Credit crunch: 89% of businesses wish they had done things differently

Recent Lane4 research has revealed that 89% of businesses would manage the recent challenges differently if they had the time again. In particular, 36% stated that their organisation would be in a stronger position now if they'd reduced costs earlier, restructured sooner, been quicker to increase marketing and got the right people in the right roles sooner.

Senior managers, CEOs, directors and partners from organisations ranging from small businesses to large corporations across the globe revealed that their top three challenges were revenue growth, cost control and managing change. Emerging Stronger: Strategic Insights for Leading in Tough Times also highlighted the ways businesses responded to these challenges:

• Financial strategies - 29% of organisations focused on cost-cutting, redundancies and cash flow.
• Commercial strategies - 23% of businesses prioritised business development, marketing, and strategic alliance.
• People strategies - 17% of companies emphasised leadership development, performance management and internal communication.
• Operational efficiency was pursued by 14% of organisations through restructuring, detailed planning and maximising productivity.
• Innovation was important for 12% of businesses, with the focus on developing new products, diversifying services and exploring new routes to market.
• Preparation negated the need for response for 2% of companies. These select but diverse group included small businesses and large corporations in the UK and the US operating in financial services, manufacturing, leisure and travel and telecoms and technology. They had planned ahead, anticipated the challenges and invested smartly to prepare for the downturn.

With the benefit of hindsight, some respondents said they would do things differently:

• React quicker was the key message for 36% of respondents.
  
• Nothing - 11% of respondents would not do anything differently. Half of these felt that their organisation had navigated the challenges successfully while the other half felt that they were impacted by events beyond their control.
• Maintain operational excellence in the good times was key for 10% of respondents. Comments indicated that organisations had grown too quickly, taken their eye off the cost agenda and, in some cases, stopped listening to customers. When the credit crunch bit, they were out of shape and therefore less able to cope.
• Manage people issues more effectively was the main lesson for 10% of respondents. This included taking engagement and morale more seriously and investing more effectively in training and development. Better handling of poor performance and redundancies was also needed.
• Adopt more of an external focus was critical for 9% and included a greater focus on clients' needs, business development and revenue generation.
• Other sources of organisational learning included the need for better communication, an increased focus on innovation and more effective change management. This left 5% of respondents unsure what they would do differently.

Professor Graham Jones at Lane4 commented: "It is notable to discover that the majority of businesses are not prepared for adversity.  Organisations constantly face adversity. Threats to the future of businesses reside both in the corporate environment, such as an economic downturn and within the organisation, such as product failures or poor management and leadership.  In favourable times, poor leadership often goes unnoticed while in turbulent times, even the best leaders are stretched to their limits. What has worked in the past may not work in these current difficult times. This is when the pressure cauldron that leaders find themselves in either makes or breaks them."

He added: "Whilst all organisations and its senior employees would benefit from developing their capacity to manage crisis, limit damage and bounce back from adversity, the earlier an organisation traps, mitigates or adapts to a threat the less harm will accrue."

Organisations often fail to maintain operational excellence in the good times and 10% of the leaders we surveyed reported that this made their organisations less able to manage the challenges they faced. Operating in a growth market can encourage complacency where inbuilt weaknesses in the organisation are overlooked. Adrian Moorhouse, Managing Director at Lane4 suggests that this is difficult to avoid:

"Complacency is a dynamic of humanity and perhaps it's inevitable to the extent that life is cyclical. It's very hard to be disciplined all the time. In sport, when I was away from competition, I might go for a couple of beers at the weekend. It's good to take a sigh of relief, the question is: how long is your sigh?"

Lane4's survey findings suggest that many leaders left it too long.

To find out more about the report contact kelly.walsh@lane4.co.uk

 

| 2009-05-30