A recession is coming. You know it. I know it. It is inevitable. The cause really doesn’t matter. Brexit, a trade war with China, failed European economies, a financial collapse, a debt crisis. We know it’s coming. The question is, as it always is, can you turn a catastrophe into an opportunity?
Economic downturns are interesting. There are some businesses that use them to their advantage. And some that freak out and never quite recover. Even when the good times return. The key is to be fast. Fast to market. Fast to pivot. Fast to take advantage of your competitors who slashed costs, people, R&D, who are playing defense. To bastardize Napoleon, speed has a quality all its own.
Playing defense is a trap. If a company focuses solely on reducing costs they can lean themselves out of existence. One large manufacturer I know did just that. They got incredibly efficient at producing one product. They leaned out the process and the people and drove their margins high during the last recession. But they lost the ability to innovate, there was simply no slack in the system. So when the recession ended, and their customers started wanting different products as they ramped up spending again, they simply couldn’t change quickly enough and they were beaten out by a smaller, faster, more Agile competitor. If you only look within you can lose sight of opportunities that arise as a slowdown comes to an end.
Never let a crisis go to waste. Here are some things you can do now before the recession hits to position yourself to not only weather it but take advantage of it.
1. Decision Latency
How long does it take your organization to make a decision once you know a decision has to be made? Time to make a decision is the primary reason why projects fail. Projects don’t fail all at once, they fail day by day. The death of a thousand cuts. A good rule of thumb is for every thousand dollars you spend on a project you’re going to need to make a decision. There’s quite good research that shows that the majority of successful projects are able to make decisions in an hour or less.
So, use this time to focus on reducing that decision latency. Question all your assumptions about who is needed to make a decision. I know of one large bank that has a committee of 42 people that meets every other week and every single major decision has to go through that group. 42 people. That’s madness. Push the power and accountability out into the nodes, where the people who are actually doing the work, who know the most, can quickly make the call.
2. Make It Cheap to Change Your Mind
Agile organizations with those tight feedback loops and fast decision-making can deliver value to their customers early and often. They can pivot far faster than their competitors. If you play defense in an economic downturn, you won’t be able to seize the opportunities that are there, or just as importantly, learn what projects and products you should quickly kill.
One large retailer I know had budgets of something like a hundred million dollars for a major project. It was planned to take a couple of years. Two months in the teams came to management and said, given the feedback we are getting from real customers, we’re doing this all wrong. This isn’t the right product, but we now know what the right product is, and you know what, we don’t have the skills to do it. You should kill this project immediately. That short a feedback loop saved that company around 98 million dollars. That’s Agile. In a recession you can’t afford to waste money making products or services that no one wants. That’ll kill you.
3. Focus
How many projects do you have going on at any one time? And how many people are working on multiple projects? You have to prioritize. And if you have more than one top priority, you don’t have priorities, you just have a bunch of stuff you dream will get done.
At one global R&D company I spent some time with, they were struggling. They couldn’t commercialize their research. When asked how many projects they had it turned out there were one hundred and thirty two. All deemed high priority. Everyone in the organization was working on five of them at once. And for some reason they were mystified why they couldn’t get product out the door. It usually took them 18 months to deliver a new product. Their competitors could deliver quarterly. It was a burning platform issue. It only took a day with their senior leadership to chop those hundred and thirty two projects down to twelve. And to put together teams that worked only on one of them at a time. And those teams had to show what they were working on, and the progress made, every week. Within three months they had delivered three products. Because they had tight feedback loops, they could pivot quickly, and make decisions fast.
What you are going to do, how fast you are going to do it, and deciding what to do about it. That’s it. That’s Agile. The coming recession, no matter the cause, will be a surprise when it actually comes. The choice is what are you going to do now to prepare. Those who dawdle are overtaken by events. Those who act seize the opportunities created by them.
