The situation that we are facing is absolutely brutal for many companies. Some will simply not survive the economic impact of this pandemic. The industries in which they operate will not be able to return to normal for several months and they may face ongoing restrictions which may make it untenable to continue operating.
Whilst it is an incredibly challenging time for business, many companies will survive and recover. For a number of companies, COVID-19 has provided their organisations with an opportunity to innovate and thrive.
Economic downturns come and go. Closures are inevitable but for those who can adapt, it does not have to be a foregone conclusion. I have seen many companies continue to grow when faced with adversity. Many have become financially stronger and resilient as a result of the decisions they made during those hard times. They made changes to their strategy but stayed true to their core purpose, values, customers and the core competencies inherent to their success.
Recently, I have been hearing a lot of talk about how companies should be pivoting at the moment. Pivoting can involve drastically changing the direction of a company. For example, companies may choose to scale back and only focus on one area that is still productive, or they may invest in a new product or service altogether. Sadly, I watched several companies who pivoted after the GFC in New Zealand and Australia fail within a couple of months as a result. I also saw, however, some companies pivot with success, long term success.
The difference between success and failure was dependent on how far they went in changing their core strategy. Those that understood what their core was and stuck to it, did better than those that hadn’t.
Reassessing your company’s strategy during good times and bad is sound practice but you should stay true to your core purpose, core values, core customers and the core competencies that have been part of your success to date.
When you change to a strategy that is not aligned to the core of the business you are likely to send your company in the wrong direction. Jim Collins’s book, “How the Mighty Fall”, provides some good insight into how misalignment between core ideology and strategy can cause a business to fail.
My advice if you are looking to change your strategy or pivot is to be clear from the start about your:
- Core Purpose. Why are you here? What difference does your company make in the world?
- Core Values. What are the rules that drive your company? Note, these are attitudinal values, not actions.
- Core Competencies. These are inherent to your success to date, not easy for competitors to imitate and can be reused for many products, services & markets.
- Core Customer/s. Who are they as individuals? What value do you provide them or what problem do you help them solve?
Use these four core strategic elements to keep your ideas aligned during the process of change and use them as your filter during the decision making process.
If you want to add another core customer to your income stream, ensure that their business is still aligned to your core purpose, values & competencies. If not, then be careful that the income they bring with them will not result in you having to create a new business model that deviates away from what you are good at.
People decisions are never easy to make and I am well aware of the impact these decisions have on others’ lives and families. Your people contribute to your company’s success and in an economic downturn, you need to try and retain your best people. Those who are aligned to the core purpose and values of the company. Those with the key skills you need now and in the future. Identify the areas you may be lacking in capability and seek to retrain existing staff or hire new people in order to effectively execute the changes you have made to your strategy.
Your people can help you drive innovation from within but you need to have a work culture, structure and organisational environment that allows them to do this. To understand more on how to do this, I recommend “Driving Innovation from Within” by Kaihan Krippendorf.