Surviving the perfect storm in business – leading through change
Your business or industry is most likely experiencing a ‘perfect storm’ at the moment. Perfect storms are, ‘a rare combination of circumstances that combine to drastically aggravate an event'. First there’s normality, then a bit of instability, followed by complete disruption. Suddenly you’re in over your head. This is exactly what is taking place at the moment within the business world; complexity, accelerated change and difficult problems to solve.
Most of the companies we support through our ALPHAS Programme are trying to deal with a number of problems at the moment, including;
- Establishing better leadership when dealing with team members who are remote working.
- Developing/adopting better tools for communication between team members who are remote working.
- Regularly reviewing financial forecasting and adjusting based on current circumstances.
- Gaining more experience with representing board level financial and operational updates to investors and stakeholders.
- Putting in place adequate systems to complete necessary tasks.
- More consistent invoicing framework to help keep track of income and outgoings
- Minimal cash reserves
Do any of these problems sound familiar? If they do, you might be caught in the middle of a ‘continuous change loop’.
Change creates problems
Running a business means leading/managing by implementing a strategy. It would be great if you could just implement a strategy and walk away – maybe go on holiday! But that’s not possible, because the strategy you implement is subject to change, which creates problems and opportunities you must lead/manage through. To solve these problems, you need to implement a new strategy, which is subject to more change, creating more problems and opportunities that require you to lead/manage through again. In the end, you are continually implementing strategies to solve problems and deliver opportunities caused by change.
Accelerated change creates a crisis
The continuous change loop is a normal part of ‘business as usual’. During ‘normal times’, if you can't effectively solve problems, they accumulate and your business will spiral out of control. Consequences include restructuring, redundancies, foreclosure, bankruptcy and going into administration. A crisis, however, accelerates the change process, multiplying problems two to four times. Change accelerators include high inflation, natural disasters or recessions. The very nature of COVID makes it an incredibly dangerous accelerator on a global scale.
If you cannot master leading and managing through change, it will impact the entire system of your business - because all systems are interdependent. It will first cause disintegration of structure, strategy and process, which results in poor planning, lack of values, hostile culture and a poor rewards policy. These greater systemic problems will then create disintegration between business functions, resulting in problems with sales, marketing, supply chain, administration, HR and financial. Finally, both greater systemic and functional problems will create consequences that manifest in the market, such as declining sales, layoffs, staff leave, poor quality products and services and resource shortages.
How to Survive the Perfect Storm in Business
A business can survive storms by reducing the damage and pain in three steps - crisis, recovery and re-boot.
- Crisis is the ‘shock’ or ‘wake up’ call a business needs to get back to the basics, such as getting in cash/resources, diagnosing business ‘health’ and learning how to identify problems.
- Recovery is leveraging the foundation to return to a ‘business as usual’ state, such as setting up collaborative teams, problem solving, action planning, prioritising and implementing.
- Reboot leverages the capacity/capability developed to launch a business into growth and scale, such as proactively identifying and delivering on opportunities.
Take the business stress test
COVID-19 is a ‘stress test’ which should be a wake-up call for your business. The number of typical business problems you can't solve and abnormal problems that have accumulated tells you two things about your business.
- It lacks leadership-management capacity and capability.
- If you can't do either then your business can't progress to the next stages of growth or scale.
If you’re here, it’s the perfect place for a storm to take your business away.
John Grisby CMBE is Professor in Management Practice at University of Bedford Business School.