As the Managing Director of IT Managed Services provider, Network Overdrive, I have a privileged and unique perspective on business strategy. I get to see patterns of response across the medium-sized businesses to which my company delivers IT infrastructure and services.
Recently I’ve been seeing both some great strategies and some costly mistakes. Many businesses are suffering – and some will suffer more than they actually need to.
I’m not talking about the hurt of loss of customers, loss of revenue or supply chain failures. I’m talking about missed opportunities to cut costs or to develop new opportunities.
7 Common Mistakes
1. Ineffective cost reduction
Some businesses make minor cost reductions while adopting a “wait and see” approach.
When we review a business that has adopted that approach, we can see some cost cuts but typically they haven’t gone as hard as they could. There is a tendency to hang onto non-core facilities, processes, products and services that could cost them their ability to optimise for today and transform tomorrow.
2. Drastic and unjustified cost reductions
On the other hand, other businesses take “we have to survive!” to the extreme and cut themselves off at the knees
They’re not just cutting unnecessary costs – they’re cutting out valuable development projects and strategic investments that would enable their transformation.
They’re making their recovery doubly hard by not thinking through fully the consequences of over-enthusiastic and sub-optimal cost reduction.
3. Failing to adapt to a new operating environment
Some businesses believe their pre-pandemic business model will work without change in the post-pandemic world.
They’ve cobbled together a solution that more or less enables them to function – but they haven’t fully optimised their business model.
They’re still doing business, but doing it with “temporary” fixes instead of adapting how they do what they do.
They think their clients expect them to keep doing things the same way they always have not realising the value they give to their clients can be delivered in a different way.
This makes it harder for everyone. It’s less secure, less efficient, delivery gets harder, things fall through the cracks and customers get frustrated and impatient.
4. Business model not just communications strategy
Some businesses think the adapting only requires adding remote work and social distancing techniques to their operations without any further change to their business model, having adapted their existing functions to a more distributed environment – but they haven’t really looked at making their processes smarter.
Effective optimising is about optimising your business model – not just your communications technology.
5. Not considering tomorrow
Some businesses think that their customers will expect the same value, delivered in the same way in the future
Even if you have a good, solid business, it’s still risky not to think strategically about the future. In Australia, we have a unique support package that gives us resources to think about “what next?”
Yet some businesses have stopped in the optimisation phase – they’re not looking for new opportunities to develop.
6. Forget FOMO
Some businesses think that if they don’t transform immediately they will miss out having leapt straight into transformation without creating a solid foundation by optimising their existing models. They’ve often jumped at what “everybody knows” without doing their homework.
Fear of Missing Out (FOMO) is driving their decisions, rather than sound strategy.
7. Consider the risks of fundamental change
Some businesses are convinced that they need to do big, high risk transformations
They’ve come up with a project, and they’re going “big bang”. It’s totally understandable – but it’s also seriously risky.
Rushing into a large-scale transformation risks over-committing time, money and goodwill in big projects that don’t allow you to “fail small / fail fast / fail often”.
So how do you avoid these pitfalls?
The best way to avoid these 7 main pitfalls is to step back and look at your overall situation – to treat your business as being in one of three stages.
Three stages of effective pandemic adaptation
The pattern that I’m seeing is that there are three stages that businesses are going through in the adaptation process.
My most successful customers intuitively understand the best way to work through these three stages of pandemic adaptation. If you know which stage your business is in, then you know what to focus on – and we can help you get the best results in that phase.
The three stages are:
1. Survival – making the hard decisions about staying alive for the long term enabling maximum resources to optimise, then transform.
2. Optimising – finding ways to keep core operations working safely and productively in a whole new, distributed operating environment – without ongoing service breakdowns, stress, and conflict.
3. Transformation – exploring, validating, and prototyping new ways and means without creating expensive, business-destroying catastrophes.
When you understand these stages of pandemic adaptation and know where your business is, then it can make your decisions clearer.
– You can put your attention on what you need to do in that stage.
– You create maximum potential for optimising and transforming your operations. When you’re clear or your stage then your technology and managed service provider will be best able to match your business to the right technology platform. They can help you transition faster – and with reduced cost, pain and risk.
What do you focus on in each stage?
In future articles, I’ll pull each of the three stages apart in detail. Here is a summary of each phase and where to focus.
1. Key focus of the SURVIVAL phase
The survival phase is about making sure your business will still be there when things restart. So it’s primarily about cost – but to make effective and strategic cost saving decisions first you need to know what survival will look like for you. It could be as dramatic as hibernation, or it could mean a significant reduction of your current capacity/revenue.
When you have a clear idea of your overall objective THEN you can make strategic and informed decisions.
Your primary question is to ask: “HOW HARD CAN I CUT AND STILL SURVIVE?”
Once you know the core things that your business will not survive without THEN you can look at what to cut in a more useful way.
2. Key focus of the OPTIMISING phase
Optimisation is about delivering on your existing business model in this new environment. How do you keep your promises to your customers most effectively? How do you deliver “timely communication” or “face-to-face service”?The focus is on the core activities that you need to maintain. How do you collaborate effectively and deliver reliably when you’re working remotely from each other? How do you maintain the customer journey and the employee journey and protect your brand?
Your primary question is: HOW CAN WE DELIVER THE PROMISES WE HAVE MADE TO OUR EXISTING CUSTOMERS SAFELY?
Could a chat function on your website replace a receptionist? Would an investment automating repetitive tasks improve your remote worker’s productivity?
If you are having trouble visualising or understanding your remote team productivity, then perhaps a tool like WorkPuls is what you need. You can sign up for a 7 day trial here: https://netod.link/workpuls
New technologies like remote worker monitoring, are NOT transformation tools if they are used to maintain your existing business model. They are, instead, optimising tools.
The distinction is important because at some point you might question the value of maintaining the business model you had before COVID-19 and at that time you will need to consider a different set of technology tools and investment strategies.
3. Key focus of the TRANSFORMATION phase
Transformation is an ongoing process of evolving your business as society and industry shifts around you. Change has been happening faster and faster over the last two decades. Now COVID-19 has doubled down on it again.
The best way to do transformation is; a) from an efficient, optimised foundation AND b) in small, experimental bites – “fail small / fail fast / fail often”.
The core question of the transformation phase: HOW DO WE EVOLVE AND ADAPT SAFELY?
The right technology infrastructure can support and accelerate your transformation. This is a place to get expert advice on the range of what’s possible to achieve your objectives.
Where are you in the adaptation process?
If you don’t identify and acknowledge the challenges and opportunities of the stage you are actually in, you risk missing out on cost reduction and growth opportunities.
Are you still working on the SURVIVAL PHASE?
Are you trying to work out what to cut and what to keep? Are you feeling pressured to get on and “do something – ANYTHING”?
Step back and define what your objectives are before you cut too deep. We can help you examine your overall costs and find savings you may not know are possible.
Are you working on the OPTIMISING PHASE?
Are you still putting together the tools and processes that will enable you to serve your customers well in these challenging times? Are glitches getting in the way of doing good business and keeping sound relationships?
We can help you find ways to streamline and improve your newly distributed business process.
Are you in the TRANSFORMATION PHASE?
Are you pivoting to new processes, products, markets or services?
Take advantage of our execution experience, so that you minimise the risks of the wrong transformation with the wrong tools.
Get expert advice on what’s possible and what’s feasible
One of the challenges of today’s SME world is knowing what’s possible and what’s affordable. Solutions that you don’t even know exist (or assume are too costly) could substantially improve your operations.
For maximum success, do your planning with expert advice. Find a partner with real execution and delivery skills. Select a service provider who can review your whole-of-business strategy to significantly minimise your costs.
In this technology-intensive world, the right partner could make a big difference to how quickly you recover post-pandemic. Contact us today to find out how we can help you find business success through the three phases of the pandemic adaptation process and applying smart technology solutions.