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Business leaders in India are experiencing a tough, and at the same time, a very exciting phase of their careers. Tough because of challenges posed by the uncertain environment and exciting because this provides a real opportunity to innovate and learn through this experience. Interestingly, most business leaders of the current generation in India haven't experienced an economic downturn like this in their professional careers, ever. Business leaders in India should view this phase as an opportunity to learn and reflect on how they can stay relevant in a challenging marketplace.
To lead in these uncertain times, we believe that a business leader needs to do three things:
Adapt your strategy and build relevance: Market conditions have shifted, customer and stakeholder needs have changed and therefore, it is vital that business leaders review strategic choices with the lens of "relevance". Choices that have been made in the past may not be completely relevant in today's conditions. It is critical to adapt your strategy by making modifications across your value chain to build relevance with your customers. In Playing To Win (Harvard Business Review Press, 2013), Roger Martin and AG Lafley present strategy as a set of choices to win in the marketplace. For example, let's look at two of those choices of "Where Will We Play" and "How Will We Win":
- Which segments and customers should we focus on? Who are the real buyers today?
- How have their needs changed?
- Do we need to sell differently?
- What product categories should we focus on more?
- How can we fine-tune our value proposition to enhance value for customers?
An important point to note here is that by adapting and building relevance, we are only fine-tuning strategy and not changing it. Taking the time to understand the answers to these questions can help organisations stay ahead of their competition.
Another critical question is where will we innovate? In uncertain times it is especially important to find smart ways to innovate. Professor Stefan Thomke, in the first article of this series titled "Innovation in turbulent times" spoke of how a downturn creates new needs as customer preferences are bound to change. We believe that business leaders in this environment should choose customers they want to target and turn customer input into innovation. This also has an added long-term advantage since most companies shy away from investing in innovation during a downturn and therefore when the economy picks up again, companies who have will find themselves in a healthier position for the future.
Manage the fundamentals well: To successfully lead in uncertain times, it is critical that business leaders manage the fundamentals of the business well, which means making balanced decisions on the various trade-offs.
One approach to managing fundamentals is to optimise costs without going too far. Avoid kneejerk and haphazard actions which can negatively impact value proposition and employee morale in the long-term. Scott Anthony in his book The Silver Lining suggests that apart from providing cost savings targets, leaders should provide "guidance" on how these targets can be achieved. If a business leader has done a well thought through job of adapting strategy and building relevance then this guidance can be easily drawn.
Another approach is to focus on turbo-charging sales efforts. Business leaders must consider new tools and processes during uncertain times. It's also critical to focus efforts and to have clarity on the following issues:
- "We want to be out there in the market more" - but how will we be smarter in validating and identifying "real" opportunities? How can we turbocharge sales without losing control of cost of sales?
- What opportunities will we not pursue?
- How can we better align sales and marketing to focus on desired customer segments?
And finally, it is important to protect profitability but with a balanced view. For many leaders the default view on protecting profitability is taking a cost management led approach. While that is important, the balance of growth and profits, value and cost are important to maintain from a long-term perspective. Assign goals and give guidance to your employees to lead a longer-term balanced view on profitability.
Communicate for strength: These days it is natural for stakeholders and employees to feel concerned. The lack of communication during this time can easily lead to lack of trust, thus giving way to unwanted negative rumours and poor engagement among employees. We believe business leaders should foster an open dialogue across the organisation and:
- Acknowledge challenges with all employees
- Share steps that organisation is taking to deal with challenges
- Ask for support and ideas
By doing these simple steps leaders can maintain confidence and drive collective ownership within the organisation. Apart from this, the mood, tone and body language of business leaders have a strong impact on organisation's energy. Uncertain times are tough but leaders can make it tougher for themselves and for others if they constantly appear worried. One of the best ways of restoring confidence is to feel confident yourself. This will happen if you have given thought to the first two areas we've outlined.
Implications on leadership capability
If business leaders are to implement the three steps outlined in this note, they need to have certain key capabilities:
- Understanding "emergent" strategy: Understanding that strategy is not just a deliberate choice anymore but that it emerges based on changing business realities. Taking strategic decisions based on real-time customer input.
- Adapting and refining business models: Ability to fine-tune company's business model to stay relevant. Making incremental changes in customer value proposition, company's profit formula and value chain.
- Disruptive innovation: Looking for un-served/underserved market segments and identifying quick innovation opportunities which are in alignment with company's strategy.
- Building relevance mindset in others: Creating strategic stretch within the company so that more people are thinking about how to stay relevant with the business climate and customer needs.
- Leading proactive change: Ability to lead change agendas through consistent, transparent communication and a clear vision or roadmap.
- Emotional maturity: Have the maturity to deal with uncertain environment and maintain a positive frame of mind.
In summary, leading in uncertain times requires leaders to work towards building relevance, manage fundamentals of the business in a balanced manner and carry people along through open and two-way communication. Uncertainty is here to stay and those of us who leverage this opportunity to adapt, innovate and learn can make these turbulent times not only exciting for ourselves but also for the people we work with and for our organisations by providing sustainability.
Sumit Sahni
head, solution design & delivery, South Asia & Middle East, Harvard Business Publishing Corporate Learning
Vivek Chachra
country manager, Harvard Business Publishing, India
