“Wait and See”: a strategy for failure

Poor strategic management is a leading cause of business failure as highlighted over the past three years in the annual ASIC Report on Insolvencies. Irrespective of market conditions, an agile strategy has been proven time and again, as fundamental to success. I learnt this the hard way as a leader through the last three financial crises. Taking a company public during the GFC was a character building experience!

The COVID-19 crisis amplifies the need for strategy revision. Foremost as a health crisis, the end game will only be reached with the deployment of a vaccine. The most optimistic timing for this is year end 2021.  The “new” normal will trail as consumer confidence – already moribund before the crisis – needs revitalising as well.

In the meantime, we will face an indefinite period of partial lockdowns. However, this is not an excuse for inaction.  On the contrary, now is the time to revise your strategy and make some bold moves.

One key takeaway from past economic downturns is that the board is rearranged.  For example, during the GFC period, 89% more US companies lost profitability and 47% more US companies increased profitability as compared to stable times. There are winners and losers; not just losers.

Those companies that thrived after the GFC undertook four key revisions to their strategy: early cost restructuring; tighter financial discipline; aggressive commercial plays; and proactive investments.

What these companies did not do was adopt a ‘wait and see’ approach. i.e., they discarded hope as a strategy.

A revised strategy needs a coherent narrative between your value proposition and your financial status. Hence, having a good grip on your financials is crucial before determining the way forward. What does this exactly mean?  It means having thorough familiarity with your cash inflows and outflows; working capital and capital resources.

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Yon can contact Cornell through his email: Cornell@qualia8.com