LEADING THROUGH DIFFICULTY
Is Survival the Only Option?
When your business growth ambitions seem unobtainable is survival the only option?
Visions can drive us forward, whether they are individual or collective. But what happens when the markets we face and the barriers we experience bring our goals into question?
Whether that happens slowly and consistently over time or suddenly and dramatically, it is often enough for motivation to evaporate, maybe to the point of asking, ‘is it worth the effort?’
Asking Leaders What They Think
Throughout this summer I took a look at how the current business environment was affecting leaders and how they were responding to it.
When I started this research, I asked: how do leaders cope in these circumstances? How do you keep everyone forward focused and striving for the best results? How as leaders do we stay optimistic enough but also realistic enough to thrive?
Or must we park ambition and shrink? Hold tight? Or embrace problems as opportunities and find new ways to succeed?
After a series of in-depth conversations with leaders of multinationals, local companies and newer start-ups in the furniture and design industry this is what I discovered.
FINDINGS
Overview
I found people who were deeply aware of the conditions they faced and actively seeking solutions, and a few who had found their own unique way through. For all, however, it was clear that the forces playing out around and upon them were causing extra friction, pain and anxiousness.
People openly acknowledged this, but what I uncovered was a real clarity and conviction amongst those I spoke to, that their business and its uniqueness would see them through.
This was more than glib complacency. This was deliberate attention to the specific attributes of their business and their business models. A doubling down, if you like, on their unique strengths and an explicit decision to play to them.
For many this forced compromise on expansion, change and growth as they might have foreseen it. For some it was an acceptance of the way things are, but also a decision to work within the parameters these set; and for others an opportunity to regroup, reset and rebuild.
Only twice did I find difficulty.
First amongst all the owner-led small businesses I spoke to.
They expressed the constant pressure they were feeling as ‘exhausting’ and wondered where it might leave them long term. The strategic questioning was there, but there was, they acknowledged, no time, no resource, no energy to find a solution yet. Indeed it was hard to clearly articulate what the challenge was, beyond survival, even though they recognised some form of strategic response was needed. It was apparent to them because they were not merely in a downturn. They knew markets and customer needs had fundamentally altered for them.
And I found one other, actually a multinational, where deep questions about what they were doing and who they were, remained top of mind. And those questions had been, in the minds of my respondents at least, hanging around, unresolved for a long time, pre-dating any general economic worries or downturn in consumer confidence.
Resilience
Resilience is an overused word, but it came through strongly in all my conversations.
For the multinationals this came from market spread.
Not everywhere was as bad as the UK, and it was clear that in markets beyond Europe and North America there was far more optimism about any opportunity ahead. In part this was due to the reality of market penetration. Many felt there was still distribution and share to go after, but also, in part, a distinct difference in the attitudes of businesses (agents, distributors and retailers) that they worked with in these markets. The manufacturers admitted their partners simply work to a longer timeline with less pressure on immediate shareholder and stakeholder return. Perhaps this is because many are owner or family led with less focus on this quarter’s or this year’s earnings or share price, but it was also due to shifts in cultural context that favoured playing a longer game.
I also got this sense of resilience from the start-ups. Though they can see innumerable barriers to doing what they do, not least finding leads, persuading prospective clients of their potential, and closing a sale, they still enjoy a very real sense that it is all to play for. There was also an acceptance that the tougher conditions were actually part of the opportunity being created for them. They were offering new solutions and ways of doing business that were ‘made for’ or at least ‘grew up in’ this very environment.
Contrast that with the older more traditional industries, built on design, on craft, on slow attention to detail and deep customer relationships. Here resilience was also apparent, but this was the ‘hang on in there’ variety.
As markets tightened, and supply chains and customer commitments became less predictable their resilience was expressed as coping and seeing projects through, holding standards and values, and stepping up efforts to build hard to fill pipelines.
Flexibility
I mentioned there were several businesses who reported ‘accepting the ways things are’ and working within the constraints this imposed on them.
For one it was grounded in a deep understanding of their business model and the need to maintain volume in particular. This meant pricing was less favourable than they had hoped. But they had made adjustments elsewhere to compensate, and also understood that this flexibility of supply on their part, was not only relatively unique in their market, but also integral to their brand and product story, and deeply valued by their clients.
Consequently, they had modelled extensively the parameters in which they could operate, flexing the two levers, price and volume, to minimise the impact on them and optimise the value of the brand to their customers.
Clarity
The most noticeable impact of the market on respondents was the decisions and internal sense-checking it had precipitated. A forced reset, but one which consistently resulted in a better and clearer articulation of the business’ strategy and focus.
To some extent this was about getting back to basics and executing better; but there was also a clear link to brand and product propositions.
For many it was an opportunity to counter the wave of new entrants and online offers that had surfaced during and immediately post Covid, but also, for some, a need to reclaim the value in words such as ‘craft’, ‘bespoke’ and ‘design’. Descriptors that had been appropriated by mass produced offers that were anything but.
In this sense the work in hand was about re-justifying and asserting value to customers who were still potentially interested but also increasingly cynical and questioning of what they were being sold.
It had created a lot of tyre kicking buying behaviour at initial enquiry, and an expectation that waiting to purchase would inevitably secure discount opportunities, so customers waited. Whilst amongst buyers of bespoke products and services there had arisen an over-demanding ‘buyer power’ that resulted in project goal-posts moving and new demands being made, often with an expectation that these would be met with no impact on cost.
The leaders I spoke to talked less about giving in to these pressures. Rising costs simply didn’t give them that option. It was about doubling down on the precision of how they articulated and proved the value of their brand, product and service offers.
For larger businesses the thinking on this work had been done and was informing their work streams. For the smaller businesses the need was recognised but they were struggling to find the time and focus to do it well.
As someone said ‘you can’t read the map and find your route while you’re busy cleaning the muck off the windscreen every day.’
AI
My research timing coincided with a period of high-profile public commentary about AI and its role in industry.
At no point did any respondent identify or suggest, even when prompted, that it was a significant part of their strategy or game plan. It may indeed be being used, but I had no sense it was a game changer for any. If anything, when prompted, it was creating more headaches.
The Sharp End
Throughout my conversations there was a clear divide between small and large businesses.
The latter had the cash, client relationships and capability in depth to weather the storm. There was pressure, but this was on systems and teams. Decisions were more significant and took deeper analysis, greater care and attention, but this was recognised and allowed for.
The leadership felt these pressures keenly and took responsibility for navigating them, but the overall impression I had was of a captain on a large ship moving through a storm but essentially ‘holding course’, even if that meant accepting forward progress was more uncomfortable and slower than might be hoped.
For many postponement and adjustment created frustrations. For a few it was clear they felt better progress could be made with perhaps some more radical changes, but these were often beyond their immediate control or remit.
However smaller businesses were more likely to feel buffeted.
For those leading start-ups or in early stages of development it was all par for the course. They had anticipated a rough ride and were getting one.
It was only amongst established owner led businesses where the conditions had fundamentally altered and undermined their relationship with their business.
‘Is it worth it anymore?’ was a common response, with people feeling they were putting in more of everything into their businesses and getting less out.
It was not necessarily about money. Numbers were often holding up. Rather it was an erosion of the intrinsic rewards of being in business.
This was not time bound with the prospect of a brighter future around the corner. For these businesses there was a sense that the fundamental dynamics of their markets had altered so much, so far beyond their experience, and so far beyond their capacity to adapt and change, that their motivation and excitement about the immediate and longer-term future had vanished.
‘How do we exit?’ was a question I heard frequently.
For many the answer was ‘we cannot’.
Their conclusion was therefore that living with this existential anxiety was the new normal. Essentially ‘as good as it gets now’.
Which left me feeling that the sharpest and harshest impacts of this current climate were being felt amongst this segment of businesses.
CONCLUSION
It is hardly surprising that those with most invested in the businesses they lead (the established owner/founders) are finding this market the hardest to navigate, and also finding their drive and motivation falling too. Their identity, lives and livelihoods are closely intertwined with that of the businesses they lead.
Whilst leaders in larger companies are not devoid of that emotional attachment, I have seen through these conversations that it is less acute. Though their pressures are many and intense there is a detachment in the numbers, modelling and rational decision making that ‘protects’ or shields them. They have capability and resource that can inform and shape their considerations, and whilst the decision itself can be complex and difficult, the system and their judgement combined were a source of confidence for them.
This enabled them to ‘steer their ships’.
For the owner founder in the smaller companies it was substantially harder. Facing a big shift, they felt the rules of the game had been rewritten and with it their motivation and self-belief too. As one respondent described it to me, an erosion by ‘wave after wave, year after year since 2018’, to a point where they simply couldn’t say if they wanted to continue with any real confidence, but only a begrudging sense of ‘we have to.’
For them that's where the conversation should start now, not with a plan or strategy yet, but with an acknowledgement of the emotional weight of the challenge they face. From that point it can be easier to articulate what's possible and what’s next.
My sense is that those who are able to do this, adjust their expectations and still hold onto what makes their businesses unique, will be the ones to succeed.
With Thanks…
My thanks to everyone who took part and to the introductions people made for me to enable these conversations to cover a broad range of companies. I promised everyone anonymity and I trust no single company or respondent is identifiable in what I have presented here.