Adam Hale is a headhunter turned scale-up CEO turned tech business champion. As a member of the Nurole community, he found positions as a NED for Tech Nation, and most recently Chair of the ScaleUp Institute, a not-for-profit company focused on making the UK the best place in the world to scale up a business. He recently shared his thoughts on how to steer a business through tough financial times.
We are in a recession. At the same time populations and companies are fighting for their lives. I am in no position to offer an opinion on the humanitarian or healthcare crises – both are heart-breaking. But having been through the last recession, and before that the dot com crash, I saw some business behaviours and actions which enabled companies to come out with better market positions.
During both of these times I was a headhunter at Russell Reynolds Associates, which allowed me to talk to executives at literally hundreds of other businesses, as well as my own. After a recession, the best companies will emerge stronger and with increased market share, even if it may not feel like it at the time. Weaker ones will decline and many will cease operations. Overall there will be fewer projects to do for customers, therefore it is only firms who capture a larger share of them that will survive. There are three things that I saw firms do to achieve this. In my experience boards will always make sure the third one happens, but I would encourage companies to consider them all.
Be closer to your customers
Talk to the customers more frequently than before, particularly at executive levels. Understand their situation and the actions they are taking to survive. Also share what your other customers are doing. Some existing projects will be cancelled and you need to know as soon as possible. There will be far fewer new projects, though there will be some. Competition for these will be more intense so the only way to survive is to win a higher share and this means being closer to the customer than anyone else.
One ScaleUp CEO I know spoke to one of his biggest customers who said,“I’m so glad you called, you are the only technology partner who has done that.” With the lockdown, people aren’t travelling so it might actually be easier to get through to them. Now is also the time to go the extra mile for customers. How can you help them? One CEO I work with reminded me that in 2009, I introduced him to a senior SAP exec as a favour. They hired him years later to run a major business unit and he has never forgotten it. That's only possible if you are talking directly to your customer executives at the right levels.
Customers and prospects will not forgive errors in this environment. If previously everything was checked once before it went to customers, check it twice now. Everything needs to be right across marketing, sales, project delivery, customer success, support, product releases and operations. For new projects, focus on the higher probability opportunities, run war room type brainstorms to review them and determine how you can maximise success.
This could mean tailoring the proposition/value to current market needs, upgrading or extending customer conversations, bundling in additional value/services or extending timescales. For scale-ups, your founders or senior executives will probably need to be more involved in opportunities than before – use them proactively and early. For existing customers, there is no room for any quality issues. Delivery must be consistent and all teams need to operate the same way. Customer executives must be fully aware, and leading the delivery, of customer engagements. Customers appreciate partners that they can rely on. Now is a good time to formalise customer success across the business – there may not be another chance if you don’t.
Secure the financial future of the business
Many businesses were loss-making three months ago, many more are loss-making now as revenues have dropped. Firms that run out of cash go bust and everybody loses their job. This means that tough decisions must be made and made early. The cost base needs to be adjusted to reduce the cash drain and every effort must be made to bring more capital into the business. I know several scale-ups who have made use of furlough schemes and/or agreed with the team to reduce to three or four days a week to save costs. Everybody in the business needs to be productive. If people were not successful in their role in a boom time, it’s much, much harder in a recession, so roles may need to be adjusted.
Luckily governments have recognised the severity and put in place some schemes for employees, self-employed people and companies.Currently the UK loan schemes do not apply to loss-making or pre-revenue scale-ups and so the ScaleUp Institute and others are working hard to try to expand them.
Going through 2001 to 2003, and 2008 to 2010, was very difficult. There’s no denying that. However, I saw firms emerge through those years as market leaders. There was a definitely a flight to quality. A software executive once said to me, “In a tornado even turkeys can fly.” It takes real skill now. You might not grow as much as planned but your business can always get better and might emerge stronger. When people look back on 2020, what will they say your business did?
Nurole is the global platform changing the way organisations bring the best people on to their boards. Find out how it works for talented people looking for the best board level positions, and for organisations looking to hire the best board level talent.