British small and medium sized businesses (SMEs) have been facing a big challenge over the past few years and this has been amplified during the Coronavirus pandemic. The challenge we are highlighting is the inability of many organisations to deal with change. 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 adapt at pace and 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 businesses will not survive.
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. SMEs, the lifeblood of the UK, 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%.
Many SMEs will survive; some will even prosper and be ready to take a leading position when the pandemic is all over and life returns to normal. However, the economy and business environment that emerges from it will look very different in many sectors. It is up to business leaders to adapt to this new world of work and spot opportunities that allow for continual growth.
The winners are most likely to be those firms that are able 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 to change and deal with new challenges will enable your business to both weather an economic storm and capitalise on new opportunities that present themselves as a result.
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 what must be adjusted.
We are living through volatile, uncertain times; infection rates might spike again leading to further lockdowns and restrictions, many companies are dealing with supply chain issues due to stockpiling of PPE, unemployment rates have far exceeded those that we saw in the economic recession of 2008, it is unclear if the vaccine will be effective against the new strain and the list goes on. This has inevitable repercussions for business.
Agility through scenario planning
To work, agility must be coupled with scenario planning. This is a simple process to explore the range of possible ways the future could unfold. Considering what is happening now 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. This allows for effective risk management as you will have contingency plans ready to go if needed.
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
Many business leaders recognise the benefits of agility. However, according to the Harvard Business Review, one-third of all leaders consider agility to be the number one challenge when executing their strategy.
Even though many business leaders know that agility is key, the responce of most businesses to change is still reactionary. Preferring to ride out the storm in survival mode rather than attempt to respond to the changes proactively to continue growth despite any external threats that suddenly emerge.
Equally, many leaders devise a new strategy, but their organisational structure and culture are not agile enough to execute it. Perhaps why (again, according to the Harvard Business review) CEOs consider strategy execution to be the number one challenge facing their managers. Change can be uncomfortable for many people so ensuring that everyone in the business is aligned and inspired to deliver against your strategy can be challenging. Without a process that allows you and your senior team to work together to develop, test, own and oversee your strategy, there is a risk that you could face resistance from change averse members of your team.
From survive to thrive
Many SMEs will stick with what they know after Covid-19 and the lucky ones will survive, but no business will thrive by doing so, as it does not consider the changes that took place in their competitive environment.
This leaves companies that take the agile route in a stronger position as it is an opportunity to gain competitive advantage, and secure a greater market share. Developing an agile strategy now, with regular strategy reviews, will give insight into what is around the corner and can help businesses secure their immediate position. This provides clarity of purpose to the business and ensures that they continue to capture future growth.
Aimed at small, to medium sized enterprises, Capture Future Growth is a 12-month programme that delivers the process, tools and support for companies looking to design, deploy and manage a successful growth strategy. If you are a business leader and you would like to know more about how Marshall Centre can help your business future proof and grow, get in touch, we love to chat!