Five focus areas for turning uncertainty into opportunity
The question of how to prepare for a recession is top of mind for executives. Research on recession readiness suggests companies that strike a balance between cost-cutting measures and investments in future growth are likely to emerge strongest from the economic turmoil. Adopting this balanced approach to recession planning and response not only aids in pursuing efficiencies, but also helps preserve workforce morale and employee confidence, both of which are critical to maintaining productivity and the bottom line.
As you prepare your business for a recession, we recommend incorporating a balanced mix of these five strategies.
Plan for the future … any future
Scenario planning is a very effective tool in times of economic uncertainty. It brings together leaders from across functions to fully examine real-world “what if” scenarios and business conditions. By doing this, companies can better prepare for a recession and understand the potential impacts of various situations on their customers, operations, technology, workforce, and on other external stakeholders. Instead of having open questions about what would happen if they lost access to a supplier or if they doubled down on R&D investment, leaders can work together to generate answers. Scenario planning helps companies prepare and prioritize, building leadership’s capacity to create a right-fit playbook for staying ahead of change to maximize returns and impact.
Flexibility is the key to stability
Fine tuning organizational structure is a continual challenge—even under optimal business conditions. But economic uncertainty pushes the limits even further. Designing the right organizational structure requires balancing the need for governance (e.g., management controls to drive compliance and lower risk) with the freedom for innovation and employee agency (e.g., empowering people who are closest to customers to think creatively about the services and products they need). This balance positions companies to navigate economic uncertainty by fostering a culture of innovation with appropriate guardrails and standards.
Optimize products, services, and initiatives
Companies should quickly adapt their portfolio of products, services, or initiatives to changing customer needs and behaviors. To remain nimble, it’s key to establish a data-driven, 360-degree view of customers to gain an “outside-in” perspective of their needs and an “inside-out” perspective of what functional areas are learning about customer behaviors. Companies should leverage this customer experience data to realign their portfolios to match emerging customer needs (and emerging customer segments) and empower employees to provide exceptional service.
Your people are still your best asset
Employees are experiencing a lot of anxiety in today’s economic climate. This can lead to lost productivity and less desire to go above and beyond. Yet employees are key; they own core processes, hold key skills and expertise, and represent the organization to customers and partners. Now more than ever, organizations should treat their people as competitive assets that can make or break their ability to emerge stronger. With the cost-focused environment making it hard to reward top talent with pay incentives, companies should look to creative retention strategies to make sure their people feel cared for and valued.
Retool for the future
Technology is essential to reduce costs and drive operational efficiencies and future growth opportunities. Leading organizations strategically harness the power of technology to augment their workforce and automate processes. Machines do the repetitive work so that employees can focus on more satisfying tasks. These top companies look beyond just implementation and focus on driving adoption and enabling teams so that the business and their people get the most from technology investments. Although budgets are tighter, adding the right tools has never been more accessible or essential to staying competitive.
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