Building Relentless Resiliency in Times of Uncertainty
Five imperatives for thriving during a period of economic turbulence.
“Never let a good crisis go to waste” may be old advice, but it feels timelier than ever. While businesses are still struggling to distill the ongoing lessons of the pandemic, they now see inflation, interest rate hikes and an ongoing war pushing the economy closer to recession. If that wasn’t enough, supply chain issues continue to disrupt and consumer confidence is fading.
Companies are also challenged as they try to figure out if we are in the great resignation or the great retirement, and what that all might mean for the great hybrid experiment.
A new norm has emerged: The only true business constant is continuous business disruption.
Predictably, many businesses are already fearful, cutting budgets, freezing new hires and even laying off staff. We are seeing this in our clients. Governments are getting involved in companies’ marketing spend. And chief sustainability officers wonder how best to pay for the commitments they’ve made over the past two years.
All these issues are real and complex, and in some ways, it’s good to be on high alert. But businesses have a choice in how they respond, as they did in the economic crises of 2001, 2008 or 2020.
Each downturn has produced new economies that did not exist before, from e-commerce to the sharing economy to the experience economy to the world of subscriptions and crypto. There’s a long list of companies that have been created by these downturns including Netflix, Uber, Airbnb, AbbVie, Spotify, Instagram, Bitcoin and Ethereum. Others, such as Samsung, GM, Microsoft, Amazon, Google and Bank of America have been reimagined in ways that would be hard “to imagine” before these downturns.
So, instead of talking about crises, cutbacks and retrenching, we are choosing to use words like resiliency, durability, agility and radical innovation, as we guide clients through this latest challenge. We know growth can’t happen amidst panicky cost-cutting or short-sighted pivots.
No one enjoys downturns. But we can see how our clients in the past have channeled anxiety into strength and resiliency. They evolve. They make intelligent choices and emerge stronger than the competition. This is a moment to leapfrog and discover ways to accelerate, creating an opportunity to differentiate companies from competitors and create net-new businesses and categories, customer experiences and offerings.
To this end, here are five ways we are advising clients as they strive to build their own versions of relentless resiliency.
Accelerate Purposeful Leadership
In the last two years, purpose-driven companies have become the norm. COVID-19 triggered an unprecedented number of companies to go out, find their North Star and align to a higher-order purpose. These past few years have shown leaders that doing good in the world, doing right by employees and customers and making money can all work in concert. Now is not the time to throw all of that goodwill and equity away.
Purpose-driven companies are forcing leaders to become more agile, transparent and even a little vulnerable. The radical communications door that opened during COVID-19 needs to stay that way. The entrepreneurial spirit that allowed companies to reinvent how they did business has to continue to thrive. The agile strategies that respond to a changing environment must become the norm. And, importantly, with a strong purpose in place, they can make hard decisions through a values-based filter. Steps to take now:
- Invest in purpose-driven growth moves. Remind teams that downturns always open white space opportunities for those that are looking “between the cracks.” Encourage teams to continuously search for the next big thing. What will be the crypto or sharing economy of 2023? How might it align with your purpose? How will it move you forward? And, importantly, how does it pay off your purpose? Assume your competition is doing the exact opposite.
- Be ruthlessly transparent. Agility is important, but moving too fast can cause whiplash, confusing employees rather than inspiring them. A change in direction and purpose alignment can’t just be clear to leadership–it must be evident to all teams and employees, as well as customers, shareholders and other stakeholders. Be vigilant, strong and consistent in your communication approach.
- Accelerate brand, demand and innovation efforts. Discretionary spending is generally first to go, yet, we have seen in the last three recessions that companies that kept their foot on all of these pedals have come out stronger on the other side. On the innovation side, widen the acquisition aperture. Start-ups and small companies might currently be more open to acquisition discussion, and can immediately fill in offering and experience gaps at a lower price point. On the brand and demand side, it’s easy to fall into the false dichotomy that companies must tradeoff between brand or demand marketing. However, you need both. And there must be a real partnership between the two disciplines often most at odds—sales and marketing–to figure out the right mix today and tomorrow.
Leverage Employees as Your Greatest Competitive Advantage
There are many reasons the employee base is so fragile right now. The great resignation, the great retirement and many of the experiments coming out of COVID-19 are still in motion. Many companies will use recession nerves to back off employee engagement efforts. If they haven’t yet focused on their employee value proposition (EVP), they may think they can let it slide.
This is a big mistake. Like many other companies, Prophet just went through a talent war like few others we have seen. There is no reason to think that will change on the other side of this downturn.
The current economy is making employees increasingly uncertain about the company-employee contract, despite all the employee engagement skills businesses have built through COVID-19. The EVPs just re-launched at many companies will be thrown into disarray. Pragmatically, if personnel cuts need to be made, it must be done through a strategic lens, tying back to the company purpose. Steps to take now:
- Choose programmatic and initiative cuts over personnel reduction. We are still in the early days. And just as the pandemic sparked supply chain issues and are still causing mayhem (just peek in a Target or Walmart warehouse), so too will the labor shortages many are experiencing on a daily basis.
- Encourage cross-functional teams. New research from Prophet finds that 63% of companies with higher cross-functional collaboration skills say it increases employee satisfaction scores, and 54% say it boosts retention. People want to work with one another.
- Poke at pain points. Hybrid workforces are in their infancy, and there is much to be done to make the experience more fulfilling. Is commuting grinding people down? Are they stressed by after-hours e-mail? Do they have Slack or Zoom fatigue, and are there other tech solutions that might help?
Make Budget Decisions Through the Experience Lens, not Just Organizational Constructions and Functions
As mentioned, it’s natural for companies to consider cuts across the organization– in each function and business unit. In tough times, this often feels “fair”. Instead, decisions should be made using the experience point of view: What allows for the best customer and employee experience?
Companies should take this opportunity to understand what is required across the functions to create differentiated experiences for customers and employees. This may require more granular cuts. And in every company, there are pockets within the budget that will always be spent, often in procedural and programmatic ways. That money may well be redirected to experience investments. Paused programs can always be restarted. Steps to take now:
- Create agility through experience pods. Many companies have already put smaller pods into place to boost agility. Put these newer teams to work differently, across functions and in ways that build customer or employee experiences. Create assignments that build connective tissue.
- Enhance collaboration. Break down silos and optimize spending by developing a more collaborative working model. Our recent research shows that while 80% of leaders believe collaboration leads to better outcomes, only 28% of hybrid workplaces effectively support it. And only 50% of respondents believe their teams collaborate effectively, even when they’re all in the same room. What are new ways to rewire traditional methods of working including budgeting, resourcing and product development?
Harness the Investments Made in Technology
Digital thinking continues to be the lifeblood of business. It drives everything from manufacturing to delivery to remote work. And technology accounts for trillions in business spending, including ongoing investments that can’t be reduced. The problem is that in most companies, this tech exists in ponds and lakes, with little ability to pull it all together.
And in many, that single view of a customer–the dashboard we’ve all dreamed of–still doesn’t exist.
If possible, it’s a good time to pause or slow new tech investments, reevaluating digital priorities. Any spending that improves customer experience should move to the top of the list. Steps to take now:
- Clarify customer journeys. Use the point of view of each customer segment to ensure existing technology adds value, eliminates friction and provides the right data for future decision-making. This includes mapping the tech to each existing critical process. Encourage teams to find greater optimization.
- Reconsider the employee experience. The right digital tools increase employee productivity and satisfaction, enabling the kind of collaboration that drives growth.
Knowledge of Customers, Competitors and the Market Is the Only Superpower
Stop guessing. When no one knows what lies ahead (and no one does), it’s critical to understand how customers think, behave and buy in real-time. And it’s just as essential to know exactly what the competition is doing. Amid so many economic changes, the rules of many categories are being rewritten as people and businesses alter their spending patterns.
What’s required is a set of processes and mechanisms to gather as many insights as possible. This needs to be combined with a mindset that accepts the insights readily, with the willingness to adapt accordingly. No one knows exactly what is going to happen six months from now, but we need the skillset to collect and discern as much about the changing environment as possible. Steps to take now:
- Pulse the market. Invest in pulsing capabilities, then embed findings into practices and processes. This constantly feeds into new products, services, experiences and go-to-market approaches.
- Use insights to prioritize new investments. These insights may tell you that you do not have what it takes to be successful in an ever-changing world. Don’t be afraid to test and learn as a result, shifting investments as needed.
- Challenge team behavior. The hardest part of integrating insights into your business may be changing the behavior of team members to act on the insights. This kind of cultural shift isn’t easy, especially when people are frightened. While you may be cost-cutting, invest in the change required in your culture to drive agility in the organization.
Amid economic turmoil and uncertainty, there are still plenty of reasons to be optimistic. Downturns may be unsettling, but they provide abundant opportunities too. Companies that can use these times to find new ways of working–collaborating, integrating and even reconstituting–will be well-positioned to prosper as they enter the next growth cycle.