Too much economic uncertainty.
Is that what’s keeping you from taking on new challenges in your company today?
I don’t blame you. With the US inflation rate at a 40-year high […], and the majority of CEOs saying they are preparing for a recession in the US and the EU […], it’s hard to think of doing anything else but batten down the hatches. What’s more, news headlines of another large company undertaking layoffs are making you wonder whether you’re doing enough to preserve cash and reduce costs in the near term.
When our certainty of the future is threatened, it’s difficult to think clearly. And when fear overcomes us, it makes us put off doing new things. It makes staying the course with our current strategy, while delaying investing in for long-term growth, feel safe.
However, not making a choice is making the choice.
Things can get worse before they get better. You need to get more granular about strategy.
I’ve spent 20+ years in strategy, finance, and operations leading teams through new business launches and organizational change. As a management consultant, I now help organizations make and implement strategic decisions so they fully realize their business goals. Here are the lessons I’ve learned to overcome fears so you can manage with confidence and humility.
Things that don’t work
1. Focusing too much on managing to present conditions
Most CEOs expect a “brief and shallow” recession, and if that holds true, you will need to pivot quickly to capture consumer demand when the economy improves.
2. Ignoring the fundamental shifts happening in your specific industry
The march to a digital, consumer-led business world continues, as we have witnessed during the last pandemic-induced downturn. Well-capitalized companies like Google, Amazon, and Meta continue to invest in artificial intelligence, Web 3, the Metaverse, and blockchain. Falling behind while technology transforms will make it more expensive to catch up.
3. Waiting to talk to your teams until you have THE “solution” figured out
They’re seeing the same stock news and layoff reports you are. They will create their own fear narrative with the data available unless they hear from you first.
Yes, you can invest in the long term while saving costs
1. Recognize your own fears before managing your team’s fears
In this article, Roger Martin, author of one of my favorite strategy books, Playing to Win, describes two types of fears companies and their leaders must manage – the fear in the company’s leaders, and the task of managing their teams’ fears. A little fear can be motivating, but too much of it will get you in a state of paralysis, which is unproductive for you and your teams.
What are some fears that might be keeping you from taking risks today?
- For me, I realized that refreshing my iPhone Stocks app and checking Finance Twitter more than 1-2 times a day only provides more data to the “the sky is falling” narrative. I try to stick with an essential diet of economic and financial facts that matter most to my client work and then move on with my day.
- Our fears are also shaped by past experiences leading through prior downturns. You may recall investors coming after you for certain decisions you made, or having to lay off employees, which is one of the most painful things I’ve had to do as a manager.
- As much as you may dread it, acknowledge that you will need to make some tough but necessary decisions to manage costs in the near term.
2. Revisit your current strategy with precision
Lay out the different initiatives from your current strategy in three buckets:
- Where will you trim? Companies buckle down during recessions and manage to optimize profit margin – it’s inevitable.
- What will you feed? Add fertilizer to products that serve customers’ needs well during a downturn.
- What will you seed? Invest in projects that build the capabilities needed to compete and win over time. Familiar places to look include IT initiatives to drive better consumer experience and insights, cybersecurity, and data privacy, but also, keep investing in your most promising new growth initiatives, even if it’s at a slower pace than previously planned.
You don’t have to invest in a project forever, you can give it three to six months, then re-assess, but set realistic milestones for each time frame because otherwise, your sense of fear will have you gather the wrong data to create the wrong narrative.
Ask yourself:
- Are the business assumptions we made last month still sound?
- What signals should we look for to adjust our strategy?
Your teams need to hear from you a story of optimism about the future of the business so they manage their own fears and remain motivated to do their best.
Once you do the two steps above, you will feel ready to tell your business narrative with confidence and humility.
Be straightforward with your teams about the current state of the business and the measures you’re taking to manage to near-term conditions. But do focus on what endures about your company – the core strengths you have built over the years, the key reasons why your core customers love you, the vision, and the purpose your products serve in consumers’ lives.
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Learn more about how I help clients in strategy here.