During challenging times, the innovators position themselves for long term success.
Companies facing challenging conditions such as economic uncertainty or recession tend to stop investing. Everything is put on hold and a survival waiting game is played, until the market comes back around. The uncertainty we refer to is the impact that Coronavirus is having on businesses.
In reality, uncertainty is an enormous opportunity for those with vision and agility. We often see more innovation during times of uncertainty, such as in a recession, than in a boom. Rather than focussing on working in the business these are the leaders who break the mould and work on the business during such times.
This article explores five organic growth opportunities a business can focus upon during periods of uncertainty.
Opportunity Number 1: Product Innovation
Leaders that focus on product innovation during tough market conditions will generally do well during the next boom. The easiest time to reposition a business is actually during a slump, conversely the toughest time is at the height of a boom.
Consider the question “are we still selling the same products, in the same way and with the same pricing structure as two and a half years ago?”
If the answer is yes, then we have given no consideration to the changing purchasing behaviours of our target market during this time. Whilst we cannot predict these behaviours, we can influence purchasing decisions and change our strategy.
Critical to this is the ability to innovate both product and packaging. Innovation products is cheaper than creating new ones, and allows us to tweak offerings to evolving markets.
In general terms we focus on product extensions during good times and product innovation during tougher trading conditions.
Opportunity Number 2: Channels to market (distribution)
If business revenue drops too much during tougher trading times, we know the channels to market were either:
- Not well enough established
- The wrong ones to move through this part of the business cycle
If this is the case, the business needs to innovate its channel strategy; if we fail to do this before the market comes back up we will miss our share of the uplift. If your business has innovated its product line, then you may want to consider different channels once the market turns.
Therefore, during good times the strategic focus is on channel extension and in bad times, concentrated on channel development strategy.
Opportunity Number 3: Functionality and Structure
Ok, we are aware of the need to evolve our products and distribution channels. But what so often stops the business owner acting on this knowledge?
The truth is that during uncertainty owners and directors focus even more of their time on day to day trading activities. They are working in the business and are unable to make the time to be strategic and work on it.
Through being dragged back into business operations, the owner or CEO does not find the capacity to focus on growth initiatives. To combat this, we need to create a functional structure that adapts to trading conditions, this frees up time for leadership to focus on strategic activities. Many businesses fail to do this and simply react through cost cutting and reducing headcount against budgets.
Therefore, during prosperity we focus on creating a streamlined efficient business (micro), and during uncertainty look at the wider market (macro) to create a stronger position as trading improves.
Opportunity Number 4: Capability
We come out of uncertain times with an innovated product range being sold into new distribution channels. We have also established the need for and implemented a different infrastructure to solve the challenge of functionality. At this stage the business requires different skills to capitalise on the rising market.
The innovative businesses coming out of uncertainty, put a focus on building the capability of their teams. I.E. the right people, with the right skills, doing the right jobs.
Opportunity Number 5: Succession Planning
Through uncertainty many companies put succession plans on hold and forget about staff planning. In recessions especially there is an assumption that staff won’t leave because of their fear they won’t get another job.
When we move into the next growth phase these employees instantly leave for new opportunities and business growth stalls. Rather than enjoying the upturn, these businesses are instead spending time and resources on recruitment.
Therefore, during tough trading, we should be investing in our staff development and culture. This combined with creating unique extras for the team that do not cost much, creates loyalty.
This loyalty allows the business to flourish when good times come back around.