The two words you have not stopped hearing in 2023 are recession and layoffs. 2022 was a year of recovery, post covid many businesses started doing better then the previous 2 years and recovered their losses apart from raising prices and improved profits. But this recovery was short-lived.
In the past 3 years of Covid and the recovery year, we have seen disrupted demand and supply chain connectivity affecting established manufacturing and delivery cycle time for every industry. Just an example was the pharma industry which was in demand overdrive for vaccine and certain drugs while and the China sourcing strategy came under pressure due to restricted supplies of API and containers being stuck in China. These challenges led to chaos as there were no quick solution in sight when dealing with such global issues.
Organisations had to get ready to tackle their challenges, that too while sitting at home. As no situation is permanent – good or bad – the challenges reduced with industries and government jointly tackling these issues. Many existing businesses did come under huge risk of closure: hotel, tours and tourism, airlines etc. What also changed for the better was adoption of ecommerce and many businesses which were online. However once the covid threat was over many of these opportunities changed into risk as startups in edutech, telemedicine or remote working became unnecessary. The software industry which was happy to work from home with reduced overheads faced new challenges like moonlighting.
Post covid, the war in Ukraine has now lasted for over a year. Leading to oil and gas supply crunch followed by higher fuel prices due to sanctions and Europe is now forcibly investing in building new energy source and resourcing alternate energy.
If this was not enough, recession clouds have started gathering and businesses are already acting to reduce expenses, cut jobs and stop new investments. A new blow from technology has been the AI based AI tools like CHATGPT which are challenging many professions to do a lot better or be redundant.
One thing is certain, business stability is a luxury of the past. This has challenged most businesses to create new opportunities to de-risk the future by developing alternatives strategies to grow their existing business or expand into new areas. No board is comfortable with the “As Is”, as mortality rate of businesses has increased.
Considering the above challenges it would be crazy to lead an organisation. One could say the situation is chaotic and the businesses are in chaos.
Chaos doesn’t mean the existing business doesn’t work but only requires constant attention and quick reaction to changes. One has to be fast to control the damage if caused by any situation and make gains with what works. But that’s living in the present, how do we deal with chaos for the future.
Dealing with Chaos
- Reskilling to beat redundancy. What you learned in college you hardly applied in your job and mostly what you have learned on the job is not relevant for the future. Managers have to learn new skills, this was earlier required only in the case of IT companies when new languages, software and hardwares were launched. But today simple coding and design can be done on AI based software. Marketing as a function is moving from conventional to digital, sales is now being challenged with data analytics and customer buying patterns. Logistics & supply chain is evaluating moving continents to source along with last mile connectivity. HR which was busy with payroll and industrial relation is realising how important is it for them to influence business productivity with learning and development, and driving cultural & performance changes through mentoring.
- Short planning cycle and risk taking. A lot of new projects will need to be done startup style, a company will need to take risks without committing huge funds at the start while it gets the proof of concept verified. Large organisation will need to be nimble on their feet and respond in real time. Needless to say companies need to be nimble on it feet and develop start up teams with a culture to perform. As today they are losing large business to startup. With advent of online buying and it meteoric rise, D2C companies have challenged the extensive distribution structure of large corporates and taking away their business. Size doesn’t matter any longer. The large corporates have to now relook at their business as entrepreneurs.
- Identifying blind spots in current business. Many businesses have been done conventionally and whether its competitor ‘A’ or ’B’ they all work on the same systems, customer feedback and application and have the same assumptions thus the products look similar as they are aping each other. When you work with a set of un questionable assumptions you are probably missing a blind spot. These blind spots can be revealed by getting a new perspective with business diagnostic techniques else get in people from different industries to run or evaluate your business. A common change use to be getting in people from B2C industries but today even the B2C industries have become staid and commoditized.
- Investing provided you have a lot of cash, this could be a good time to buy out companies which could compete with you in the future or those who would define the future of your business. A buyout at a good price is another way to grow exponentially. However, there would be cultural challenges which may need to be managed.
- “Jugaad”, an Indian term for a quickfix or frugal innovation or hack. This is suggested for situations, a challenge which exist in the short term, but may not persist long. Or for symptomatic challenges. One needs to be innovative while solving temporary issues or issues which may not require a lot of changes in systems and approvals. As some of the issues may not arise again.
- Cut costs on projects which do not a have a definite return expectation or exist low profit products which are not reengineer able by hiving them off.
- Transform your business re look at the business on what segments are we missing out and what opportunities are we failing to address. Are there opportunities in B2B or B2C, or new markets or un-addressed price segments. This is a way of redesigning your organisation to cater to customer satisfaction. How can we deliver customer delight through mapped customer journey and monitor each and every interaction with the company, its products, people, intermediaries and service.
- Digitisation is a process of enabling your business to be data driven rather than work on gut feel. Every decision is based on data for which one needs a robust system on which will reside an ERP, sales automation, logistics, digital advertising, lead management modules as may be required and all these should talk to one another i.e. be compatible. It’s a long process starting with cleaning the data followed by data analytics. This can help identify internal challenges before they happen as well as gain customer feedback for a changing future.
These are just a few ways of managing chaos, of course, depending on the industry and product life cycle there could be more ways to manage chaos. While for the unforeseen.
– By Vineet Trakroo
CEO and Chief Evolution Officer
Evolution Strategy Advisors LLP