In an economic downturn, we expect certain industries to thrive. Oil & Gas. Data. Basic necessities such as food and health care. State supported services. When an economic downturn collides head first with a global health care crisis, You create a digital tsunami that most were ill-prepared for.
According to research papers from HBR, BCG, Bloomberg and the Economist, Companies that have done well as a result of past economic downturn have followed these OUTREACH elevation strategies:
- Opportunistic M&A – looking for the distressed assets that fit with their long term plan or risk mitigation strategy.
- Utilise and leverage key resources to acces new avenues.
- Transcend industry boundaries, looking for ecosystems, collaborations, and other means of growth.
- Robust scenario planning – mitigating risk while seeking growth.
- Engage in continuous and aggressive learning strategies.
- Aggressively pursue digital transformations.
- Create resilient systems with redundancies – mitigating the risk by creating options.
- Having a long term outlook – What’s are these trends going to offer us in 10 years time?
There are 4 fundamental capabilities that support the successful companies in leveraging this OUTREACH Plan. These are:
History: knowledge, interpretation and understanding. It repeats under different guises. Understanding the past helps build a more robust outline for the future. A key trend to review is the collapse of past civilisations and empires, as well as the creation of new ones. What can the past predict for us about the current geopolitical and national trends within our countries? Warfare is waged first psychologically, then physically. How can we leverage this understanding to positively redirect the trend?
Economics vs Ecology – Commanding the sciences. What happens to our economics when more of our basic needs become scarce? Economics solves the problem of scarcity by assigning a price to it, and the higher demand grows against supply, the higher the price. What price would you pay for clean, potable water? fresh air? cooler climate conditions? What things do we consider free today but can become increasingly expensive in the future, and what is the impact? coming to terms with the science helps us to make better decisions.
Accepting some risks, and knowing which ones. As we return focus on stakeholder value versus the shareholder value propositions that drove us in the past half century, what risks become acceptable? is zero % growth an option? Or low single digits? The ability to influence stakeholders becomes key when playing the long game, and this implies some tradeoffs for the future.
Data and consumer analytics. The more data points that are captured on consumer behavior and patterns, the more predicatable are those behaviors. The growth of Google/Alphabet, Facebook, Microsoft Apple and in China Ten Cent have been clear testimonials to these strategies, as the use of the data being collected offers more certainty of the future.
Digital first companies have an edge in growth trajectory over long standing digitally transforming ones. They are more likely to attract new funding, modern talent, and new customers because they focus on user experience, and more importantly have found ways to incoporate purpose and a wider stakeholder view in their business models.
Example 1: Tesla. The value proposition of Tesla is compelling. A luxury line of ecofriendly vehicles that create an aspirational quality about them, while being equipped with the most modern of technology. Their value proposition has met a latent consumer need for luxury, beauty and social responsibility.
Example 2: Beyond Meat Inc – A company specialising in plant based alternatives to popular meaty dishes. This company is building a profitable viable business while contributing to meaningful solutions for the planet.
Leverage for Change
To have a meaningful and lasting impact, businesses need to work more collaboratively with governments, other businesses and social enterprises to help deliver sustainable change. Brad Smith President and CLO of Microsoft addresses one of these levers best on digital technology in his book tools and weapons. He says we need:
- A digital Geneva Convention.
- A magna Carta for AI.
- A hippocratic oath for coders.
Perhaps we need the same for sustainability designers as well?