themselves for long-term success and resilience in an ever-changing world.
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