These are possibly the toughest times that some businesses may have seen. The hopelessness and gloom is transcending across businesses unless you are in the business of Covid protection or care.
The gradual unlock was expected to ease not only restrictions but also spur business growth, but it does not seem to be happening. Only a few sectors seem to do well enough to survive; for others there doesn’t seem to be an easy way out. The conventional approaches to managing the slowdown don’t seem to be working anymore; the environment is more uncertain than ever before.
So, what is it that the businesses can do currently?
First, the businesses need to understand that these changes are not short-term; they are likely to exist for a relatively long period. The Government unlock has not and is not expected to get customers to open their purse strings. In the past few months, customers have discovered new ways to exist, have developed new habits and new preferences. The restrictions in the wake of Covid have been long enough for neuroplasticity to set in, we have lived our life the ‘new’ way long enough to alter our default behaviour, way of thinking and preferences. And, the Covid infection curve still doesn’t seem anywhere close to declining, hence these habits are only going to entrench further. Businesses need to make sure that they understand these new consumer habits and trends.
Second, the businesses need to discover for themselves how these changes in consumer outlook and preferences are going to impact them. I am not only talking of B2C companies but also B2B businesses since the shift in consumer habits are bound to have a domino effect.
Under the circumstances, it may not be easy to make a specific prediction and hence what is important is to do scenario planning. Multiple scenarios will help businesses understand the range of impact, and it will also help them devise strategies for alternate scenarios.
Third, businesses need to think of what can be done now, to mitigate the effect and what will need to be done, in future depending on which scenario plays out. Both the top-line and costs have to be in focus.
These strategies will need to answers the following questions and many more depending on the situation of each business:
• What more can we do at this stage to engage our customers?
• Is there a way that we can change the way we offer our product or services to our customer – alternate channels, digital?
• Could our customers and relationships be useful to another business (not competition but maybe complementary) and can we partner with them to subsidise our cost to serve?
• What about human resources, both costs and numbers? Do we and will we need all the people that we have? It’s a heart-wrenching to let people go, especially under the circumstances but some businesses may not even have a choice.
• Which of the processes can be outsourced? Variable cost structures will be the way to go, not only in the current situation but also for future.
• Which costs can be re-negotiated? Notably, this may be the best time to re-negotiate all commitments relating to physical space.
Fourth, the businesses which have the privilege of some runway should use this low activity time to do all that they may have wanted to do with their business. Transformation is always tricky when you are busy managing business ‘as usual’, but now could be a good time. Now is the time to do all those things that were being put away – migration of systems, streamlining processes and procedures, ISO certifications, legal entity re-structuring etc. Your teams may have some slack time, put it to productive use.
Fifth, this may be the time for you to get a consultant or a business coach to help you take a fresh look at your business and re-think your options. It is essential to get an outside-in view, as the entrepreneurs or leadership teams are too close to their businesses to give an unbiased view. Most importantly, the consultant should help you think whether it is even worth continuing the company or is it better to pack up or sell out, put your money in a bank and do something else to be gainfully occupied. We all understand the concept of sunk-cost but we still have challenges in applying it. We are emotionally so close to our strategy, which may have served us well in the past, that we keep doubling down on the same strategy until it becomes a vicious whirlpool.
Let’s not forget these are desperate times, and it does need disruptive thinking!
By Sandeep Jain (Consultant with IndusGuru Network Partners)
Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of IndusGuru Network Partners
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