More Turn Around Stories and Tips to Survive a Downturn
In the SOS SME Business innovation theme, we have written about several Covid transformations including the re-purposing of artisan gin distilleries, and a wholesale champagne business that found a new audience and thrived.
Whilst Covid is here and now, occupying most of our thinking time, it is worth noting that we have had massive downturns before, and clever entrepreneurs have thrived, creating some of today’s household names!
So, first we look at some earlier transformations, and then we look at some top tips that I have borrowed from Dr Brad Poppie, as I think they are spot-on.
Before we do either, there is some research aimed at you and me (i.e. SME entrepreneurs) from the Journal of Business Research that concluded after a study of innovation, “Entrepreneurs have unique advantages during a downturn, including the ability to recognize opportunity and an adept imagination for innovation.” I think we knew that, didn’t we? I don’t think it takes a survey to point out the blindingly obvious, but there you go; it is now official! We think outside the box!
Today’s household names who reinvented themselves before they struck gold include Twitter, Wrigley’s, and Nintendo.
Twitter was formerly ODEO, a podcast platform that as a fourteen-man company could see the writing was on the wall when in 2005 Apple launched what became iTunes. There was clearly no-way ODEO could compete, so entrepreneur owner Evan Williams called his team together and asked them to imagine a new future for ODEO. One of the ideas was Twitter, which today employs 4,600 people with assets over $10bn.
Did you know Nintendo has been around as a games company for over 100 years? I certainly didn’t. It originally found fame and fortune as a playing card company and did well until the gaming card market collapsed in the mid 1906s. They were looking at bankruptcy when the chairman visited a production plant and saw an engineer playing with an extendable arm he had built. The chairman loved the idea and asked the engineer if they could put the arm into production. So, the Ultra Hand was created and went on to sell millions, staving off bankruptcy and allowing the company to move into mainstream toy production prior to computer games.
Wrigley’s, that we all know as the gum company, was originally a soap company, that gave away gum as a free promotion. They found the gum was more popular than the soap, and so switched strategy, and the rest, as they say, is history. In 2005, the company was sold to Mars for $23 bn.
Now let’s look at some of Dr Poppie’s top tips.
Without doubt, the past few months have been a challenging and difficult time. The coronavirus pandemic has changed how people interact with one another, as well as how businesses operate and connect with their customers.
"Survival of the fittest" is a popular saying, but I am not sure it is apposite for our current situation. As millions of businesses have been forced to close their doors, with workers laid off and unemployment soaring, we have seen an understandable increase in remote working with many businesses digitally transforming their strategy. Companies have had to think outside the box on how to generate revenue as traditional revenue streams have evaporated.
In the coming months and even years old business philosophies will no longer apply. The name of the game now is: How do I help my business not only stay afloat but also remain attractive to consumers — all while keeping the work environment safe? How can new and traditional businesses evolve, thrive, and survive?
Prioritize innovation. Businesses that are innovative in how they operate while keeping a safe work environment will pave the way for how other businesses follow suit.
Many sectors will be racing to gain market share. Ensure your business is not passive by simply seeing what everyone else is doing. Be proactive and consider what areas of your business could be improved or adjusted to avoid being left behind.
Ask your staff and your customers what you could do differently or better. Even though you are the leader you don’t own all the great ideas. Very often the people on the front lines have the best ideas. Remember a genius is defined as a man who has had TWO great ideas!
Practice patience. Being patient with new ways of doing business will be paramount not only for the consumer but also for the business owner. There is no manual to this evolution, only time. Knowing when to watch, listen and react in challenging situations not only demonstrates how effective patience can be in the workplace but also influences others to positively react in difficult situations.
One of the most valuable lessons I ever learned was management by benign neglect. This simply means leave it alone and let’s see what happens. As a young energetic SME leader, I wanted to make all he decisions, now! I was far too interventionist. I wanted to own and sort every business issue I came across. I was an absolute nightmare to work with. And then an older colleague pointed out that I was creating as many issues as I was solving.
Build your network. Today, I believe one of the strongest business advantages that you can put into effect is working on building your network.
Massive opportunity can come to those who have revamped and become expert innovators but growing your network should not take the back seat. Your company should be leading through innovation alongside expanding your reach and developing a stellar team. To me, have a strong team can take you from a teetering business centered on the unknown to a solid machine.
Please remember you don’t have all the answers, although you think you do!
Reconnect: Think about reconnecting with contacts who might have an influence on your business. After you choose to reconnect, this time, make an extra effort to stay in contact. Learn from them.
Use social networks: Sure, you can have a lot of followers and connections on social networks, but if you're not engaging in a conversation with your contacts, there's no point. It's okay to ask for advice, feedback and to start a conversation. Learn from them.
Be a connector: Introducing people who can benefit from one another proves to be very effective. Building a stronger rapport with multiple contacts is better than having one. A connector not only builds new relationships but also helps to sustain new ones.
Use technology: Using technology tools like video conferencing to reconnect and network with your customers can be very effective. Host how-to or video calls that are relevant to your business. Be creative and use the tools that are available to us.
Look ahead: While it is important to think about how you're going to navigate the next few months, it's equally important to recalibrate your business goals. This way, your goals will encompass long-term growth, as opposed to merely surviving the next quarter or year.
Don't be afraid to act when setting your goals. During this challenging time, some businesses were shut down, as they were not deemed essential. It is certainly understandable how this could be devastating. While you might be thinking, "This shutdown is out of my control, and there is nothing I can do right now," I believe you're wrong. Use this time to strategically shift your mindset and reassess your business, even if you're still waiting on the sidelines to reopen. You might be making soap when the market wants to buy gum.
Those organizations that prioritize innovation, practice patience, build their networks and look ahead will ultimately set themselves apart from their competition and help ensure that if another crisis occurs, their businesses will be much more resilient.
Makeham has enjoyed a lifetime in software ‘business development’, as a programmer, implementor and entrepreneur. He has grown, bought and sold many business software companies and floated one on the public markets. He has worked with private and ‘private equity’ owners. Today Andy acts as a business development advisor to the software sector. In that capacity he is working with SOS Inventory.