A few weeks ago I was at a conference of colleagues from around the country. As we discussed what was going on in our businesses and with our clients, one common thread surfaced. Just about every business, no matter size or industry, was rethinking their business strategy. Many companies have found that the strategies they developed even as near as two years ago are no longer valid and going to ensure the long term success that they desire.
Many companies, by necessity, have gone into survival mode. They have had to abandon many of the strategic initiatives that they saw as essential to long term success when their strategies were developed. They have had to reduce the size of their work forces, losing valuable talent that they may need in the future. Most are operating in a reactive mode, rather than proactively.
There are probably as many opinions as there are economists right now as to where we stand in the economic recovery. The real “doomsday” analysts are saying that the recession is not over and we are in for even more difficult times. Others point to GDP data that suggest that the recovery has already begun. There has always been and will continue to be uncertainty in economic forecasts and business projections, so this is not a reason to ignore or delay strategic thinking in any business.
I believe with total certainty that the economy will recover. However, I think recovery will mean different things to different businesses and industries. There are going to be some long term implications and outcomes of the economic difficulties that we have experienced. Current low interest rates will not last forever. Some industries have seen consolidation or exit of players from the industry. For example, the auto industry is going to look significantly different after the recovery than it did before the recession.
In light of this every business entity should be rethinking its business strategy going forward. Some of the key strategic questions that a business should be asking itself include:
1. By what signs will we know that our business is recovering? What are the leading indicators of a turnaround? Many businesses wait for historical or lagging information to signal action. The problem with this is that those competitors which have leading indicators get a jump on the competition, gain market share that is tough to recover, and begin reaping the profits from the turnaround quicker.
2. How have customer expectations changed in the market place and how does it affect our competitive position? During tough economic times, people focus more on value and utility, and less on brand and reputation. While neither are businesses I frequent, McDonald’s and Wal Mart have done fine through the economic down turn. Consumer buying patterns have changed. Some may be temporary, while others may be permanent. No matter what the business there is going to be a greater focus on value. Products and services with the highest perceived value will enjoy a competitive advantage..
3. What will be the implications of key macro economic or political factors on our business? Many economists are predicting a period of high inflation and high interest rates once the economy recovers. Businesses that will need capital to expand to meet increased demand, or who want to purchase other assets will need to factor this into the strategy. While the political debate over health care reform continues to rage in Washington, there will some impact on every size business.
4. Will we have the human talent we need to meet increased demand as our business recovers? Many companies have slashed jobs and with it have lost some valuable talent in the process. With 10 unemployment, it’s hard to come to grips with a potential talent shortage. The current high unemployment rate is a short term aberration in the long term trend that says the U.S. will be facing shortages of skilled workers in the future.
5. Do we have leaders that are capable of succeeding in an era of rapidly changing market conditions, wider spans of control, and more diverse responsibilities? Leaders at all levels in today’s organizations are expected to do more with less. Most organizations have eliminated levels of management and increased the depth and breadth of managerial responsibilities. Companies are going to be reluctant to add back layers of management even as they add lower level workers. A new style of management, based on high levels of employee engagement, skills in performance management, and strong relationship building capability will be required.
6. How will we repair any damage done with key stakeholders—customers, employees, suppliers, investors—as a result of decisions we made? As customers, we all probably have experienced something “dumb” that a service or product provider has done to us in reaction to the down turn. I won’t mention the bank by name, but I have banked with the same institution for almost 20 years and now they have added fees and changed terms on my accounts. They have managed turn a loyal customer into one that will be changing to a different provider.
We can’t ignore the impact that the recession has had on employees who are still with the company. Many have no choice but to stick it out and suffer through the current situation. However, many will be looking to jump ship as soon as the opportunity presents itself. Having a strategy for retention of key talent will be essential.
Author Resource:
Ryan Scholz works with leaders whose success is dependent on getting commitment and high performance from others. He is author of Turning Potential into Action: Eight Principles for Creating a Highly Engaged Work Place. For more information, visit his web site at http://www.lead-strat-assoc.com .
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