In a 1959 speech, John F. Kennedy famously said: “When written in Chinese, the word ‘crisis’ is composed of two characters—one represents danger, and one represents opportunity.” Although today it is widely recognized that this is not the correct interpretation of the Chinese characters, President Kennedy’s wisdom about a crisis yielding unique opportunities may be more critical than ever.
As service business executives, we spend our days attempting to predict, prevent, and prepare for challenges to our P&L statements. Most often, the challenges occur at an evolutionary pace, and occasionally they happen at a much faster pace. Either way, leaders must be able to use the challenges and changes to redirect business models. As President Kennedy suggested, in times of significant change, great opportunities exist.
But how do we identify and then react to the need to change? We reinvent our business, either to a large or small degree. Let’s not forget Plato’s phrase, “necessity is the mother of invention.”
At Collective 54, our members are the owners of top-performing professional services firms. As a collective, we accelerate members’ success by helping them grow, scale, and effectively exit their firms. In the best or the worst economic conditions, C54 offers excellent practical advice on how to succeed and flourish as a service company. We do this by building the best thinking and approaches into our proprietary diagnostics, resources and solutions to accelerate your success.
Following is an excerpt from a Boston Consulting article that we believe you will find informative.
Practical measures service companies can take to reshape in the post-COVID-19 reality? BCG suggests eight steps:
1. Expect change and look ahead.
Organizations tend to become myopic and insular when under threat. But crises often mark strategic inflection points, and a necessary focus on the present should not crowd out consideration of the future. The key questions become, what next, and with what consequences and opportunities?
2. Understand broader social shifts.
Addressable opportunities are often born out of new customer needs and frustrations, so listening to customers is vital. However, traditional surveys tell you only about existing product and category needs and uses; consumers may not be explicitly aware of their emerging needs. Companies need to look more broadly at how social attitudes are shifting to understand which observed changes in behavior and consumption could be lasting. For example, if leaders’ and workers’ attitudes toward remote working shift after a few months of experiencing it, that could have significant consequences for office equipment, office real estate, home remodeling, transportation, and other sectors and segments.
3. Scrutinize granular, high-frequency data.
Aggregates, averages, and episodic statistical data will not reveal the weak signals of change. Companies need to access and analyze high-frequency data, such as data on credit card transactions, at a very granular level in order to spot emerging trends.
4. Identify your own revealed weaknesses.
The crisis will undoubtedly expose needs for greater preparedness, resilience, agility, or leanness in different parts of your company. Those weaknesses also signal opportunities to renew your products and business model and serve customers better. They may also help you understand broader customer needs, since others are likely to be experiencing similar stresses.
5. Study regions further ahead in the crisis.
China and Korea are many weeks ahead of Western countries in their experience of crisis and recovery. By studying what happened in these markets, leaders can better predict which changes are likely to stick or could be shaped. A geographical fast-follower strategy may be available to agile players.
6. Scan for maverick activity.
Some companies, often smaller players on the edges of your industry, will be making bets predicated on new customer needs or behavioral patterns. Ask yourself, who are these mavericks, and which potential branches and leaves on the tree of possible shifts are they betting on? Are those bets gaining traction? What are you missing? From there, you can decide on the appropriate response to each opportunity or threat: ignore, investigate further, create an option to play, replicate and exceed, buy the maverick, or act with high priority.
7. Look at which new patterns reduce friction.
Frictions are unnecessary delays, costs, complexities, mismatches with needs, or other inconveniences that a customer experiences in using a particular offering. Forced habits that entail more friction than the traditional alternative are likely to be temporary: we may be forced to eat only canned food from our pantries in a crisis, but many are likely to return promptly to consuming fresh food when it is over. On the other hand, forced habits that reduce friction are more likely to stick: how many of us relish the thought of carving out a couple of hours each day to reach our workplaces? High-friction areas are also ones where it is logical for mavericks to innovate and where they are more likely to succeed.
8. Maintain hope and a growth orientation.
This crisis is not a reason to postpone innovation and investment. Counterintuitively, 14% of companies grew both their top and bottom lines during recent economic downturns, and our analysis shows they create value mainly through differential growth. This is true across all industries. The evidence is clear: the best time to grow differentially is when aggregate growth is low. “Flourishers” in a downturn do reduce costs to maintain viability, but they also innovate around new opportunities, and they reinvest in growth pillars in order to capture opportunity in adversity and shape the post-crisis future.