Moving Forward For Businesses After The First Phase Of Coronavirus
2020 is not an easy year for most businesses, with the covid-19 pandemic spreading at extraordinary speed crippling the world's economy as we know it. We are now faced with the biggest economic shock for generations and possibly the worst depression in this century. Countries globally are confronted with rising unemployment rates as businesses large and small are struggling to stay relevant.
Evolving customer behaviors and shifting business models are tell-tale signs of what is to be expected ahead. How can your business navigate through these times of uncertainty? So far, you have done what you can by keeping your people safe, getting your business to work remotely as best as you can, and keep your operations flowing BUT having to deal with these growing uncertainty and changing business climates, it is likely not going to be good enough.
In the game of Go, the position of your first move often determines the overall strategy and outcome of the entire board 361 moves later. To win, the player needs to engage in many mini local battles throughout the game to eventually emerge the victor of the war. A single misstep locally, will affect the overall outcome of the game board. Even when you decisively win a skirmish, if your final position of the local battle is not complimenting your overall strategy, it can lead to a loss at the end. So, having a laser sharp focus and continuously executing your overall plan and objectives is sometimes more critical than coming ahead in the mini skirmishes throughout the board.
“Winning the battle and losing the war” is when one is so concentrated into completing a task that he/she thought was so big, but at the end realized it was nothing compared to the big picture that he/she lost.
This ring true for business today, especially in these unprecedented times. Having a larger outlook and clear company direction is more important today than ever.
Here are some strategies to help get your business through this economic shock:
1. Re-evaluate your company position
In times of extreme uncertainty, you should start by dissecting your business position and look at it from a fresh view. Think of it as an investor looking to buy into your business. Re-look into three main areas of your business; your financial assumptions, your ongoing initiatives and lastly your business current roadmap.
In your financial study, inspect your business war chest. Understand in detail what is available, what can be leveraged on and lastly how to raise emergency funds. Also, in extreme cases, explore winding up as well to prevent further leakages if prospects are not favorable. As Warren Buffet once said, “Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
For on-going initiatives, re-look into existing opportunities and place them into three buckets: Positive, Maybe and Negative. List them in priority from major projects to recurring ones. Have a game plan how on it will align with your current capital expenditure spending to determine an overall view of your business.
Lastly, list the big strategic choices that define your company’s business model. For example, maintaining your current pricing premium, marketing investment, R&D investment, technology advancement and competitive advantage against your competitors. Sort those too into the three buckets and then you will have a clarified view of your business position today and strategize your next steps.
2. Read into all possible scenarios of your business playing out
Reading in Go is a mental process of analyzing lines of play (also known as variations or branches) that stems from your current position. The main objective of this exercise is to determine the most favorable move to play in sequence after studying the layout of the current position, understanding opponents best moves and attempts to end up in the most favorable position after.
In business, you should too read out multiple versions of your company’s future from the most ideal outcome to the worst outcome. This strategic approach to planning will steer you away from as much unpredictability as possible, so you will not be stuck in a position like a “deer in the headlights”. Now more than ever, you cannot avoid uncertainties but rather you must confront it and face it head on.
The aim of this exercise is not to debate which scenario is more likely to happen but to explore all that is possible. And by predicting multiple scenarios, you can determine and start strategizing potential next steps to face them. Also, you can put uncertainty and uncomfortable business positions into manageable and measurable boxes to reduce backlash when it happens. To top it off, when these scenarios do appear, you will be able to identify with confidence, make more agile decisions, create or execute a clear strategy to navigate away from what could be an unsurmountable crisis.
3. Look into all potential short-term and long-term opportunities
Study your pipeline closely. Understand how these pipelines might shift negatively by looking into each opportunity deeper and evaluate if new social or economy trends will impact your client or their industry, directly or indirectly. Impacts such as national and global industry trends, consumer buying trends and even regulation changes may effect the final outcome of these opportunities. Put higher priorities to focus on lower hanging fruits available to your business and capture these revenue early, as the environment may change due to extreme volatility projected to happen in these coming months.
Cashflow will be the single most important factor to navigate the rocky waters ahead. Focus on accounts and projects that will generate positive cash flow rather than negative cashflow accounts where the company will need to invest high working capital in early stages to generate large rewards later. Using your best judgement to balance the two will determine if your company will be at an ideal position for stability and growth.
4. Determine a broad grand scenario your business should be in and navigate towards that goal
As mentioned earlier, start building a larger outlook for your business. With every situation constantly evolving, it is important now to have a wide view of your business’s industry. Some businesses will be forced to enter a slow and painful period of cost cutting and rebuilding whilst some might find windfall in near term opportunities due to the new opportunities that arise.
Look into large strategic pivots and innovations that might benefit your business. In a disruption of the magnitude of the COVID-19 pandemic, a point of view on what has changed permanently is the term “ESSENTIAL”. What value proposition does your business provide in the new essential trend? Understand the vision of your business’s industry and lay out plans and invest on the future of the industry whether it could be pure automation, replacement by newer technology or even a complete monopoly or buyout by competitors or yourself.
In the 1980s, for example, Bill Gates did not know which operating system would emerge as dominant, but he did know that, in all scenarios, personal computing would be the next big thing and computers would need to run on graphical user interfaces. He also knew that it was likely that it will be a zero-sum scenario where winner takes all. This led him to navigate Microsoft to adopt a clear posture of trying to win the race for the PC operating system.
Few emerging trends for consumer behavior have already surface, such as distance business models. During these months in global lockdown, a growth in technology usage from remote working, video calls, e-learning, shopping and even consumption of entertainment has emerged. How will these trends affect your industry especially in your business’s client retention and acquisition? We have seen brands starting to shift their business models to facilitate the new methods of engagement. Even movie producers like Universal is opting for a hybrid rollout of theatrical and digital streaming releases of all their new movies.
5. Build a portfolio of strategic moves that are robust and flexible
In a world of extreme uncertainty, a rigid deterministic plan will not be right for very long. However, the opposite is also true, having too flexible of a plan can also be an expensive path to nowhere. Rather it is better to build a collective of strategic moves that you can use across all likely scenarios.
There will be a variety of strategic moves a business can undertake to face impending forks. Firstly, there will be the imminent no-regret moves where the benefits will outweigh the risk where you can proceed with confidence such as investing more towards digital automation of your business or e-client engagements.
Then there are your big bets move, a move that will pay off greatly in certain scenarios yet hurt if executed wrongly for example expanding your business. Research and information gathering IS key here, as the more information and analysis you make, you can try to minimize the risk as low as possible. Otherwise look into breaking these big bets into smaller phases, resulting in smaller risks, instead of a huge one-off investment under high uncertainty.
Lastly, the most important one is Options, real options. These normally come at a price especially with the market currently in high volatility. However, these are worth a lot as well, so it is good to create optionality where you can. Real options can come in a variety of forms such as option to expand, option to abandon, option to wait or option to switch. Each option comes with its own weighted pros and cons. How a business decides is by understanding the Net Present Value (NPV) method of decision making.
For example, imagine an oil company who discovered a new oil field. To date no one will ever know how much oil is there neither do they know what the oil price will be when they start pumping that oil. So, the oil company will have to study their options on whether to purchase the lease and start drilling, purchase the lease and drill later, or forego the lease altogether to their competitors. By understanding your real options, you will be able to make more strategic decisions when opportunity arise.
6. Set trigger points throughout your plan to measure success or failure
The business world today will evolve faster than ever before with huge advancements in technology to cater for globalization and trade. You would not know what scenario your business might be approaching but you will need to be the best learner, the best adapter and the best executer among your competitors when the time comes. It will not be the one with the most perfect plan but rather being the business with the fastest improvement trajectory that will come out on top. In a fast-moving world, this will matter the most, as sometimes the most perfect plans can be rendered obsolete instantly.
As discussed, a great part of your strategic moves can only be executed in certain ideal scenarios and circumstances. Many companies face destruction as they will start debate these moves when the circumstances present themselves rendering them too slow to react and naturally becoming obsolete such as the story of Nokia.
To avoid such predicament, it is extremely important to lay out a articulated set of trigger points for when the business is presented with such scenarios, and should begin detailed planning and execution of said moves. Having this idea of a “trip wire” will be critical and a necessity when time is of the essence. This will allow you and your team more time to react to these scenarios and capitalize or minimize damage if needed.
7. Be decisive and act quickly
One of the biggest issues with large organization is the inability to operate and decide in high speeds, often resulting them to face the danger of being obsolete. Under high levels of uncertainty, speed may be more beneficial than being perfect. Accept that your first move will not be 100 percent right, but you will work on making it better and adapting after each iteration.
So start making planning your business strategies to get ahead of your competitors in the next stage of this global crisis.
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