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Tuesday, December 6, 2022

How not to lose business in a crisis: three trends and ways to adapt to them

The pandemic and the resulting recession have resulted in many companies going bust, leveraging more, budget cuts, and longer buying decisions for the foreseeable future. No sooner had the market recovered than a new crisis overtook it, caused by a large number of sanctions and the loss of established economic ties.

Transformation as a company survival strategy

To work effectively in a crisis, it is very important to be able to adapt. Instantly respond to external circumstances, take quick and decisive action, do not be afraid to change.

At TexTerra, we categorize changes by the impact they have on the business. The stronger the perceived threat, the more radical changes are required. The crisis that companies are facing today cannot be solved by simple process optimization or repositioning. To keep a company afloat, it may be necessary to reorganize or even transform the business.

For successful change, it is important to foresee possible threats in advance. Most often, the transformation fails due to the resistance of employees and lack of funding. The lack of a clear plan and the necessary skills in the team can also interfere.

For a successful transformation, it is important to consider the behavior of employees. There are 4 types of behavior here. For the first, a positive role model is very important. Such employees adapt if everyone around them supports change. The second type is ready to rebuild after gaining new skills. For them, the crisis becomes an occasion to improve their skills. Still others welcome changes positively if the picture of the future suits them. And finally, for the fourth type of employees, a clear plan of action is important. This is where regular meetings, work sprints, and so on come to the rescue.

Whatever approach you use, you will certainly go through all the classic stages of reaction to change. After any change comes a sharp stage of shock and denial. Tangentially, we descend from anticipation and uncertainty to skepticism and frustration. And after that we enter into a sharp resistance with the coming changes. After this recession, if successful, employees move on to creative solutions, innovation, finding a new path.

Business transformation is a relevant solution for any major crisis. But how is the current situation different from those in the past? We are currently seeing three current trends.

Trend 1: shorter planning horizon

Previously, a strategy for six months, a year or several years seemed to be an integral part of the work plan. In the current conditions, when the world has become unstable and unpredictable, the planning horizon has been reduced to a few days. Building long-term plans is too risky and inefficient.

Sales chains and communication channels that have been built for several years can collapse in one day. And it is almost impossible to predict how conditions will change tomorrow. Even large companies that once seemed like a bulwark of stability have become fragile and now depend on rapidly changing market conditions just like the rest.

How to act in such conditions? The most reasonable option is to reduce work plans in proportion to the current planning horizon. In other words, plan in short bursts and continuously monitor the situation.

If you used to set prices on a quarterly or monthly basis, try splitting those goals up by weeks or focusing on individual tasks. This approach will help to get rid of the feeling of helplessness in making strategic decisions and more objectively evaluate the results in the face of uncertainty.

Trend 2: Ad Hoc Decision Making

In the new realities, big efforts can lead to insignificant results, and small efforts can lead to grandiose victories. No wonder there is a saying: “chaos is a ladder.” Periods of crisis can turn the usual situation on its head. For example, during normal times, sales of travel products decline with the onset of cold weather. But due to the announcement of a partial mobilization, the demand for camping seats, camping burners and other goods skyrocketed. And those who ended up with a full warehouse of unsold goods won.

In such uncertain conditions, employees may experience a state of apathy, demotivation, and burnout. To prevent this from happening, it is worth switching to internal tasks that have minimal dependence on external circumstances. This will help strengthen the business, improve processes, and work out what there was not enough time for.

For the development of the company, it is worth switching to the situational decision-making mode. Be prepared for impulsive, spontaneous choices and quick reactions to external circumstances. This approach should be combined with the advice from the previous point: in the mode of short sprints, it is easier to switch between tasks and direct efforts to the most promising areas as soon as the opportunity presents itself.

Trend 3: changing priorities and target audience

It is impossible to imagine periods of crisis without budget cuts. Most often, the first “under the knife” is marketing and market research. But such spontaneous shrinking of budgets can be a big mistake. Even in a crisis, customers continue to buy goods and use services, only priorities change. Companies that adjust their strategies, tactics, and product offerings in response to changing demand tend to thrive.

Not only customer preferences are changing, but also the target audience. In a crisis, a product or service can open up from a new perspective and bring you an impressive number of customers. But in order for them to know about you, you need to use advertising. By focusing only on the main customers and reducing advertising costs, you can easily find yourself in the shadow of competitors.

So instead of cutting budgets, you should pay more attention to product or service analysis, adjust positioning and find promising audience segments that will help the company survive the crisis.

The crisis forces companies to look at the market in a new way, and those who use this opportunity to 100% can not only survive in difficult conditions, but also increase profits.

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