Is your business essential?
As the new normal unfolds, one question we won't stop asking anytime soon is, "What is essential?"
Governments aren’t the only ones asking it. So are your customers and competitors.
"What is Essential?" is the title of a thoughtful article from Scott Miller, Education Chair at Core Strategy Group that led me to give the answer, and what it means to me personally and professionally, quite a bit of thought.
These are my thoughts.
We think of "essential" today in terms of which businesses can remain open and which can't. What is necessary for survival and what isn't.
In one form or another, though, most of us are practicing essentialism everyday. We rarely buy, build, and hire for things we absolutely know we don't think we need. Our decisions are justified by a perceived need and our different personalities account for the disparity in how “need” is defined. Generally speaking, though, we think our needs are essential.
Another factor that influences what we consider essential and what we don’t is circumstance.
If someone is forcibly holding your head underwater, everything you considered essential prior to that moment isn’t going to matter much. All you care about is getting your next breath of air.
The pandemic induced slowdown dramatically changed our circumstances and has redefined what we consider essential.
We pressed the emergency stop button on a decade-long bull market run, and almost overnight our perspective of what is essential and what isn’t changed. As many businesses are gasping for air, they, or perhaps you, have begun redefining what is essential and discovering that “essentials” just a few months ago are luxuries today.
What does this mean for your business? At least two things:
As businesses redefine what is essential, they are going to be ruthless about eliminating activity that doesn't make the cut. Now is the time to really understand where you stand in your customer's eyes and what to do about it, or you may not make it.
Are you a luxury they can afford to live without?
Is there a lower cost competitor that doesn't do as great a job, but does it sufficiently?
Is there a clear return on the investment your customer is making in you? Do your customers know that? And can they quantify it for other stakeholders that may be inquiring?
These are the types of questions that will help you assess your vulnerability.
What do you do if you determine you are vulnerable? Sadly, there's no formula here, but the one-size-fits-most answer is: pivot.
You may pivot how you position your offering, who you market it to, how you price it, how you sell it, or in some cases, what you do altogether. Whether you are pivoting a small part of your business or the business as a whole, don't be afraid to kill your darlings. Staying the course when your customers don't gets lonely very quickly, which is great for social distancing, bad for business.Now is the time to do the same thing your customers and competitors are likely doing: Evaluate what you do and how you do it. Then get brutally honest about what is essential in your own operation so you can eliminate anything that isn’t.
Paring back investments to focus on essentials isn’t necessarily a prescription for what it takes to reignite another bull market, but it will increase your chances of survival in an extended period of volatility and uncertainty.
Is your time, or your team’s, divided between essential and inessential activities?
Are your vendors working on projects that aren't essential? Are they contributing verifiable returns on invested time and money? Or are they racking up vanity metrics?
Do you have any precious resources, especially capital, being allocated to inessentials right now?
This exercises won’t necessarily be fun for leaders, but objectively working through them may very well determine whether your business lives to fight another day and earns an opportunity to settle into whatever the next “business as usual” looks like.
One word of caution here: Beware of sunk cost bias. You will inevitably come across a priority or project that already has significant time and money invested towards it. You may think about all that time and money and resist making the cut. Unless your decision has the potential to bring back any of that time and money, though, the question that matters most is, “If you had to start this project today, how essential would you consider it?”
Both of these questions are reflective of the need to update marketing playbooks and adopt a lens that is “re-emergence sensitive,” as strategic marketer Bob Perkins aptly put it. What re-emergence sensitive means is still unfolding, but a great example of something you’ll see with the new lens is age-centric solutions, where colleges reopen because COVID-19 “poses zero lethal threat” to younger students while seniors are encouraged to “exercise strict caution when leaving the home.”
What else will evolve that requires changes to your strategy, and how quickly will it evolve? That remains to be seen, but you may ask yourself, “What am I doing to get my playbooks updated, and ensuring they stay that way as constantly changing events make them obsolete?”
The process of resetting and rethinking is going to differentiate businesses that merely survive from those that are able to thrive.
Perhaps I’m wrong. So, what if we find ourselves going into this summer comfortable and poised for another decade-long tear of pandemic-free economic growth? If that is our future, which I certainly welcome, it’s unlikely that practicing disciplined essentialism and agility will have done harm to your business.
Until that future is upon us, though, we have uncertainty and we are making calculated bets. My betting strategy today is to hope for the best and prepare for the worst. Preserve resources essential for your business's survival, be objective about where you stand in the eyes of your customer, and be agile and humble enough to pivot where needed.
Miller concludes his article with a statement as good as any to end with:
Almost forty years ago, Steven Jobs taught me the value of change-leadership in the unstable business world that the information revolution would deliver – management that values speed and mobility over size and scope; values vision over heritage; values flat and fast organizations over bureaucratic and formal; and most of all did not fear change as a threat, but welcomed it as an opportunity. He was right then, and his wisdom is vital to us now.
