Our Managing Director, Jean Pousson, offers some insights to Directors in the current chaotic business climate.
Uncertainty has always been a property of business. But events of the last 18 months or so would have flatfooted even the smartest economic soothsayers. No sooner have Boards recovered from the Covid 19 and subsequent aftershocks, that they are now faced with high inflation, energy spikes, recessionary conditions, continued staff shortages, Trade Union actions, not to mention geopolitical uncertainty caused by the Russian invasion. Complaining about all these uncertainties may be therapeutic, but it won’t help.
One of the primary functions of any Board has always been to set the strategic direction of the organisation. This has not changed. But the variables and supporting assumptions have.
Some thoughts and ideas:
Financial desperation should not replace strategic thinking. Yes, the purse strings may have to be tightened and budgets revisited, but please do not lose sight of the overall strategic fundamentals. The discussions must not be corrupted by numbers and only numbers. Avoid what I call “Fatal Attraction to Spreadsheets”. Keep asking the following:
• Is our business model still relevant?
• Is our purpose still strong?
• Do we still believe in the vision?
• Can we authenticate the information that we are receiving?
• What is our source of competitive advantage?
• Has our competitive position changed vis-a-vis our competitors?
• How can we capitalise on all these shocks?
• What can we do to assist our customers, (and suppliers)?
• Do not lose sight of the big picture and keep playing the long game.
• Where could the sucker punch come from?
Experience is great as long as the future resembles the past. We have mentioned this to Clients on numerous occasions, but it is still worth repeating. Especially now. The edict by some bosses to get everyone back at the office is a model from the Donald Trump School of Leadership. If the dynamics have changed, (and they have), the old management toolkits need to change as well. New World needs new thinking and agility means just that. Directors have to be prepared to experiment and mistakes will be made, (of course), but, in truth, there is no alternative but to experiment.
Cost cutting is not a strategy. It is something that may be unavoidable, but do not vandalise capabilities in the process. We are surrounded at the moment with businesses who have laid off en masse and are now struggling to recruit. We are experiencing terrible levels of service across so many businesses because of the lack of appropriate skills. Ryanair, the low-cost Airline, managed to get staff to accept lower salaries during the pandemic and as such, have been much better prepared for the recovery. The long game again!
Avoid copying everyone else. Strategy should not be like fashion, ie, “I want to be like everyone else”. Mimicking the herd invites regression to the mean. You will end up looking just like your competitors with no discernible differentiated advantage. Be prepared to think very differently, invite as many of your staff as is logically possible to explore the future and discuss what the world may look like in three to five years’ time. They will surprise you. We appreciate that the temptation to revert to the strategic quo can be very seductive, but that option has probably gone. Do not let the financial targets inform the discussions. You may have to start from scratch and revisit all your underlying assumptions.
Revisit the strategy process in its entirety, ie from gathering intelligence, to implementation:
• Is your process still robust?
• How sure are you as a Directors that the strategic decision-making process is solid?
• Given the shocks that we have experienced, how did the Board react?
• What are you doing differently?
• And remember, “do not let planning get in the way of business!”
Wanna make God laugh? Tell him about your plans!