The markets are under attack – “Covid-19 presents the greatest danger to the world economy since the financial crisis of 2008” (OEGD).
“The FTSE 100 fell more than 8% in early trading as fears of a global recession grew, caused by the impact of coronavirus and an oil price war – it is more than 20% below its recent peak seen in January when it traded above 7,600 points. The drop follows a 30% slump in the oil price overnight after Saudi Arabia launches a price war, as it boosted production amid a major disagreement with Russia. It is the biggest single drop in the price of oil since the first Gulf War, in 1991.” (The Business Desk)
Closer to home businesses, both large and small are beginning to be affected by these macro threats.
The John Lewis Partnership saw profits plummet by 23% to £123m for the year ended 25 January 2020. “We need to reverse our profit decline and return to growth so that we can invest more in our customers and in our partners…this will require a transformation in how we operate as a partnership and could take three to five years to show results.”(Sharon White, partner and chairman)
This morning, I received notification that an event I was due to speak at had been cancelled due to the threat of the coronavirus.
Where’s your growth coming from this year, performance or market growth?
I doubt it’ll be the latter unless you have a magic lamp or an incredible plan like no other, for said volatile markets, the still to be negotiated Brexit trade deal, the running saga of the US election and the daily status updates on Covid-19.
Studies by Management Consultants McKinsey support the assertion that business performance improvements can help companies survive market downturns.
“It turns out that in times of crisis and in times of economic slowdown, not everybody fares the same. When we traced the paths of more than 1,000 publicly traded companies, we found that during the last downturn, about 10 percent of those companies fared materially better than the rest. In short, your business context is and will remain uncertain. But if you get moving now, you can ride the waves of uncertainty instead of being overpowered by them… (this) requires big moves: dynamic resource reallocation, disciplined M&A, and dramatic productivity improvement.” (McKinsey)
In Value Innovator terminology, focus on the improvements you can affect in your business today – improve the performance of your people, the profitability of your products and the productivity of your processes. Realise their latent value, build their resilience and transform your performance in these difficult times – it’s far easier to control your controllables than the uncontrollable externals; and it doesn’t have to be complicated!
#1 Improve the performance of your people
- Work on your communication skills – when people feel stressed by things beyond their control, they need to hear from you. They need to hear (and understand) what actions, initiatives and support you are intending for the business. In short, they need you to lead.
- Training doesn’t have to stop but it may have to change to reflect the changing needs of the market – whether that’s online, in print or in person.
- As well as encouraging employees to acquire new skills (both hard and soft) it’s important that they are rewarded for these efforts. These soft non-technical skills are much harder to replicate via automation and AI
- Address the “problem children” that you’ve been too busy to do anything with or about.
- And ensure your customers remain at the heart of your strategy.
#2 Improve the profitability of your products
- Review your supply chain – as early as January UK manufacturers were feeling the pain caused by suspended shipments from China. If you haven’t got a supplier strategy create one; you can start by identifying any over reliance on any one supplier/country and identify secondary suppliers for the same product but from a different country – eggs in one basket and that.
- Pass on your price increases – retain your customers via your improved communication skills
- Improve your new product developments or existing product enhancements – be driven by speed to market and adding low cost, high value improvements.
- Exit the loss makers – it’s a simple rule, if you can’t reduce the cost and can’t increase the price, then it’s time to let it go.
#3 Improve the productivity of your processes.
- Review how you have you responded to increasing internet sales in your sector – are you getting your share?
- Walk each, and every process, whether that’s in administration, in the call centre or on the shop floor. Identify opportunities to remove bottle necks, reduce costs and increase efficiencies.
- Journey map your customer touch points with your business, look for opportunities to reduce their pain and improve their experience.
- Understand and share your data to make meaningful changes to the business in the areas where it will have the greatest impact.
- Review your Social Media metrics beyond likes and clicks to ones that relate to revenue.
- Score your existing communications process against these 7 key questions
- How open are you?
- Do you have an open-door policy?
- How aware are you of yourself?
- Do you remember to listen?
- How regular are your staff meetings?
- Do you seek feedback and suggestions?
- When did you last act on the feedback / suggestion?
Done well, these People, Product, Process actions will encourage a positive culture change throughout the business in which everyone understands how their actions can add sales, cash, value and growth to the business they work in.