Analyst’s Note: The topic of this report was prompted by a roundtable I hosted in January on “Leading in Uncertain Times.” It was a much-needed therapy session with ideas including how to shed bad habits based on past experiences. The discussion quickly turned into a brainstorming session on ways to better manage a business and lead people. What follows, including rants and advice, is inspired by this experience.
I want to declare that the oft-used statement “do more with less” be forever banned from our business vocabulary. This cliché has not only become a passive-aggressive euphemism for budget cuts, but it’s also bad advice, weak business strategy, and the wrong mindset for leaders that aim to win customers and develop thriving businesses in the acceleration economy.
Before we get to the good leadership ideas, here is my three-point rationale on why to banish the “do more with less” mindset, thinking, and phrase, no matter what economic environment you’re in:
- It leads to shortsighted decisions such as universal budget cuts in a business — “every department find $X or cut y% from the budget.” This is death by a thousand cuts — everybody and everything is trimmed somewhat, which holds back the entire business without consideration for market dynamics or customer opportunities.
- It puts your best talent at a disadvantage, focused on cost-cutting rather than putting their energy into creatively navigating tough times and/or crafting and executing breakthrough strategies. This is especially true because talent and skills gaps exist, and true talent is hard to find and retain.
- It further discourages you from using customer, market, and product intelligence to guide and prioritize investments. If you don’t use data to guide decision-making in tough times, then when will you use it?
It’s cathartic to get the baggage of that phrase out of the way. Now, let’s turn to what companies and leaders can do today, next quarter, and in the years ahead, no matter what headwinds or tailwinds we may face.
Make Fewer Strategic Bets, Focus Resources
The natural reaction during uncertain times is to hunker down, wait it out, and play defense. This may have worked in the past, but today this “cut and hold on” strategy won’t work. Why? Because with the expectations of increasingly finicky customers changing daily, the ability to disrupt business can happen with something as simple as a new app (ChatGPT being a recent example). The economic picture can change in a blink. Moreover, the relative strength of vertical markets is uneven. For example, demand is still high in travel and hospitality, while tech is suffering from a reduction in demand and dealing with cutting costs out of the business built up during the “growth at all costs” environment of the last few years.
To be clear, budget cuts and belt-tightening are required. However, what is also needed is research and decisions to make strategic bets, allocating resources to the best market opportunities and customer needs. For example, take Microsoft, which laid off 10,000-plus workers last month. CEO Satya Nadella made the statement that even though it competes in the high-growth cloud market, Microsoft is moving its resources and placing its bet on “AI as the next major computing platform.”
Another example is to trim investments in legacy businesses and use the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), or cash flow, to fund the next market opportunity. This is happening, for example, in the world of communications, where 3G network infrastructure and services are being phased out and the investment is being shifted to 5G services and new products.
Double Down and Invest in Your High-Potential Talent
Despite uncertainty and global economic softening, talent is still scarce. For example, today there are 11 million job openings in the U.S. alone, according to the most recent Bureau of Labor Statistics report. Even in tech industries, where layoffs continue daily, companies report trouble finding talent for important open roles geared to developing and delivering new capabilities. As a result, one of the best ways to fill these roles is to move your most high-potential and high-performing people into new roles where they can have the biggest impact quickly.
For example, as hyperautomation rises on company agendas and artificial intelligence (AI) is applied everywhere from product development and supply chains to marketing and data science, it raises the demand for developer, ops, and tech skills. The best companies and leaders have a proactive strategy for their high-potential team members, especially in tight markets. It’s not only good for the business, but it’s also motivating and energizing to your best people who thrive on taking on new tasks and building their careers.
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Reach Out to Customers, Partners, Even Competitors
As the saying goes, a rising tide lifts all boats. Well, the corollary is also true: tough times can sink all boats. A creative idea — depending on the markets you serve and levels of competition — is to actually sit down with your customers, competitors, and partners to pool your intelligence, co-create strategies and ideas, and/or pivot your business quickly based on market need.
Companies pool resources, supply chains are redirected, inventory is re-routed, and facilities are shifted during other times of crisis. Customers are a source to identify changing needs by specifying new goods and services they want. Partners can help accelerate and fill gaps without the added business costs; and competitors can flip to “co-operators” to share resources or carve up markets.
The pandemic taught us a few important lessons. We saw factories that previously crafted gin, vodka, and other spirits become a primary source of much-needed hand sanitizer. Manufacturers of airplane parts, which suffered with travel’s slowdown, pivoted to making auto parts for popular items such as sprinters and delivery vans. Grocery and food organizations, logistics and delivery companies, and pharma and healthcare providers are just a few of the examples of businesses that creatively sent business to, and shared customers with, partners and competitors — all with the goal of delivering on customer needs. These strategies are equal parts survival during tough times and inspiration to reinvent business models to align with customers.
Eyes on The Road, Foot on the Gas Pedal
As my dad was teaching me how to drive, he’d look me in the eyes and deliver fatherly advice: “Don’t brake as you head into a curve.” Rather, with a bit of profanity for emphasis, he would exclaim, “Accelerate!” Well, we are hitting some curves as markets tighten and uncertainty is our business reality. Now is the time to make bets, invest in your best people, and work with your customers, partners, and even competitors to navigate through uncertainty and prepare for your next chapter.
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