How to Survive as a Company During Turbulent Times
Turbulent times, hard times, crisis, bad days or whatever you are calling these pessimistic days. Name can vary but unvarying truth is: These days are happening and not so rare. I made a classification from product teams perspective a while ago. You can take a look at here.
In this article I want to take a step back and try to think company level to same question.
As a company, you might face risks at different levels. If one of your job is to deliver your service or product to your customer, one another job of leadership is to create ways to tackle these risks.
What might be the risks?
- Product — Market Fit Risk
- Competition Risks
- Logistics Risks
- Economical Risks
- Credibility Risks
1. Product Market Fit Risk
This is a very common risk for especially valid for start-ups or scale-ups that are working on their “next” product. In my experience, there is a reality that usually your customer is not you. Your assumptions need to be validated before starting execution.
If you try to scale fast before proving your product’s existing version is a good fit, probably you will burn more money than your gains. In that case, I suggest companies to have an healthy and prejudice free evaluation mechanism. I can not tell how. Every business is unique but you need to have it. Ask some of your customers, demo some of your investors, build prototypes and use it among your team. You name it. But do it otherwise, it will never reach its potential even the idea is good.
2. Competition Risk
Competition is fierce. If you are working on digital services or products, entry barriers are also low. If you are building a product with simple flows and do not have any extra value, it is very easy to create similars of it. So you need to be able to create a difference, a unique value.
If you are first in the market you can use it to hyper-grow and have a big customer base. If you are delivering a service with a big monthly premium, try to work on a yearly subscriptions and to be able to convince your users, give them some extra value.
I can not list all possible options here. But reality is competition is very high. So you need to differentiate yourself and your strategy. For example think about payment world. There are different issuer banks, acquirer banks, card networks, new gateways that means in the market there are giant banks BBVA, HSBC, ING, there are startups adyen, paypal, stripe there are payment networks Visa, Mastercard and a lot of different players that targeting different flows in the payment scheme. To be able to exist in this competition, you need to have a structured strategy.
3. Logistics Risk
If you are doing something requires physical transportation of goods, products etc. you need to have a good logistics solutions. This is required for receiving raw materials and also it is essential for delivering your produced products to target markets.
In case of any risk in your logistics solutions, you need to have alternatives. We experienced logistic network problems during pandemic, during Brexit and during Red Sea shipping crisis.
Problems on logistics may cause increase in the costs and may cause delays on production lines. Both results in prices of products or decrease in profit margins. So companies need to have a portfolio of solutions and alternative plans.
4. Economical Risks
All the company managers know this a lot better than me. Sometimes bottlenecks occurs in the economy. Origins might be related to high inflation, problems in the cross-border trade or something else. During that times, demand decreases, some cost of production line increases etc. As a result company profitability decreases.
Companies can mitigate that type of risks by finding new lower cost suppliers, lowering the costs of production or can try to find new markets to boost revenue. This is again unique to market and leaders knows it better than me.
I just want to point out one issue: We observe companies prefers to lay-off their labour as a way to improve profitability. I personally should say that human is an important factor during the production period. Very sharp increase is not possible because you need to educate and people need experience to utilize their production capacity. Similar to that, companies should not cut employees sharp just because fixing the balance sheet. I can accept if production is not efficient and companies need to improve it. But to do this, companies need to invest in R&D to invent new methodologies. Innovation is not just inventing the new iphone. In modern world, modern companies also responsible to create effective working methodologies too.
5. Credibility Risks
All the risks up I mentioned above is reversible. Companies can build new ways, new methodologies and adopt new stragies to perform better. But main pre-requisite to all is “credibility”. We assume these companies are equal players and judged by their performances, products etc.
But actually all company also has a brand. They create an emotional touch, reliability and a feeling in the customer. To build that trustworthiness is not easy and it is too expensive to loss when it is built.
As I see in my experience, building a brand is a hard thing. To do it, having values is a good starting point. Following this values with respect to varying circumstances is the second one. You can always have a list in your corporate website but it means nothing if noone in the company following them. And also third step is to having the right mechanism to tell your values to your employees and to outer world ( customers, competitors, investors etc.)
As an example, amazon has a set of leadership principles. They are visible to everywhere and rumors says that they are strictly following them. ( I am not discussion they are true or false.) It is a very good way of setting rules and sticking with them.
If you have that set of rules, make them visible and act accordingly, In case of any credibility crisis you can defend yourself. You can prevent your brands from credibility loss or boycotts.
I am sure there are some other categories of risks too. But I tried to discuss the ones in my mind. I hope It helps to anyone who reads up to here.
Wish you all risk-free days!
