In the middle of an economic catastrophe, you and your business are facing challenges and obstacles you never expected.
To be honest, while I am incredibly sad and pained by the suffering happening right now there is also a perpetual current of excitement pulsing through me. That excitement is for the unleashed innovation and creativity arising out of the pandemic’s impact. Even the most pedestrian parts of life become laboratories of novelty. Dancing in my kitchen with 20,000 people –and no cover charge or trying to dress cool! I am so in.
In my own firm I am trying different ways of working and learning a great deal along the way. I see the same in my clients, both in how they are applying their efforts to leading their teams, but even more, in re-imagining their strategies.
Despite government loans and grants, you may see the new circumstances as a harbinger of early bankruptcy, a valuation nosedive, or at least, lots of struggle. But, you must face the challenge with courage and ingenuity. Systematic ingenuity.
Every adversity contains, at the same time, a seed of equivalent opportunity!
What kind of shift will you need to undertake to salvage the business –and even better – to turn this period of downturn to your long-term advantage?
I’m talking about revising your strategy. Pivoting in Silicon Valley parlance. Doing that implies you had a well-articulated strategy in the first place. If not, there is no time like this moment to fix that.
Developing a strategy will lift your mood, because, there is optimism and passion in action. There is neither in stewing. But it will also take some fortitude. Uncertainty is unnerving and can even be terrifying. But face it head-on and you can turn it to your advantage.
Every strategy is based on a set of assumptions about the world, the market, the product and the future. Your assumptions may have included ideas about the price of oil, the buying habits of consumers, how many people are traveling or the demand for imported cotton tee shirts. Those assumptions are part of a sort of logical proof. Remember geometry class? Assumptions are the premises, and from them you create a theory. If X, Y, Z à then strategy A, B or C.
For example, if you opened a spin studio, then your assumptions might have been that people want to lose weight and get fit, and they love the socializing and motivation of spin classes. Now, this is the important part. Given that assumption, you theorized that Therefore you could keep classes full, and generate revenue.
The structure is always the same: If my assumptions are correct, then, my business model should work.
In order to strategize for the current reality, you need to have something that can serve as the “original assumptions”, even if your strategy was never articulated. You may never have listed them, but there were assumptions and a theory driving your decisions. You had beliefs and a plan to leverage them. That’s a strategy.
Strategies fail for only a few reasons:
- The assumptions are wrong
- The strategic hypothesis is wrong
- The strategy was not executed well
Right now, the diagnosis is obvious. Questionable assumptions.
Most assumptions that were valid at the start of 2020 have been invalidated by the pandemic. Whether your business depends on Asian supply chains, ecommerce traffic, full salon chairs, or selling bicycles, the assumptions have been nullified.
To pivot and adjust for that change you need to do an inventory of your original assumptions. What was true when you crafted your current strategy? If you never crafted a strategy, just think back to 2019. What conditions existed for your business? Said differently, what has changed that is hurting your business now?
If you own and rent out Airbnb properties, you believed:
- Travel is a booming sector
- Travelers have a growing desire for non-hotel lodging
Those assumptions led you to a theory. Maybe it was that by increasing your Airbnb locations you would build your revenue.
Here’s where you need some courage. It would be reassuring to assume that everything will go back to normal, just as though the economy has simply had a brief nap. But, what if that’s not true? When you examine your assumptions, including that one, you need to face whatever level of doubt you may have. Embrace the possibility that those assumptions are no longer true, or at least not as certain. When assumptions aren’t valid, neither is whatever theory they led to your crafting.
But you can generate new assumptions. Here are a couple:
- The pandemic may last for over a year
- There will be a demand for short-term housing for COVID-19 positive people
Or, how about these?
- Long-term rental supply is low
- Those in cramped quarters need safe housing
Different assumptions lead to different strategic hypotheses. In the case of the first set, you might decide to begin marketing your properties as quarantine locations, or as housing for mobile healthcare workers.
The second option might mean going in an entirely different direction. Instead of short-term, rent to longer term tenants. Perhaps the marketing could be targeted toward university students who are concerned about dormitory crowding.
By surveying the new reality, and examining your assumptions, you take the first step toward strategic change. Of course, a new strategy demands more than new marketing. It may change your training, pricing, or infrastructure. In the example, both sets of assumptions demand more than new messaging. They require different investments to fulfill them. You need serious analysis to decide between these two, or any of myriad possible sets of assumptions and strategies.
Like every strategy, your new one will depend not just on your assumptions, but on whether your hypothesis is correct and whether you execute it well. Start with the assumptions and hypothesis. But then dig into the work of making it so.
As Seneca explained “A setback has often cleared the way for greater prosperity.”
Hopefully, your brain is aflutter with the creativity that will fuel your own new strategy! Let the sparks fly as you craft your plan to thrive.