So the initial shock-wave has subsided. We’ve made it this far. What next?
Like most people, I have personally grappled with the sudden changes thrust upon us all as the COVID-19 situation unfolded across the world over recent weeks.
It felt like for a couple of weeks from mid-March onwards we were subjected to a tumbling cascade of new information, changes, new health warnings, stimulus packages, Government closures and confinement directions. To a degree the waves upon waves of initial shocks have now subsided with many of us “settling” into a new normal of home schooling, Zoom meetings, enjoying quieter weekends and seeing our spouses a LOT more than normal!
When I reflect on this period of sudden change in a business context the impact was enormous. The change was sharp and sudden and for some businesses very severe.
What is admirable is just how quickly individuals, businesses and employees alike adapted. We accepted a change was required and we all mobilized and adapted extremely quickly.
When humans are faced with sudden change we do tend to be very adept at adapting quickly – cue the “boiling frog effect”.
This is the notion that a frog immersed in boiling water will jump out immediately. Conversely the principal is that if that frog were placed in cold water and this was heated gradually, said frog would fail to notice the creeping changes, even as it’s literally being boiled alive.
(Interestingly, it is now commonly accepted that said frog would in fact jump out of the pot once it becomes too hot. So whilst the actual specifics may not hold true, the analogy and learnings are valid. Let’s not let facts get in the way of a good story here!)
This element of human behaviour, where we tend to be less aware of and reactive to subtle changes, is also evident in Neuroscience research. Researchers have identified that our brains perform automatic visual smoothing over time – this filtering is called Continuity Field. It’s why we miss small errors in movies when we watch them like this one of Brad Pitt in Ocean’s Eleven.
It’s not until someone points it out that it becomes painfully obvious. Up to that point it’s likely that your eyes had filtered this unimportant detail out.
Again, back to business. The Boiling frog effect or more scientifically speaking, the Continuity Field effect means we can easily miss subtle changes.
Missing these subtle changes presents a huge risk for business right now.
In my opinion we still have a long way to go and many changes to come – hopefully none as sudden as the initial impacts but significant nonetheless. The changes are likely to be more insidious or creeping.
Whilst every business is different the COVID-19 situation will have three distinct phases for business. During each phase a business owner must take deliberate actions and implement specific changes to succeed and survive:
- Reset phase – immediate and necessary adjustments
- Recover phase – stabilising the business to continue operating under the changed conditions
- Revive phase – where our mind turns to planning for the future
The danger zone for businesses and their employees is in the hung-over feeling from the urgency of the reset phase. We all had to adjust so quickly that we are suffering from change fatigue.
But there are more adjustments to come. The economic impacts are still playing out and whilst they may be more subtle they are no less dangerous.
Without specific attention these things can creep up on business owners. Businesses must now turn their mind to how to position their business through the Recover phase and then into the Revive phase.
First the Recover phase. This is about what needs to done to stabilize and normalise and sustain the business and your team through this period of economic uncertainty.
Many business owners are asking questions about how long this will last and what is the extent of the economic impact. Unfortunately no one really knows. According to Peter Switzer’s article “Forget the Yogi Bear corona curse: we’re coming out of hibernation! some of the signs are quite positive.
Despite this positivity and signs of economic recovery, our message is clear:
Business owners must continue to adapt to an evolving situation – you and your team must adopt agility, ingenuity and community to not only survive this, but survive this well.
Recover phase – 6 steps you can be doing to help you adapt and succeed:
- Reflect and review your progress.
- Review and adjust your business processes – do adjustments need to be made to maximise efficiency?
- Tighten up your financial practices – ensure you are regularly monitoring and following-up outstanding invoices to minimize the impact of cash drying up in your business.
- Set targets and discuss these with your team.
- Review your numbers, your budget and your break-even point – are your predictions on track, are there any concerning signs in your numbers that trigger that changes need to be made?
- Establish some leading indicators or KPI’s to give you early warning signs of changes.
A leading indicator looks forward at future outcomes and events. They are predictive measures.
A lagging indicator looks back at whether the intended result was achieved.
For instance – # of quotes prepared, # of enquiries, # of open jobs, quote to job conversion rates are all examples of leading indicators.
As opposed to lagging indicators like gross profit margin, revenue growth or revenue decline.
These are important but a leading indicator is particularly important during times of changes because it’s like an early warning beacon system to the business.
I have a saying in my business –
“two eyes on the here and now and one eye on the future”
Your number one focus as a business owner right now is leading your business and your team through change. The COVID-19 situation can be an enormous “distraction” so what this saying means for me is that we all need a very deliberate focus on what needs to be done day-to-day to keep the business ticking along. And then we need one eye firmly on what the future holds. What structural changes will come about in the market and in the world as a result of COVID-19 and how can I position my business to succeed?
In our next article we will focus on the Revive stage and steps businesses can be taking to prepare themselves for a new future.
The Atticus team are driven to help business owners learn, lead and succeed so please let us know if we can assist you in any way to navigate your business through this period.