The market shows us early warning signs of a recession. The US yield curve (one of the most-watched bond market indicators) shows the strongest signs of recession since the financial crisis of 2007. Brexit and specifically the potential of a no-deal Brexit create perpetual economic and financial uncertainty. The global political instability and market volatility are also likely to have an impact on future trends in Finland, where economic growth dropped to below 1% in May 2019. Compared with the same period in 2018, the components of the Consumer Confidence Indicator in Finland have all weakened, apart from spending. To a great extent, expectations concerning Finland’s economy plummeted over the year.
Are we on the verge of a downturn? How should you prepare your business?
How to get ready
Firstly, it is crucial to develop an agile strategy that will adjust to different scenarios. Todays’ business environment is more challenging, complex and fast-paced than ever before. For that reason, the concept of strategy must be updated to respond to contemporary challenges. It’s time to unlearn the traditional, top-down approach of strategy, with communication mostly took place in yearly strategy meetings, and with a sharp division between the strategic and operational side of the business. A strategy run in the old-fashioned way is too slow to react to changes in the external environment, and if the rate of change on the outside exceeds the rate of change inside, the end is near.
Secondly, you should create efficient operations. This is crucial no matter what the factors that change in the external environment are. Digitalization, technology, and AI are pre-requirements to succeed in the time of economic downturn.
Thirdly, you should implement digital technology with a clear return on investment. Digitalization is shaping every industry. Even if you are moving slowly, your competitors are not. By focusing on implementing digital technology with a clear RoI, you guarantee excellent customer experience and availability of services, no matter where your company is physically located. This will also result in reduced costs. Either sharing or providing insights into your data can also create fruitful data monetization opportunities. In short, uniting digital and data strategy with overall business strategy shortens feedback loops, and can help in breaking organizational silos. This helps your business to move forward with a clear vision and objectives.
Most importantly, you must be aware of your customers’ needs and develop services and offerings that help your customers in these uncertain times. You want to identify your ideal customers, then ensure top-quality customer experience and satisfaction. To be able to do that, you need information backed up by data. Information about the customers’ desires, and how these might be shaped—or will be shaped by their environment and global megatrends. Sharing data across ecosystems can help to discover new opportunities. If you don’t use data external to your organization, your internal decision making risks being done without fully considering the customer’s environment.
If you use the right data and the right KPIs, you can optimize your business performance and respond to your customers’ needs.
Solutions by Taival
To get your business ready for a potential downturn, it’s essential to address the new strategic imperatives before it’s too late. The level of preparedness will separate the winners from the losers, and Taival wants you to become one of those who has the winning strategy to survive the post-digital era and the times of economic uncertainty. Down below are some ideas: pick something you would like to do and start your journey:
- Set a clear strategic direction for the company that considers different future scenarios and creates a mechanism to change paths based on actual events. (what Taival offers –Agile Strategy Development)
- Understand & optimize your processes by utilizing the existing digital footprint (what Taival offers – Digital Process Discovery)
- Harvest the power of digital technology for improved efficiency and new revenue streams (what Taival offers –Rapid Digital Exploration)
- Get ready to address the global push towards a circular, more sustainable economy as sustainability is becoming more reflected in customer demands and regulations. Start your actions towards a more sustainable world before the outside world forces you to act! (what Taival offers –Circular Economy advisory)
- Build a strong foundation in a vibrant ecosystem. Your success is something you have to achieve by yourself, but you cannot do it alone. Successful companies need to build an ecosystem and collaborate with actors that have complementing skillsets. (what Taival offers – Ecosystem strategy & operating model)
- Establish new, winning business models & revenue streams to increase the relevance of your offering for your customers in an uncertain world focused on solving real-world problems. (what Taival offers –Agile strategy and operating model design)
The potential risk of a downturn does not mean you should freeze all your investments and hide in the basement in fear. What it means is that you should find investments that get you ready for the downturn while building a strong foundation for the time after. That you should invest in a way that helps you to meet both immediate and long-term needs.
Short term RoI is one KPI but not the only one. Make sure to maintain the right capabilities and KPIs to measure your company’s success outside of the immediate storm. While the innovation budget might seem irrelevant in a downturn, it provides critical capabilities for keeping your products and services relevant for your clients.
At Taival, we believe that while efficiency is vital in uncertain times, you should keep your focus broad enough to harvest growth opportunities, and keep your offering and services relevant for your clients. You need to be able to adjust your course proactively to adapt to changes, and to learn from every situation you go through. Have you noticed the signs of a downturn? If you want to share your insights with us or discuss how to get your business strategy future-proof contact us here.