I’ve never been a great believer of managerial concepts like planning for the unthinkable. I’ve always preferred the entrepreneurial and managerial ability to quickly read something new and rapidly adapt to it. I understand that large corporations need scenario analysis to prepare their companies to face tough and unexpected events. But almost all companies in the industrial and energy sectors face a complex, dynamic and somehow turbulent scenario. Revenues are under constant pressure, budgets become obsolete quite frequently, costs have to be contained to an unimaginable low, customers are continuing to postpone buying and investment decisions, and supply chains are under severe need of efficiency. Painfully, some companies have started using furloughs to try to survive and dramatically decrease operating costs.
Every sector is different, and each company is somewhat unique. There are no receipts valid for all businesses. But there are some basic principles that I think can guide in difficult times like this. “The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown” (Lovecraft). The human brain is uniquely vulnerable to uncertainty. Unpredictability can cause significant negative effects. When average people have multiple versions of the future in front of them, the reaction can be disruptive in a very negative way. In such a case, people may perceive threats everywhere, reacting emotionally and in a disordered manner. Even experienced managers and entrepreneurs may find themselves in a context where complexity, velocity and ambiguity are overwhelming.
I believe that there is a very simple rule that applies nowadays: in uncertain times, business leaders should spread as much certainties as possible.
First to your own people: payrolls are usually on top of the list when it comes to reduce costs. Reducing the workforce, especially in certain countries is easy and common practice. Of course, it is difficult to judge from the outside and every company is different from others. However, several times I’ve seen decisions made on a short-term view, without considering all the efforts that were necessary to recruit, select, integrate, and grow the right individuals in all markets and functions. Moreover, the same costs and complexities will have to be sustained also in the future. The risk is to lose competitiveness and competences. Protect your people especially in bad times, use internal resources and money as a powerful umbrella. In my opinion, everything starts and ends with people (not employees …). Reassure your community, indicate what you know and what you don’t know, without faking super-powers. Plans always have to be adapted and interpreted. Use all the brains and experience in your organization to overcome the difficult period and strategically reduce the uncertainty within your group of people.
Secondly, give certitude to your customers. Answering client questions and doubts with certainty is, now more than ever, the difference between winning and losing. Prices, delivery times, project schedules, the ability of your company to go back to normal, and the respect of contracts. Which constraints are facing your customers to say yes? Which worries and ambiguities about your offerings are causing blocks? Which emerging problems has your company introduced in the system? How can you eliminate some layers of vagueness? How have your clients been impacted in the key operations with their customers? The velocity with which your company will give new convictions to the clients may be translated not only in new orders but in a reinforced market positioning. It would mean that your company is on the go to survive a fierce and unexpected Darwinian evolution.
Thirdly, give certainties to your suppliers and partners. Strong companies usually have built great supply chains over time. If you want to give certainties to your clients you must give the right assurances to your suppliers. There is direct relationship, and your company is probably a key ring in the chain. Especially if your company is larger than your suppliers, you have responsibilities. Your long time partners in business would look at you to create the basis for a relaunch. If your sector is a complex network of suppliers and sub-suppliers, explore the impacts on each entity and verify how you can support them organizationally, financially, even emotionally.
Finally, give certainties to yourself. The current scenario is just another chapter of our journey in this life. For Homer, Ulysses represents the ability of human acumen to overcome adversity and obstacles through intelligence, shrewdness and perspicacity. Ulysses does not need Gods to protect him, he is the essence of the indomitable man who always seeks solutions, facing any situations and dangers. Ulysses represents the incessant research of man towards knowledge and the unknowable. Ulysses is us, women and men that navigates the stormy seas of life and today are fighting new and aggressive challenges. But Ulysses always finds a solution.
About OPG
OPG is a part-time management company in the industrial and energy sectors that works with entrepreneurs, top managers and fund managers to unlock growth.
About the author
Enzo Losito Bellavigna is founder and CEO of OPG – Operating Partners for Growth.
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