For most business people, the word “crisis” is synonymous with “disaster.” Many managers are preoccupied with the question of how to prevent it from happening in their company, how to minimize the risks and eliminate the consequences. Leaders try to minimize the impact of the crisis on the business process, not allowing it to spread throughout the company. However, this classic way of behaving is also a classic mistake. Why?
Is your company stable? It's time to start a change!
A crisis is like a visit to the dentist: not fun, but necessary.
Because:
1. By traditional methods, we will eliminate the consequences of the crisis, but not the cause, which means we have not solved the problem.
2. The crisis itself is a sign and a factor of the development of the system, and its “extinguishing” is not always possible. In essence, the crisis is not a disaster. Yes, it is unpleasant and undesirable. But, in essence, it is a natural process in the development of any system, and a guarantee of moving to a new level of development.
Whether the crisis will become a cause of disaster or a factor of business development – this depends entirely on us.
What can a company director do to prevent the word “crisis” from becoming a scary word that haunts his sleep at night? We need to change our perspective on this word and its actual manifestation. We need to recognize the potential in crises to take the company to a new level of development – provoking crises.
Don't wait for a crisis! Provoke it.
The traditional approach to corporate management is outdated. The minds of most management researchers and practitioners are focused on finding new ways of managing in a changing world. And these searches need to focus on two forms of development – man-made and natural.
Natural growth pattern – it is the traditional life cycle of the organization with all the phases of growth and decline.
The slogan of this form of development is:
“Don't wait for a crisis – provoke it yourself!”
Provocation of a crisis always involves the rejection of something: a product, a market share, a sector, personnel, a business line (project) and even the organization itself. If there are serious problems in its operations, the company has no hope. It is not necessary to save the organization in terms of physical assets, but to save its intangible assets: brand, core competencies, trademarks, product names, technology, etc.
Crises form new experiences, new management processes and new organizations.
From there, we have the second slogan:
“Don't save the company – dump it”
Crisis provocation is the process of turning the unexpected into the expected. We simply speed up their occurrence. If we know how to operate in the dark, a sudden power outage will not frighten us!
The businessman gently “shakes” the company, understanding that if it is not done in a special way, stability will push him into a crisis for which he is completely unprepared.
Why allow a difficult situation to arise, if it can be ended by preventive measures, through the use of crisis-provoking strategies?!
ELEMENTS OF EXCITEMENT
Crisis instigation can be accomplished by two types of factors – internal and external. These factors can be used sequentially, or they can be used simultaneously.
Internal factors are associated with changes in business processes within the company itself. For example:
1. Stop producing products that are currently generating stable profits, but in the near future demand will decrease. Isn't this the case in your company? In the product life cycle, we do not rule out the possibility of decline. So we understand that the "plateau" period is over, but we continue to focus resources on existing products. Why? Simply because we are afraid of the crisis that will certainly occur during the period from stopping production of the old product to stabilizing production of the new one. But note: if the crisis comes, the revenue curve will plummet, and the company will not have many resources to recover. It is best to start the change early, when we are growing.
2. “Stable” downsizing. We are talking about employees who have been working for the company for a long time. That’s right: gradually the “veterans” no longer add value to the company. Obviously, new ideas and new core competencies are brought into the company by new employees. However, between the departure of old employees and the arrival of new employees, there will be a period of small crises. This period can also become a time to reconsider the methods of doing things that were familiar to you before, and perhaps, abandon some business processes that were previously considered necessary.
A few years ago, the company “KampoMos” launched a series of products that competed with each other, not with the goods of competitors. Sales began to decline, the basic financial indicators deteriorated (profitability, liquidity and debt levels). Not paying attention to this, the company's management continued the strategy of salvaging old products. After acquiring a controlling stake, the Spanish investors decided to change the management. The new CEO implemented a series of strategic solutions, drastically reducing the range of products and introducing a new product project, such as the launch of frozen pizza. At first, the crisis worsened. There was a need to invest in new factories, and the company had to incur losses. But the resources released by the implementation of the new strategy not only did not suffer a deficit, but also created favorable conditions for capturing new markets.
External provocative factors
External crisis triggers are often external factors that directly or indirectly impact the capabilities and threats to the organization. External factors often have far-reaching consequences and are therefore, without a doubt, dangerous to use. These include:
1. Change the business line. A decisive move. Not every CEO decides to leave the industry in which their company has been operating for many years. It is easier to agree to change market segments, if the current segment shows no potential.
2. Change your market strategy. Has your company been doing well for a long time using a diversification strategy? Maybe it's time to sell off everything you have left and focus on your core competencies, focusing all your resources on one big sprint?!
3. Change the company office geographically.
Maybe it's time to think about moving production to a place where labor costs, manpower and resources are cheaper? To a place closer to consumers to reduce transportation costs? Or moving headquarters to the capital?
4. Company closure
Of course, this is not a complete abandonment of the business. We are talking about closing the company as a set of physical elements until the establishment of a new company in a new market, and about rethinking the basis of strategies for the successful use of remaining intangible values and core competencies.
Everyone understands that the fundamental values of modern companies lie in intangible values and core competencies. Even the loss of physical assets is less frightening than the loss of core competencies and intellectual property. The next important thing is the brand, the trademark, the corporate symbol. The loss of production equipment is much less damaging than the loss of the brand, the trademark. The loss of a production facility can be replaced by a contract production at another facility or outsourcing. But the loss of a brand or other intangible values is no longer possible, even if it is outsourcing.
The political situation in the country can play a role as an external provoking factor. For example, the ban on advertising alcoholic beverages forced the manufacturer to find new ways to sell its products. Indeed, “Kosogorov Samogon” held a contest for the best advertising for visitors to the website. More than two thousand people took part and enriched the organizers with their creative ideas. One of them was a story that, like Cognac brewed in the village of Cognac, Samogon is also brewed only in the village of Samogon, which is located in the Krasnodar region. The manufacturer, imitating French winemakers, also began to write on the labels of bottles “brand controlled by Samogon”. Of course, this attracted the attention of consumers.
Bwportal
