A lot is happening in the world these days impacting business life, and we can’t ignore it. With compounding factors such as the Climate Crisis, the war in Ukraine, post COVID-19 market leading to higher inflation, the worry of tighter financial conditions are creeping into the collective consciousness of employees and business owners alike. Knowing the characteristics of recession resilience can be a huge advantage in future-proofing the success of your company. With this in mind, let’s run through five success factors to ensure your company stays recession resilient in spite of economic turmoil:
1. Listen To Your Customers
In the face of a recession you will experience a period of depressed consumer confidence – which culminates in lower spending and business activity. As recession-conscious consumers are more likely to be cautious with their spending habits, your company needs to address their pain points with razor-sharp precision to beat the competition. On top of attaining market-fit, you also need to maintain it.
As technology, markets and competitors evolve, so will the type and severity of your customers’ pain points. Keep your customers' needs at the forefront of your company as you drive innovation and product development.
2. Focus on Organizational Agility
Agility is all about how well-equipped organizations are to respond to changes in business conditions to deal with disruptive events - a looming recession and unpredictable market conditions being the prime examples here. In a volatile business environment, companies must be able to anticipate and adapt to change in order to survive, and ultimately thrive.
Inability to anticipate and swiftly respond to change impairs organizational performance, jeopardizing competitiveness and possibly the future of the company.
To improve agility, follow these steps:
- Examine what works well in terms of swiftly changing direction when needed: Assess the effectiveness of any practices that have already been adopted to enhance agility. Are your tools and processes as agile as they could be? Your ways of collaborating and handing over? If not, make them!
- Learn from external sources: Analyze the suitability for adoption of agile practices that have proved to be effective by external sources such as industry peers, external research, and consultancies. Get inspiration from what has worked well in similar organizations.
- Make your work model agile: Fundamentally rethink the way your organization leverages its people. The pandemic proved that people are taking factors such as flexibility, location, hours, and remote/hybrid models seriously. Being agile enough to move with the wants and needs of the workforce will serve your organization in the long run.
- Establish change management: Given that the most significant inhibitor of increased agility is human resistance to change, establish a strong change-management program which can help people through change and on a continuous basis help people navigate and thrive during change.
- Develop a roadmap specifying which practices will be adopted, fine-tuned, accelerated or sustained to keep your organization agile, resilient and ready for changes.
3. Be Hard-Core in Your Prioritization!
During times of crisis, it becomes much more clear what is nice-to-have and what is need to have. There are concrete and actionable steps you can take to make wise and strategic company decisions, with the needs of employees, customers and stakeholders in place. To make your company recession resilient it is important to get rid of any business which is not paramount for your survival or will make sure to future-prove you within a market or in front of key-customers. Now is the time to make those prioritizations and cut off any business not adding value.
4. Optimize Your Digital Processes
In the era of digital transformation, it’s becoming more and more critical to optimize your digital offerings. Examine the following processes:
- Automating your processes is the first step to permanently reduce the cost of doing business. Adopting technology such as artificial intelligence to reduce labor costs, shore up production and free up high-cost talent will put the focus on bringing value to your organization.
- Improving the customer experience via digital offerings: focus your efforts on producing more relevant digital products and services and remember the human touch! People want to feel special, also in times of crises - so figure out what to automate, and where to keep - or add - the human touch.
- Focus on predictive analytics: invest in predictive digital projects that make your organization faster and leaner, including in its decision making. Investing in tools to help you predict based on data and facts, we as humans cannot digest and make sense of quickly enough ourselves, is a non-negotiable for a recession-resilient company!
5. Clearly Differentiate Your Organization In Its Field
Michael Porter’s competitive strategy tenets state that a firm cannot be everything to everyone and must focus on leading either through cost leadership or quality differentiation. Having a clear north star towards one of these sides will ensure that a business stays on the right path during hard times. This is a particularly important factor for start-ups to consider, who might try their hands at being too many things at once in the early stages of development. Instead, focus your attention on clearly differentiated offerings to stand out from the competition.
Summing It Up
Now is the time to take wise and strategic steps to future proof our organizations. We hope you will get the best out of following the advice in this guide and that you will get through change, crisis and downturns, successfully.