2. Strategy in times of crisis
http://igneos.eu/ Page 1
When a financial bubble bursts and a crisis results, it arguably also gives rise to
positive effects. After having praised virtual indicators, daring diversification
projects, strategic mergers without real economic grounds or pompous growth
plans during the build-up phase, directors and management are now returning to
concepts such as good management, sound business plans, return on
investment… Companies are reverting to a more pragmatic and realistic
approach of economics and management.
An exaggerated prudency is
transforming into an aversion of
even the least of risks, with
companies folding back onto their
same old core business, while they
are taking the trends and
expectations of the market
less and less into account. This short-term view lacks openness and is thus
feeding itself into a self-fulfilling prophecy, as the organization’s teams are
becoming demotivated in the absence of new projects, heeding only the mantra
of “let’s do the same as before but with less, much less resources”. Budget cuts
succeed one another, their impact are often unassessed and unanticipated, as
companies try to brace themselves in hopes of hanging in there long enough for
the economy to pick up again, for the markets to adapt and for the hypothetical
moment when things would go back to normal.
While, in times of a bull economy,
management acts in excessive euphoria,
thinking “everything is possible” and
“growth brings growth”, we now see that
they are equally excessive in letting
themselves drift with the changing
tides.
Igneos presents two approaches for breaking out of this vicious circle,
exacerbated by bad management decisions, and for coming out as a
winner:
1 Focus on your core market to reinvent your offering
2 Rediscover your strengths and reinvent your business model
3. Strategy in times of crisis
http://igneos.eu/ Page 2
1. FOCUS ON YOUR CORE MARKET TO REINVENT YOUR OFFERING
“The client comes first” does not translate as having to do every single thing for
the client. It means you must form a well-founded, objective understanding of
the client’s challenges and ambitions, of the value he is looking for in the
products and services he is buying, of the value chain these products or services
are meant to become part of, and of the impact the products and services bring
to the client’s management, staff and, ultimately, to your client’s customers.
This understanding of an
organization’s core target
audience guarantees a solid
relation of trust, in which the
client will look to his supplier
and partner for suggesting
solutions, thus delegating part
of their own development work.
This is synonymous with engagement and strengthens loyalty and revenue
levels. This approach also allows identifying new target audiences with similar
profiles, who, though active in very different market, may turn out the most
promising prospects for developing your activities.
The right activities to perform in light of this approach are:
Building focused analyses of needs and expectations,
Putting in place a client segmentation model and
Redefining your product portfolio so as to bring it in line with your different
segments’ profiles
Investing in your understanding of these
specific needs and value levers enables a
winning organization to anticipate its
market’s expectations and to be proactive
in development and presentation of new
products and services that are relevant to
the client, compared with direct or indirect
competitive solutions.
4. Strategy in times of crisis
http://igneos.eu/ Page 3
2. REDISCOVER YOUR STRENGTHS AND REINVENT YOUR BUSINESS MODEL
A period of crisis, more than anything else, imposes choices and requires work to
optimise an organisation’s business model.
Starting from the market’s expectations and taking macroeconomic trends into
account, an organisation should identify its real strengths, both tangible and
intangible.
These strengths form the
foundations on which the
organisation will build its products
and services portfolio.
Starting with this exercise will, first
of all, make it possible to identify
product and service lines which are in fact not compatible with the organisation’s
major strengths. These products and services will become the most appropriate
for disinvestment, regardless of their revenue contribution.
For every product or service line which is compatible with the organisation’s
strengths, a high-level description of the end-to-end macro business process
must be developed: from the R&D that goes into developing the offering, over
production and logistics, and - last but not least - to the commercial aspects and
its go-to-market approach and market positioning.
Then, an in-depth discussion of how these macro business process steps are or
could be organised should take place, yielding a clear decision tree, with the
following possible options:
No major changes to be made
No changes to be made
Minor changes to be made: improvements without fundamental
modifications
It is crucial to describe these advantages
and their added value in the world we live
in today, as well as the world of the
future in the most specific and detailed
manner possible.
5. Strategy in times of crisis
http://igneos.eu/ Page 4
Major changes to be made
Stop executing this step within the organisation
Outsource to a business partner
Do not outsource
Change the process within the organisation
Transfer command lines (change accountability holder)
Reengineer the steps to reduce costs or to significantly increase the competitive
advantage
This discussion will be iterative and will be modelled into business cases. These
models, in turn, serve as a way of facilitating managerial decisions about
financial ambitions, taking into account an objective view on associated risks by
means of an implementation roadmap.
Staying in touch with your clients and your market to develop a more relevant
offer and reviewing your business model in light of your organisation’s strengths
are two ways in which you could significantly improve your organisation’s
competitiveness in the short term.
They also bring motivating and inciting measures that will help your teams
recover their sense of control over their destiny and their success.
Thibaut Georgin
Managing partner IGNEOS
