There’s a problem at the heart of British businesses, particularly amongst SMEs.
It’s been there for some time, but the Coronavirus pandemic has brought it into stark clarity.
This is the inability of many firms to deal with a new and challenging set of circumstances. When the economy is ticking along, this problem tends not to rear its head. But when a crisis hits – like Covid-19 – many firms are unable to cope with the big changes that take place.
And Covid-19 presents a formidable challenge to even the most prosperous and well managed businesses. The future is uncertain and, unfortunately, many firms will go under.
SME’s are taking a hit
The figures are stark. The global economy is expected to take a hit in the region of $76 billion and the British economy could shrink by as much as a third. And it is SMEs, the lifeblood of the UK, that are likely to be most affected, with 80% reporting a decline in revenues and 25% expected to go out of business if revenues drop by 10% to 30%.
Of course, many will survive. And some of those will even prosper and be ready to take a leading position when the pandemic is all over and life has returned to normal. But the economy and business environment that emerges from it will look very different in many sectors. This could spell disaster for some, but opportunity for others.
The winners are most likely to be those firms that have the ability to take advantage of this new landscape and adapt to its demands. But introducing an agile strategy is easier said than done as many managers struggle to deviate from a defined plan.
Agility is key
Nobody can predict exactly how the new business environment will develop. So, having the ability to quickly adapt and deal with new scenarios will enable your firm to both weather an economic storm and capitalise on new opportunities that present themselves.
In brief, being agile means that each month you must take stock of where you are, and what is happening in your market, bringing your senior team together for a ‘strategy sprint’ through what you’ve learnt and how you must adapt.
But, even at the best of times, you obviously can’t know exactly how things are going to pan out. This is especially true as the world emerges from a pandemic, as at any point infection rates can spike again, which can be accompanied by new legislation and restrictions. This has inevitable repercussions for business.
Agility through scenario planning
So, to work properly, agility must also be coupled with scenario planning. This is a simple process to explore the range of possible ways the future will unfold. Looking into what is currently happening in your sector and the wider economy, together with social and market trends, gives you early warning signs and indicators of how things are most likely to unfold in the short term.
When you build this knowledge into your agile strategy, it keeps you one step ahead – as you can plan effectively based on the knowledge and skills of the leaders who design the scenarios. This process allows you to navigate an uncertain future with the agility and pace necessary to capitalise on change and secure future growth.
Agility is nothing new to business
Business largely recognises the benefit of agility. According to the Harvard Business Review, one-third of all leaders consider agility to be the number one challenge when executing strategy.
But despite this, the reaction of most businesses to change is reactionary. Preferring to ride out the storm in survival mode rather than attempt to respond to the changes required to continue growth.
Equally, many firms devise a new strategy, but are not agile enough to carry it out. Perhaps why (again, according to the Harvard Business review) CEOs consider strategy execution to be the number one challenge facing their managers.
From survive to thrive
So, many SMEs will simply stick with what they know after Covid-19. And the lucky ones will survive, but no firms will thrive by doing this, as it fails to take account of the changes that have taken place.
This leaves companies that are prepared to take the agile route in a strong position – as it is an opportunity to get ahead of your competition, and secure a greater market share. Developing an agile strategy now, with regular strategy reviews, will provide insight in to what is around the corner and can help companies secure their immediate position, providing clarity of purpose to the business and ensuring they continue to capture future growth.