Continuing European turbulence and US election gridlock is driving strategic and structural changes in leading Australian companies.
Successful companies are focusing on maintaining a higher-performing workforce, differentiated capabilities, and a deep leadership bench. Just as important, they are realigning their advertising and marketing programs to better deliver the kind of strategic impact that enhances business performance in good times and bad.
Communication and service requirements must be redefined and projective processes must be redeveloped for this unsure environment.
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Global consulting firm Booz & Company’s annual CEO succession studies confirm that companies find it challenging to attract and retain leaders with the capabilities needed to execute their strategies. Tim Stevenson, Henderson Global Investors’ Pan European Equity Fund manager, argues for two crucial features: patience and selectivity. The first is because investment in change takes time. The second is because those companies that fail to change will lag far behind.
Uncertain times and job security concerns have damaged both consumer and business confidence. Employee trust, productivity, and commitment levels typically decline dramatically unless there is a clear business plan to create a sustainable consumer market by applying revised thinking about innovation. See ‘Rethinking innovation for a recovery‘.
The first step is to get everyone on the team looking forward rather than getting lost in concerns about current trends. Toward this end, team members should thoroughly understand the revised priorities of corporate, business unit, and functional leaders who are struggling to build brand equity. Remember that TEAM stands for Together Everyone Achieves More.
The second step is to avoid a focus on head counts and instead direct attention to what counts in people’s heads when they are under stress. There is widespread anxiety as incoming governments sack public servants, report austerity measures and focus on their own administration rather than offering effective tax relief to new business ventures and a positive climate for entrepreneurs to take on staff.
What people want to know is how corporate and political leaders will invest in critical capabilities for business expansion, new technologies for enhanced productivity such as online marketing and new 3D smart production platforms.
The third step is a cost and energy audit that reduces corporate overheads by freeing up resources that can be outsourced and renegotiating supply contracts to be ready to take up increased customer demand for innovative products and services. While effective cost and risk management will remain a priority for the foreseeable future, leading companies recognise the need to plan ahead as their business climate improves.
Customer expectations provide the pull for identifying disruptive technologies necessary for successful applications innovation. Business-model innovation, meanwhile, is inherently about finding new ways to deliver, and profit from, fundamental customer value. Many cost innovations also arise from finding new ways to leverage cost advantage without compromising the ability to deliver core functionality at a quality that customers deem acceptable.
The fourth step is what The Economist magazine recently dubbed the new paradigm of “reverse innovation”. Learning to excel at this type of innovation is now an imperative based on research into innovation re-vectored for the creation of new customer interests. Capturing the upbeat of economic recovery demands a renewed commitment to the creation of customer commitment and willingness to use their savings. This requires innovations that are different from those required in boom times.
The final step is to recognise early signs of burnout and to reward carefully those who have been carrying the load during the last couple of years. The top team must invest aggressively in leadership, talent management, career development and other areas that help nurture workforce engagement and drive enhanced customer focus. Only by investing in quality assurance principles and staff training programs will it be possible to have the right players on board.
Investing for the long-term is admirable, but innovations must be supported by leading company team members who are in touch with the needs of value-conscious customers scarred by the post-GFC crises.
Only by generating improved business and consumer confidences will there be the willingness to open wallets and make investments in productive enterprise.