Words by Leanne Kemp, Queensland Chief Entrepreneur
Queensland businesses are starting to plan their re-entry into the market, but how do they know what the market will look like?
Despite what experts may tell us, I don’t think the recovery will be V-shaped, W-shaped, L-shaped, or even a slow uptick ✔ There is a third dimension (a Z-axis), which tells us about the structure of the economy that will drive a truly re-enlivened, robust and regenerative economic response.
Most of the current conversations, the economic graphs and projected financial plans ignore this third dimensionality of recovery. Many leaders are putting too much trust in forecasters.
“Predictions are risky, especially about the future,” according to a popular expression.
In the current crisis, we have daily grand predictions about “new normals,” and managers must restart their businesses and make decisions based on assumptions about the future.
The problem: Most of these prophecies about what is to come are basically straight-line extrapolations of a few weeks of data or sermons about what that prophet believes should happen. These won’t be of much use to business leaders making cold, hard decisions about returning to the market.
Here’s a common prediction: Social distancing forces people to do more buying online and communicating through social media, thus accelerating a permanent, big shift after the crisis to more ecommerce and virtual models.
The evidence, however, is not so clear-cut.
So, what’s a manager to do given the uncertainty of both predictions and prophets? Here’s some advice to CEOs, CFOs, sales managers and others who allocate the major resources in most firms. Whatever else you do in thinking about the future of your business, pay attention to the following:
Shorten selling cycles
In surviving and recovering from a crisis, increasing close rates, the efficiency of a sales model, and its segment focus are strategic issues, not only sales management tasks. Consider: When commerce resumes, what’s the impact on your business from shortening selling cycles and accelerating time-to-cash by one week, two weeks, or more? If you don’t know, find out now and work to shorten ramp-up time and increase productivity in your sales team after the crisis.
Consistent messaging to customers
A problem with megatrend predictions is that, even if they turn out to be generally accurate, they’re not managerially useful. Companies sell to customers, not to a trend and priorities must be set. Make sure that key customers are aware of supply disruptions or other problems. Do not assume that, in a global pandemic, “everyone knows.” They are absorbed with their own business issues. Big accounts drive a disproportionate amount of a company’s revenue (the 80/20 rule), and reliance on large customers has grown. Salespeople must send consistent messages, not ad hoc responses.
Use data, don’t hoard it
Important data is account profitability, your cost-to-serve customer A versus customer B. My experience on boards of directors and in work with leadership teams is that “vision” discussions are fun, and quarterly financial results are tracked closely. But despite much talk about big data, the customer information required to survive and then restart the business after a major downturn is often lacking.
One reason is that, in many firms, the relevant information is effectively the “property” of an individual rep, not the company. That makes it difficult to set account and segment priorities. Use the current frightening hiatus from business-as-usual to get this data and establish a process for keeping that front-line information flowing and timely. Otherwise, “customer focus” will remain a perennial slogan, not an organisational reality. Oversight over this activity is as important as it is in the capital budgeting process, innovative ideas in the virtual crisis war room, and the speech about resilience.
It’s unclear whether social distancing has made people more eager to transact online, or whether it simply demonstrates the limitations of communicating virtually. The historian William McNeill documented in Plagues and Peoples how epidemics were a recurring norm, not the exception, for millennia.
Buying and selling have been social as well as economic transactions since the Greek Agora, the Grand Bazaar in Istanbul, malls in the 20th century and through decades of internet use.
Will months-long confinement change that deep-rooted human behavior?
Get back to basics
Finally, for what’s it’s worth, here is my prediction: The coronavirus will eventually abate and few will remember the many false predictions made during a crisis—but you will still have to live with your business decisions.
Do your best to separate hype and headlines from market-driven data and options. When much of the world economy is shut for weeks and possibly months, cascading bankruptcies and higher debt loads probably mean a tightening of purchasing decisions and capital expenditures in many consumer and B2B markets. Your business-development efforts will need to be more focused and productive after the crisis. Start now and take care of these customer basics before you potentially follow a prophet into the wilderness.