The expression “when the going gets tough, the tough get going” couldn’t be more appropriate as we continue to deal with the challenges brought about by COVID-19. More than a year has passed since the pandemic steamrolled the world economy and rang in the work from home revolution. Although huge progress has been made over this past year in fighting the virus, businesses, particularly those in the retail sector, are still reeling.
Difficult times bring about interesting reactions from business leaders. This is true whether dealing with a recession, poor business performance, or the emergence of a new competitor. These reactions often differ and range from doing nothing to making what might be considered monumental changes.
What interests me, however, is that all too often business leaders are content to stay the course when times are good, and only take action when things begin to get difficult. Let’s take the current COVID situation as an example. Prior to the effects of COVID being felt by businesses, leaders in many industries were happily following their business plans with an expectation of achieving the goals they had outlined at the beginning of the year.
Were they thinking critically about their businesses? Were they evaluating ways in which they could drive continual improvement in process and execution? Were they actively engaged in ideating potential new business initiatives? While there are certainly business leaders and companies that have established processes and dedicated organizations focused on innovation, many have not. This is especially true for small businesses where leadership is directly engaged in day-to-day business tasks and challenged to find the time to focus on strategy.
As outlined by a Harvard Business Review study that researched company performance exiting from recessionary periods, businesses generally fall into one of four categories: prevention-focused, promotion-focused, pragmatic and progressive. From the outside, it is often hard to discern where a company falls. However, during times of crisis, clues emerge. During the pandemic, for example, we’ve seen prevention-focused companies focus much of their energy on cost-cutting, including major headcount reductions and lowered spending on marketing. By contrast, progressive organizations have reacted to the pandemic by employing a balanced approach, using this time to make investments in research and development and enhancing business processes.
What difficult times teach us is that it’s important to employ critical thinking in one’s business not only when times get tough, but at all times. Take the organizations focused on prevention, for example. Their primary actions are all geared toward business survival. Given the unique nature of COVID, this may have been necessary for some businesses, however, this would also likely have been their approach if the scenario had been a recession. What if these organizations had a culture that incorporated continual innovation and process improvement? Wouldn’t they be better positioned to weather poor economies, a new competitor or even a pandemic?
Building a critical thinking organization sounds great, but is challenging in practice. Even for large companies that have personnel dedicated to new business development and innovation, if those personnel are the only ones responsible for driving new initiatives, it is likely that most ideas will never see the light of day.
The critical thinking organization requires that all leaders and their respective personnel question the nature of the organization’s products and services as well as the processes by which work gets done. These organizations are continually looking for ways to enhance existing offerings while at the same time investigating the potential of entering new markets. Critical thinking companies often view their own internal operations as a potential competitive advantage, knowing that continued improvement in internal operations will not only deliver bottom-line profit improvement but can also mean the difference in competitive market position.
So, what type of business is your company? Is it process improvement focused with defined processes for new business development and innovation? Or is it an organization that is continually reacting to whatever challenge may emerge?
Whether an economic recession, new competitor, or global pandemic, if we have learned anything in the last year it’s that, more than ever, critical thinking is critical.