In five articles leading up to this conclusion, we’ve outlined what it will take for companies to manage better than just surviving during the pandemic, and the ensuing down-turn.
We seem to have entered a phase of COVID-19 denial, with many world and business leaders hoping for a quick V-shaped recovery from the pandemic. But can we really expect everything to go directly back to normal? New, fundamental challenges have arisen for people and society. These are what will truly impact consumers and businesses, rather than the pandemic effects we’ve seen so far.
Thinking that everything will simply go back to normal is a mistake. Not only do you risk the financial tail of the pandemic to later catch up with your business, but you will also miss all the opportunities that come from changing customer sentiments. Learning from previous downturns, we know they often derail many companies, even those that start out doing well going into the crisis. A study by HBR found that out of 4,700 companies, 80% hadn’t regained their growth or sales rates three years after a recession. Can you afford that?
Numerous studies have shown that post-recession winners are smart about defense by selectively cutting costs to improve operational efficiency, rather than e.g. dramatically reducing employee numbers. By reexamining the business model, operating costs can be permanently reduced and stay low when demand returns, pushing profits ahead of the competition.
Resources freed up by the improved operational efficiency also help post-recession winners finance their offense: ambitious investments. They spend significantly more than competitors on R&D and marketing. This is a long-term play that mainly has effect on sales and profits post-recession. By staying closely connected with customer needs and how these are evolving, they can place their bets well.
All in all, leaders of post-recession winners do not focus solely on handling the downturn. They start to build great conditions for thriving when it ends. You need to take a long hard look at your own business, and at the changing world around you. What is your starting point? What will the impact on customer sentiments be in your market? Where are your opportunities? How can you turn them into reality?
Innovate your business’ healthy core
Recessions are times for focusing on what you are really good at, and for asking yourself what business you should be in. It might seem obvious to start with focusing on your business’ healthy core, the question is: What is your healthy core? It’s not just the part that works best. It’s the part that is the most relevant, and most importantly, that has a future. Now and in a post-pandemic world.
You need to take a step back and look 360° at your business, your organization, the people that you cater to and the society they live in. Where is it all today? Where will it all be tomorrow? When seeing through the eyes of you consumers, you may find that your own team and your customers have different ideas about what your company is best at. In fact, our experience is that this is quite often the case.
As an example, Volvo identified that their core isn’t only safe cars, but human-centric mobility. In a world where people value flexibility highly and want to avoid large purchases, like during a recession, leasing a Volvo or accessing a Volvo through a carpool might be a more attractive option than buying their own. By creating services and solutions around the core offering, instead of just selling products, you can tear down barriers and increase relevance.
With a clearly outlined business core, you’ll be able to decide where to streamline and where to invest. And you can identify opportunities that let you evolve your business into adjacent products and services.
Reassess your purpose
These are interesting times for anyone interested in the future. Things aren’t just changing, they’re changing fast. Uncertainty is pushing consumer sentiments towards inner-driven values, multiple pressing sustainability issues is increasing the importance of societal perspectives, and we’re seeing technological innovation happening daily.
Many companies will find that their current purpose does not ring true anymore, after years of diversification to find new growth. It might be time to reassess your purpose and reshape the movement you want to lead, in order to create true believers externally and internally. Pinpoint a future-proof purpose that will reveal new commercial opportunities. How? By finding convergence in what people value, what society needs, and what relevant new technology is emerging.
Health is a great example of an area that affects most industries and where there’s a lot of movement: people are growing more health concerned, society needs to solve large-scale unhealth (UN SDG goal no 3. is Good health and well-being), and healthtech and medtech are booming with new innovations.
With a future-proof purpose, you can more confidently plan and make decisions for the post-recession world. You know that you will still be relevant to the people you serve.
Walk the talk
The times when companies could make big claims but never live up to them are over. Today, more than ever, you need to walk the talk. The changing sentiments following the pandemic so far show that people are likely to reward truly purposeful companies, and critically see right through companies that don’t walk the talk. Your purpose has to permeate your entire organization and every touchpoint with people. And it needs to start from the inside, with the people in your organization. It will be well worth the effort.
We’ve seen that that trust is the single most important factor for purposeful brands, and we believe it will only grow further because of the pandemic. In our Purposeful Brands study, we concluded that once you’ve established trust: “Trust is the platform from where you climb, but it’s also from where you fall.” This means that while trust can be fragile, it offers a world of opportunities.
A trusted brand that is perceived as purposeful by people and society can bank on that trust and venture into additional categories. So, keep track of by whom and for what your brand is trusted, and you will be able to identify new commercial opportunities and ways to serve these consumers.
Make sure your brand walks the talk by living your purpose, building and carefully retaining trust, and you’ll well during the downturn. You will also reap the benefits coming out of the crisis.
Now get going!
As a business leader navigating out of the current situation, you need to be perceptive, decisive and willing to act. When things move fast, like they do now, not all companies will keep up. You’re likely to out-speed your competition if you set a clear direction towards real future opportunities.
You don’t need to be a guesser or a gambler; take it one step at a time:
- Innovate your healthy core – through the eyes of your consumers
- Reassess your purpose – make sure it still rings true in the future new normal
- Walk the talk – act and live your direction inside out
Progress with purpose! And reach out if you want to discuss gaining insights, making them actionable and turning them into reality.
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