Leading Business in Tough Times
Economics situation of any country or economy never remains the same. There are numerous factors that impacts and influence the status of an economy. The economy could be booming, however, a business or business owner might still face a tough time. This depends on their situation, industry, or competition. Every business small and medium business owner, should always be ready to lead business in tough times. They should always have some tools and approached up their sleeves to fight these battles. You can reach out to us. Use our business coaching or business consulting services for support during these times.
Below four steps approach, you can take to survive during tough times :
1. Identify and understand the problem
Most business owners run their businesses in a reactive mindset. They are usually drowning in day-to-day tactical business activities. As a result, they get a false sense of comfort and heroism. They feel this way if they can immediately jump to a conclusion and impose a solution. In most cases, such actions create more long-term, costly problems. Below are a few techniques you can apply when leading business in tough times at first to identify and understand the cause of the problems so you can solve the issue in the future:
- Six Thinking Hats
Encourages looking at problems from different perspectives. Coffee Stop, a local coffee house, received more complaints from customers. They were unhappy about the long wait times for their coffee. The store manager, Joe, made a decision. He used the Six Thinking Hats technique to address this issue with his team of eight employees.
- SWOT Analysis
Identifies internal and external factors affecting the business. Towcha Technology, an indigenous-owned SME, used SWOT analysis to grow their business through the Digital Marketplace. They expanded from 5 to 12 employees by leveraging their strengths and opportunities in specialized digital services.
- Design Thinking
Emphasizes rapid iteration and user-centric solutions. Zappos often used design thinking to revolutionize its customer service approach. They implemented a “Customer Service for Anything” program. This allowed customers to call about any topic. The initiative led to exceptional customer loyalty and engagement.
- 4M Methodology
This simple yet effective method focuses on four key areas: Man, Machine, Method, and Material. It’s beneficial for SMEs in manufacturing or production. A small industrial component manufacturer optimised operations using the 4M methodology (Man, Machine, Method, Material). This systematic approach helped the company grow from 6 to 120 employees and expand nationwide.
These methodologies offer structured approaches for SMEs to tackle various challenges, improve decision-making, and drive growth. The key is selecting the method that best fits the specific problem and available resources.
2. Take Ownership
Taking Ownership is a critical component of effective leadership, especially when leading business in tough times. You can understand this concept by first identifying what you can control or manage. Once identified, then proactively manage those aspects to achieve a desired outcome. Here are a few things you can do to create a culture that encourages Ownership.
- Accept Responsibility
Leaders who accept responsibility for situations and their roles in addressing them foster a culture of accountability. Haque et al. (2019) found that responsible leadership positively influences employee innovative behaviours.
- Demonstrate Resilience and a Positive Attitude
Demonstrating resilience and a positive attitude is essential for inspiring confidence in your team when leading business in tough times. The case study of Starbucks CEO Kevin Johnson’s response to a crisis in 2018 exemplifies this principle. Johnson quickly identified the issue, took responsibility, apologized sincerely, and showed that corrective actions were being taken.
- Make Tough Decisions
Being willing to make tough decisions while considering the impact on employees is key to taking Ownership. A case study of Jill Taylor, former CEO of Burgerville, illustrates this principle. Taylor made ethically sound choices that prioritized employee safety during crises. She also fostered a culture of community support and organizational integrity.
- Lead by Example
Leading by example is crucial for cultivating an ownership mindset across teams. Research by Kim and Beehr (2017) suggests that leaders who demonstrate ownership behaviours inspire similar attitudes in their employees. This “leading by example” approach creates a culture of accountability. It empowers team members to take initiative. They also take responsibility for their work.
Here are some tools you can use to find and assign clear accountabilities.:
Defines roles: Responsible, Accountable, Consulted, and Informed. Example: Cisco Systems improved decision-making in its supply chain, decreasing time-to-market for new products by 25%.
- DARCI Grid
DARCI grid adds “Decider” to the RACI matrix, enhancing collaborative decision-making. The Bill & Melinda Gates Foundation uses DARCI to clarify roles in complex, multi-stakeholder projects, improving grant-making efficiency.
- Functional Accountability Chart (FACe)
A one-page tool assigning specific accountabilities for company functions. Verne Harnish, founder of the Entrepreneurs’ Organization, reported that implementing FACe helped a $120 million company. The company was capable of identifying and filling crucial leadership gaps. This led to a 20% annual growth.
3. What’s Your Action Plan?
When leading business in tough times, having an action plan is a must. Your action plan will direct your energies and resources in addressing identified problems and ensuring accountability. Let’s explore each part of an effective action plan with examples and case studies:
- Develop a Clear, Strategic Plan
A strategic plan acts as a road map for your business, detailing the steps needed to achieve your objectives. For example, in 2012, Best Buy faced intense competition from online retailers. These included Amazon. This resulted in a loss of over a billion dollars in revenue in a single quarter. Their strategic plan involved utilizing their physical stores as “mini warehouses.” This approach provided faster shipping times. It also enhanced product availability. With these strategies, they competed effectively with online retailers.
- Set Specific, Measurable Goals and Timelines
SMART goals (Specific, Measurable, Attainable, Relevant, and Time-bound) are crucial for tracking progress and ensuring success. For instance, a content creator might set a goal to “increase website traffic by 20% within the next six months.” This goal is specific, measurable, and time-bound, allowing for transparent progress tracking.
- Prioritize Actions Based on Impact and Feasibility
Prioritisation helps assign resources efficiently. The GOST model (Goals, Objectives, Strategies, and Tactics) can be beneficial in this context. For example, a company wants to enhance client satisfaction. It might priorities hosting an annual client conference. This is a high-impact, possible strategy.
- Be Agile
Flexibility is vital in today’s rapidly changing business environment. Silicon Valley Clean Energy serves as an excellent case study in adaptability. The company was in its second year of operation. During this time, it conducted thorough analyses of the electric utility industry. They anticipated significant challenges and adjusted their strategies proactively.
- Consider Innovative Approaches and Potential Pivots
Balancing short-term survival with long-term growth is crucial. TechGrow, a software company, provides an insightful example. They set a short-term goal. It involved increasing customer growth by 25% within one year. At the same time, they focused on long-term customer satisfaction. By the end of the year, they not only achieved their customer growth target but also improved overall customer satisfaction.
In conclusion, a well-structured action plan is essential for navigating challenges and achieving short-term and long-term objectives.
4. Communicate, Communicate, and Communicate
- Keep transparent and frequent communication with your team about the situation and plans
Maintaining transparent and frequent communication with your team about the situation and plans is crucial. Open communication reduces uncertainty and builds trust during organizational changes. Leaders who openly share their challenges and progress create a sense of psychological safety. This psychological safety enables teams to adapt more effectively. For example, Buffer practices radical transparency by publicly sharing salary formulas and financial data, fostering alignment even during strategic shifts. Similarly, Marriott International maintained employee trust during COVID-19 layoffs by candidly addressing hardships in CEO video messages.
- Keep employees informed about changes and the reasons behind decisions
Keeping employees informed about changes and the reasons behind decisions is essential. Regular updates help prevent misinformation and align teams with organizational goals. Research indicates that employees are 45% more likely to stay engaged when leaders explain the “why” behind changes. A LinkedIn case study showcases how Slack provided 30-minute status updates during a service outage. Slack openly acknowledged missteps while updating stakeholders. Even simple practices, like sending “no update” notifications, can help preserve trust during uncertain periods.
- Encourage open dialogue and feedback from all levels
Encouraging open dialogue and feedback from all levels of the organization drives innovation and fosters buy-in. Google has institutionalized this through weekly “TGIF” meetings where employees can question executives directly. Zappos promotes an open-door culture by embedding transparency into its core values. This allows staff to critique processes without fear of reprisal. Tools like anonymous surveys are used by organizations including Royal London. Digital suggestion boxes, like EDEKA Paul’s employee app, also democratise feedback.
- Use various communication channels to guarantee message reach
Using various communication channels is vital to guarantee message reach. Different mediums accommodate various learning styles and roles. Nationwide Building Society merged town halls, digital surveys, and workshops to gather feedback from 18,000 employees during a rebranding initiative. XPO Logistics utilized a custom app to engage deskless workers across 104 sites, demonstrating that accessibility drives participation. Best practices include pairing emails with video updates, utilizing intranet hubs, and creating team-specific Slack channels.
- Listen proactively to concerns and show feedback is valued
Proactively listening to concerns and demonstrating that feedback is valued fosters psychological safety. Starbucks treats employees as brand ambassadors. They use training programs and open forums. This ensures that front line voices shape policies. Bauder, a manufacturing firm, bridged communication gaps between office and production staff via an app, boosting engagement to 90%. Constructive feedback models, like Netflix’s memo-based discussions, ensure that ideas are translated into action rather than left unaddressed.
Organizations like Patagonia and HubSpot have integrated these principles. They have sustained high engagement and innovation. This proves that transparent communication is both a cultural cornerstone and a strategic asset.
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