Unless you’re in telecommunications or making PPE, 2020 may be perceived as the year for downsizing and battening down the hatches. These unprecedented and challenging times call on all business leaders to rethink their typical operations. While budget cuts may be anyone’s gut reaction to unpredictable times, those who analyze and act upon emerging changes in market needs will be the ones that stand out as business success stories. In these volatile situations, sometimes making a pivot in business strategy could be a very profitable endeavor.
Innovative Companies Don’t Anchor Themselves to the Past
With a pandemic, an upcoming election and a recession looming, CEOs need to realize that what worked before will not always work in the future. Far too often business executives fall into the ease of routine. Companies are resistant to changing their directions because of the success they’ve reaped in the past.
So how do we move forward? Innovation requires an acceptance for “Change.” The first step forward is internalizing that since circumstances have changed, the way we do business needs to shift as well. Companies stuck in their old ways will eventually get left behind. Although shifting business strategies may clash with your original picturesque version of the world, ultimately you need to focus on what’s going to enable your business to survive, grow and thrive in a new environment.
Near the start of the 2008 recession, I joined a telecommunications test & measurement company facing major cash flow challenges. As the company’s new COO/CFO I had to figure out what was being spent where and how to minimize and prioritize these expenditures before we ran out of cash. After significantly restructuring the company’s processes at the time— which required going against the familiar way of operating—we ended up churning a profit amid one of the worst economic crises of my generation. Having this strength of character to completely change gears is crucial for maintaining the future of your company.
Customers Determine a Need for Change: Listen to Them
Possessing a will to change is the critical first step. The next step is having a keen eye for observing and understanding shifts in customer needs. Understanding what type of change your company will need to take and if the opportunity is worth adapting for requires a keen eye and willingness to take calculated risks. Take for example Unilever—demand for their essential items such as food and hygiene products is superseding that of the non-essentials. Their product priorities have now shifted as a result; whether that pivot will be long term remains to be seen.
It is important to take the time to communicate with your customers — and prospective customers — to understand what they’re looking for. Has the way they perceive your products or solutions changed with the environment? If it has, how big are the gaps between what you provide and their needs?
Focus on the Positive Outcome from Making Changes
You’ve listened to the market, you’ve done your research and you know better than to anchor yourself to past habits simply because it is the easy road. When deciding to draw and enact a new business blueprint, you have the responsibility of breaking the news to your employees and shareholders. While shifting a business’ original structure is challenging, it is important to keep in mind we did not become entrepreneurs because it was the easy option.
I am the co-founder and CEO of The Glimpse Group, a diversified platform company of enterprise-focuses Virtual Reality and Augmented Reality software companies. Covid-19 wreaked havoc on our 2020 growth projections and gave us three months with practically no new business. To say the pandemic threw us off schedule is an understatement. Rather than accepting defeat and looking to the exits, I worked hard with our executives and our subsidiaries to strategically assess new market needs and shifting demands. One of our subsidiaries, Adept XR, was originally focused on developing VR/AR solutions for the corporate training sector. However, the sudden shift to remote learning led to an emerging need for remote solutions for higher education. To capitalize on that need, Adept XR shifted focus and placed a higher emphasis on building VR/AR learning environments and simulations for higher education. Several other companies in our portfolio have made similar business development, sales, and strategy adjustments.
Making Changes: Never Lose the Start-Up Mentality
It can take a long time for information to travel from the front-line to the leadership of large companies, which makes it more difficult for employees to move quickly or even to know in which direction to move. Start-ups are at an advantage regarding their agility to respond to market trends and changes because of their smaller sizes and increased interconnectedness. This is why I always try to keep a start-up mentality in mind and communicate directly and frequently where I see fit.
CEO Adeo Ressi of idea-stage accelerator The Founder Institute discusses the edge start-ups possess because they’re “small and nimble.” Large companies can act like start-ups by making internal changes in parallel with the environment, which is crucial to a company’s health. It’s important to keep in mind, however, that changes shouldn’t be made too quickly. This is in order to mitigate whiplash from excessively pivoting back and forth and draining out resources too quickly.
McKinsey partners Stacey Haas and Brian Quinn discussed what larger companies can take note of regarding how start-ups innovate. Senior external advisor Julie Baskin explained, “…they [start-ups] seem to come out of nowhere, and they seem to be moving fast with no resources. And they seem not to be weighed down by the baggage of their own success, like our big clients are.” I believe there is much to learn from today’s startups how they are working to stay fresh and productive.
Apply These Lessons to Your Business Growth
Being nimble and having courage in your convictions is an art that CEOs like you and I are learning to hone nationwide. The long-term success of your company boils down to your thirst for understanding the dynamics of a fluctuating environment, and your willingness to pivot your product offerings in response. The times are evolving, and so should your company.