In uncertain times like these it is vital that businesses stay agile
Reproduced with permission from The Times Enterprise Network. To subscribe click here.
I wonder if readers aged 45 and over remember where they were when the 1990s dotcom bubble was in full bloom? Twenty-five years ago I was on a rollercoaster ride that did not end as planned. I was running a venture capital-backed healthcare software business and, as was the trend at the time, we were “pivoting” to become a portal, with a fast-track plan to list on the stock market at a sky-high multiple, while the boom lasted. Unfortunately the bubble burst a week before our flotation and the ride came to a screeching halt. We managed to sell the business privately for considerably less than planned and many lessons were learnt.
- Youth can provide that powerful “can-do” confidence of ignorance but even now, when I am definitely older and hopefully wiser, the recent tech boom/decline and our high inflation, low growth/recessionary trading environment has felt a little like a dotcom TV drama sequel, just with a few character changes.
There is no getting away from the fact that running businesses is difficult at the moment. Stuff is coming at you from all sides, all the time. A survey released by Alix Partners at The Times CEO Summit this year found that of the 3,000 global execs polled “75 per cent worry that their companies are not adapting fast enough, 85 per cent say they don’t know where to start and 98 per cent expect to change their business model in the next three years”.
The finding about the pace of change is unsurprising; the second is alarming; and the third is way higher than I would have expected. Leaders have to respond.
It got me thinking at our company, Ground Control, about what changing your business model actually means. In my time at other businesses I have led numerous initiatives, from shifting pricing models to subscription; re-engineering a product range; entering new markets; off-shoring production and data processing; and moving from using distribution partners to direct sales.
In each case I think they worked because we stayed focused on what we were good at doing. We understood why continuing to do certain activities in-house was important. They gave us our edge, our competitive advantage. Most other things could be better achieved through partnerships with other businesses.
As Ground Control enters the third year of our five-year plan to grow revenues beyond £300 million, we think our business model needs a fine tune rather than stripping down and starting again. We are looking again at three main areas: what we focus on, how we do it (particularly our use of technology) and further embedding our culture.
Distractions occur in all organisations. In times of low interest rates, when money is relatively cheap, and/or low economic growth there is a tendency for businesses to start new ventures in search of sales. They sprout what a colleague of mine recently referred to as “hobby” businesses. These are sub-scale, cost money and time and will probably stay small.
Far better, we think, to invest the majority of our resources and energies into our core services, where securing the benefits of scale to improve our profits should be easier.
It also frees up our key people to challenge accepted wisdom and working practices. Why is that process so complicated? Why do we need three people involved in that decision when two will reach the right result more quickly? If we had the chance to start this process over would we really do it this way? How do our customers rate the total experience we are offering?
Not all revenue is equal. Revenue obtained organically, from an existing sales team, has the edge over sales that result from acquisitions. Recurring revenue has more value than that derived from one-off projects.
We have developed some golden rules to remind us all of the mistakes of the past and how we responded, whether at Ground Control or elsewhere. Good practice needs to be constantly refreshed; the reasons why you do things in a certain way explained. People need to buy into them; it won’t work if they are simply told.
Thinking about how you do things naturally leads you to consider the technology you are using. We can all get really excited about the Alice in Wonderland “drink me” potential of AI but having just implemented a new custom relationship management system, we are concentrating right now on getting the basics right. One area that too often gets overlooked, particularly by management, is data quality. I used to see this first hand as a chief executive when I listened to customer calls and witnessed the impact that poor data had on the productivity of our frontline teams. Large Language models (LLMs) have their own inaccuracies but the quality of our businesses’ own data lakes will be crucial to unleashing the power of emerging new technologies.
That does not stop us trying new things but they have to be focused on our core services. In our trade, horticultural services, we are assessing geo-digital mapping, drone technology, job scheduling and carbon reduction and tracking.
You also have to keep looking in the mirror. At a seminar I went to a while back the speaker asked: “As business leaders what do you stand for?” Answering that question helps to set the bar for what behaviour you will and will not tolerate.
We work with independent businesses that help us to deliver our contracts out in the field and we are placing an even greater emphasis on ensuring that they are all in tune with our values. We take pride in being recognised as one of the UK’s Best Companies to Work For, but it requires constant attention, feedback and review.
The pandemic may be disappearing into the rearview mirror, but who knows the timing of the next shock? The best we can do is remain agile and in good shape to survive it and take advantage of new business opportunities as they arise.