You can read our previous blog post on recession here.
Let's first take a look at the main symptoms of the current crisis:
- High and constantly rising inflation, which affects the purchase price of raw materials and equipment
- Rising energy prices are placing a heavy burden on operations, multiplying existing costs
- High costs and high prices
- Skilled labour market reduced, rising wage costs, difficult to retain staff
- Digitalisation is splitting the market - those who act late are left behind and are likely to be left out
As much as it is essential to be able to shape our costs dynamically - reacting quickly to external influences, we should also think about survival and certainly growth during a crisis, as well as "fire-fighting".
How to grow in uncertain times?
Let's start with step zero, which is really nothing more than rethinking and rationally reducing costs. The emphasis is on being calm and reasonable, as mass redundancies may reduce costs in the moment, but can seriously damage the quality of the product or service, or in the worst case, sabotage it.
It is worth thinking about the organisation's operations, identifying the strategic priorities, reinforcing them and setting up a sustainable cost structure.
What happens after the fire is put out?
It is worth gathering questions and discussing them within your organisation, for example:
- What processes are taking place in the organisation?
- Who is the company dependent on, who are the suppliers and partners?
- What - possibly new - legal requirements do we have to comply with?
- How much money, what resources do we have?
- How do we serve our customers, how well do we meet their needs?
- How have needs changed in line with the crisis and changing trends?
- How can we make use of existing expertise, do we need to retrain or retrain existing staff?
- Should we hire new professionals with the skills that are essential in the new situation?
This process of rethinking and the answers that emerge may be similar to the plans outlined at the outset, but this time we are not building from scratch.
Digital professionals are in high demand and there is a huge race to get them, even in a calm economy. Take advantage of the opportunities created by the crisis, when these experienced, in-demand professionals are being laid off from other companies, and attract them with a good offer. Build your team in the middle of the storm.
According to the Boston Consulting Group, it is worth thinking in 3 dimensions when developing a crisis strategy:
- Organisation, operations and costs
- Workforce, skills and capabilities
- Culture and change management
In our practice, the following factors should be considered according to this threefold approach:
Organisation, operation and costs
Cost advantages can be gained through flexibility. How quickly can we reallocate resources within the organisation, reduce or even increase production? Are we able to identify and let go of things we like but don't use in order to reduce costs? The English term "Kill your darlings" is used to describe an activity or habit that you should to stop doing when it no longer serves the company.
However, it is not enough to reduce costs spontaneously in an organisation's operations. The screening of items must be followed by selection to ensure that the event or item that is the subject of cost reduction brings real, long-term benefits to the company.
Workforce, skills and capabilities
Something we can't stress enough: employer branding. The focus should be on the employee, and digitalisation is the means to achieve this. You need to make your company transparent about where you need what in terms of resources. Who can potentially move between positions, which jobs need to be cut and where are there skills shortages?
Motivated workers have a proven track record of higher job performance, a more positive market perception of the product they sell, and stronger loyalty, resulting in a higher retention rate for the company.
Culture and change management
The most basic human reaction to change is discomfort and resistance. When an organisation is undergoing major changes, it makes sense to communicate them to employees in a well thought-out way and to be careful to involve them in the different parts of the process - each according to their own job role. This not only has the advantage of opening up new perspectives, but also builds employee loyalty and satisfaction, as everyone 'owns' the company's mission and the struggle to survive and thrive.
Change, cost optimisation and the right motivation of the retained workforce are the added values for any company that can bring a quality service or product to a secure market. The strategic planning of these activities does not necessarily imply specific numerical differences as defined in so-called KPI targets*. For these activities, it makes sense to define so-called OKR targets**.
*a KPI - Key Performance Indicators, used to identify specific, quantifiable business outcomes for your company or employees.
** OKR - Objectives and Key Results is a management approach based on defined objectives measured by key results. The documents that result from corporate strategic planning are on the one hand long and difficult to communicate to the organisation's employees, and on the other hand, they usually do not include a breakdown of objectives for each department. In the absence of organisational objectives, it is difficult for the lower levels of the company to link their day-to-day decisions to the company's objectives. The OKR system creates a link between the top-level strategy of the company and the objectives of each department.
To find out more about crisis planning, email us or contact us via chat www.sciencer.me.