by Clive Keyte.
There is no doubt that the ongoing Covid-19 crisis has posed an incredible challenge for businesses. Sales have suffered, budgets have been cut and the uncertainty posed by ongoing national and regional lockdowns means that business leaders are struggling to plan in an environment of constantly shifting parameters.
But one concerning thing we have noticed at Intrafocus is a knee-jerk trend towards cost-cutting. And in many ways this is understandable. It is important to manage business costs at any time – during business as usual, economic highs and recessions alike. But it is also equally important to recognise the value of key strategic activities and to get the balance right. Don’t fall at the last hurdle – now is the time to take control
Why strategic measurement is so important
With this in mind, one of the most essential things that any organisation can do – especially at the moment – is to implement and commit to an effective set of strategic Key Performance Indicators (KPIs) – and the tools to manage those KPIs.
The evidence says it all…
Research shows that organisations that measure their strategic activities in a thorough, structured way, are more successful than those who do not.
A study by the Harvard Business Review found that, during a recession, firms who cut costs swiftly and more deeply than their competitors have the lowest probability of beating rivals when the economy rebounds. The biggest winners were those who managed costs carefully whilst investing to grow for the longer-term – and who also focused on their strategy, and on delivering a mix of defensive and offensive strategic moves. These businesses were 37% more likely to break ahead of the pack and to succeed after the recession. Reference: HBR Roaring Out of Recession
Intuitively, we know this is true. The strategic process only succeeds when its efforts are measured and evidenced. Without committing to the continuation of that process, the risk is that your precious business assets and resources are being wasted – directed towards activities that don’t matter, not being fully employed, or being frittered away entirely. Suddenly that cost-cutting activity becomes far more fundamentally expensive than the budget line it appeared to save!
What we recommend
We understand the challenges that businesses of all kinds are experiencing right now. Reduced revenues and ongoing uncertainty mean that profitability (or equivalent measures) need to be sustained. And this requires a delicate balancing act of inputs and outputs.
But where you can continue to develop your strategy and commit to its effective management using a system such as Balanced Scorecard, your business will be in a far better position to succeed.
Five reasons to commit to strategic measurement
There are actually a fairly large number of reasons to continue measuring the strategic outputs and progress of your business, but here are five to focus on.
1. Strategic effort is not wasted effort
Firstly, by continuing to measure your strategic outputs, you will ensure that the hard work you have done so far to develop your strategy is not wasted. Think of all the time, effort and resources you have committed to taking this process forwards? If the measurement of their results now fails, this process is likely to become a wasted one.
2. Better manage your way through uncertainty
Secondly, you will be far better able to see where your organisation is working successfully – according to the metrics that matter to your success – and where adjustments need to be made. These vital forms of measurement give your business leaders the data that they need to be better managers. Without this, they will struggle to do their jobs, and there is a very real risk that the business will become lost in a sea of uncoordinated tactics and knee-jerk actions once again, eroding its competitive position.
3. Signal success
A business which appears to disregard its strategy and starts to knee-jerk into tactical, panicked decisions and cost-cutting signals that it is in trouble. This will become rapidly evident to your employees, who will likely start to look elsewhere – setting you up for a talent drain. Suppliers and stakeholders will become nervous and may reconsider their own relationship with your business in order to mitigate the risk of personal losses. Signal confidence and the strength of your management processes by continuing to commit to your strategic path, and its evidence through measurement.
4. Position yourself for success
Thirdly, by committing to your strategic process, you will continue to consolidate the strength of your strategic position. Remember, your competitors exist on a global scale and other businesses will not necessarily be putting the brakes on their own powerful, well-managed strategies. Now is the time to look to the future and to commit fully to the path of action you have already begun. Then, you will be far better placed to weather the last of the Covid storm and to enjoy even greater success in 2021 and beyond.
5. The end is in sight!
With the news that the first Covid-19 vaccination has now been approved and is on the way to the UK, there is a real feeling of positivity in the air. Yes, uncertainty for businesses is likely to persist for some time yet, but we have a real opportunity to look ahead and to strengthen our positions for success. The pandemic WILL pass, customers WILL return and the fast-paced business operating environment will return again – requiring all business leaders to be on their A-game and ready to respond to new challenges and opportunities that appear – with a strategic mindset.
The help you need
Intrafocus is here to assist you with your strategic journey, wherever you are in its development. Our friendly team of strategy experts can work remotely as required and offer the tailored help that you need to succeed in these ‘interesting’ (!) times! Please contact us to find out more.
