While the COVID-19 pandemic has caused a virulent recession in many countries globally, Nigeria’s case is a bit direr.
Even before COVID-19 struck, Nigeria was already suffering from the adverse consequences of collapsing oil prices. Hence, without effective and impactful strategic leadership, the virus could aggravate the pain of an already hard-biting recession.
For organisations that are not dynamic, responsive and agile, the effects of the recession are likely to continue hurting their performance into the foreseeable future and threaten their existence.
Some of the many challenges that organisations are facing include a high level of inflation and insecurity. Other stumbling blocks include fluctuations in forex, low customer demand, high operating costs, negative GDP, dwindling business and government revenue, loss of critical talent due to unavoidable redundancies and, of course, diminishing productivity due to low levels of morale among staff.
Without a doubt, being a leader during such a challenging period of great uncertainty is a challenge in itself and also an opportunity to make a profound impact and consolidate one’s legacy.
It is a time, not only to work hard, but also to be strategic and ensure that one remains optimistic even when the going seems to be getting worse. For someone who has been in leadership for long, experience may offer some perspectives, but these are unprecedented times and solutions of the past may not suffice.
Also, what about those new in management positions? For organisations to win in these times characterised by severe socio-economic crises, they need strategic leadership.
Importantly, organisations need viable strategies that can help you manage the challenges that your organisation faces during such unprecedented times and turn it into opportunities. After all, companies such as GE, Disney, FedEx and IBM were all founded during recessions and DHL, Amazon and Netflix are all currently doing well despite their higher cost of operations and their increasingly disruptive and turbulent operating landscape. Here are some strategies that you can implement to succeed:
Establish Strategic Priorities
Dwight D. Eisenhower, the 34th President of the United States from 1953 until 1961, said: “I have two kinds of problems, the urgent and the important. The urgent are not important, and the important are never urgent”.
This quote underscores the importance of prioritising and advance planning. Thus, if one were to ask Eisenhower who was the Allied Forces Supreme Commander during World War II, NATO’s first supreme commander and who successfully navigated NATO and the USA through uncertain times; how can you achieve your diverse goals in these fast-paced and turbulent times? His response is likely to be that not all activities are necessary. So, when sailing through hard economic times, identifying priority areas and therefore, the ability to develop the strategy and implement it to reflect the set critical direction is what separates those who succeed from those who fail.
It is, therefore, imperative for leaders to determine and clarify their strategic priorities. What priority areas mean here is that you need to identify those essential activities that you must do to survive and succeed. So, those that are important but not urgent can be scheduled for another time, those that are urgent but not important can be delegated while those that are important and urgent should go on.
But how do you ensure that this is implemented? Well, you need first to identify critical organisational vulnerabilities and address them as well as ensure that your senior leadership team is aligned to this priority. Then stay fully informed about the happenings within and outside your industry. Follow trends and changes that you can attribute to the recession. Your focus here should be responding appropriately to changes in demand for your goods/services, as well as the behaviour of your stakeholders (e.g. customers, regulators, investors and competitors). Recession hits both at a micro, intermediate and macro level, so understand how the economy is affected as well as the impacts on your stakeholders and how you can effectively and efficiently unlock scarce value.
Manage Finances and Cash Flow Carefully
Recession significantly affects sales, revenue and profits. One way to manage its effects as a leader is to monitor your expenditure, earnings and cash flow carefully. Explore innovative expenditure solutions, for example, instead of outright purchase can you lease? Another could be, after weighing the cost of switching and if it is not too high, in place of using big service providers such as courier and IT providers that have substantial operational costs, could smaller firms be a suitable replacement?
If you could offer incentives such as discounts for advanced payments and use of electronic remittance to receive sales revenue faster, this could be a means of reducing default risks. It would help if you could explore all business lines of credit locally and internationally including business credit cards even before you need them. Explore the use of inventory and a percentage of account receivables as collateral. Most importantly, ensure that your spending is only limited to the most critical areas that you need to focus on to keep your organisation going despite the harsh financial/economic environment. Can you cut on utility, rent or renegotiate on terms of loans?
Keep Your Staff Informed of Your Current Situation
One of the ways to sail smoothly through turbulent economic times is to keep your team informed and optimistic about the future. However, this is often hard since some of your staff members are likely to exit to find employment elsewhere, feel insecure or even engage in private activities. You might also want to downsize and lay off some of them to keep costs as low as possible.
As you tighten staffing levels, note that there are key people that you cannot afford to lose. So, the best way to act is to make any necessary redundancies all at once then make sure that all key people are motivated by listening to them, involving them in solving problems, celebrate any progress made and appreciate your team. It is not just enough to keep them. You also need to train those who remain with the organisation to keep their morale high and help you keep the organisation going despite the difficult situation.
Keep Your Customers Satisfied and Happy
Customer satisfaction is what creates the difference between organisations that survive and those that thrive. Ideally, when customers are satisfied with your services, they tend to share their experiences with friends. Eventually, those friends of theirs will end up as your customers too if they are happy with what you offer them.
Note also that satisfaction finally turns into loyalty, but customer loyalty is difficult to maintain during an economic downturn. Thus, leaders need to safeguard necessary investment in marketing to ensure top of mind awareness, as well as emphasise brand proposition, build brand trust and recognition. All these functional strategies and tactics are fantastic ways to reduce business risk, stabilise the brand, assure the long-term health of the brand, capture market share from weaker competitors and achieve loyal customers, even in these challenging times.
With a devoted team of customers, surviving and winning in the current and even future recessions won’t be hard. Also, through research and customer service, Leaders need to ensure that their organisational products and services exceed the expectation of their customers in terms of functionality, delivery time and after-service support. Explore multiple platforms for your organisation to stay in close contact with your customers’ offline as well as online and find ways of meeting and exceeding their needs. Leaders need to ensure that their organisations are sharing reassuring messages, demonstrating genuine empathy to customers and reinforcing emotional connection.
Seek Opportunities Home and Away
The impact of a recession is not uniform across the world. Some parts will often suffer more than others in such instances. It, therefore, makes sense to market your organisation across the borders, so you have opportunities home and away.
One way to expand your scope across the borders is through seeking relevant areas where you can innovate and get new clients. The Africa Free Trade Agreement offers some opportunities to expand to other neighbouring countries which you are not presently operating in-this may require a different business model in such contexts such as selling to the bottom of the pyramid. As long as what you are doing is earning you something, do not despise it, the question mark of today may be the cash-cow of tomorrow.
In a nutshell, providing exceptional leadership during a recession is not an easy task. It calls for resilience, serious restructuring of operations, scaling down of some activities, making redundancies, empathy and most importantly, keeping your customers and other stakeholders happy since you need them not only for survival but to thrive. If you can manage all these, you are no doubt going to sail through and emerge victorious.
Abubakre is a British based entrepreneur with an unparalleled passion for Africa, academic, and Founder & Non-Executive Chair of TEXEM, UK which has trained over 4,000 executives in the UK and Africa in the past ten years. He is on the advisory board of the London Business School Africa Society, lectures in Coventry, a top 15 UK university