Surviving Tough Times by Investing in the Future
Companies are facing a myriad of challenges, ranging from labour shortages to increasing costs of supplies to heightened concerns amongst consumers about the environmental impact of the products and services that they buy.
From tourism companies to multinational banks, these challenges affect firms regardless of their specific characteristics. How should firms respond to them? Fortunately, various mechanisms exist that can enable firms to survive and thrive in these most demanding of times. Key amongst them are investing in employees, using technology more, and offering new products or services. In any company, a mix is likely to be needed.
Investing in Employees
By investing and training their employees and by providing workers with opportunities to use their new skills, companies can make their workplaces more attractive places to work, helping them to both recruit and retain key employees. Employees often appreciate the opportunities to gain new capabilities that can unlock additional responsibilities for them, enabling them to vary their activities and strengthen their contribution to their employer. Indeed, by enhancing employees’ skills, training can increase workers’ productivity, enabling the firm to achieve more with the same number of employees. Training can focus on ‘hard skills’, such as finance, logistics or human resource management, or it can seek to develop ‘soft skills’, including leadership, coaching, and presentation skills. The training should seek to boost employees’ efficiency by deepening their existing functional skills and by helping them to gain new perspectives on how to complete their work. In addition, training should seek to prepare employees for the next stage in their careers within the organization by giving them with insights into their own personalities and how work individually and with others.
Using Technology More
Technology can often refer to emerging computer-based developments, such as artificial intelligence, virtual reality or augmented reality, but it need not do. Adopting relatively simple customer relationship management tools that can enable small firms, for example, to track enquiries to the firm, glean some insights into emerging market trends and spot new market opportunities can be invaluable. Technology in the form of algorithms underpins search engines. Understanding how those search engines work can help firms appear higher up the list of search results without having to pay for an ad to be placed at the very top. For instance, incorporating words that potential customers search for when looking for a product or service within a company’s website can increase the likelihood of the website coming higher up the list of results. So, too, can having links to or from other websites, as this typically increases the importance of that website to the algorithm. By seeking to heighten the prominence of their websites to search engines, companies can start to manage where they come on the list of results rather then leave it to apparent chance. In short, having a search engine optimization strategy can lead to customers having a greater awareness of firms’ products and services, and can increase profits.
Offering New Product or Services
It is often said that the only constant is change. For companies, this means continually thinking about the evolving and emerging needs of their current and prospective customers. It also means thinking how best the company can create products or services that meet those needs and add value to their customers. This can involve identifying new opportunities and developing the capabilities needed to deliver products that fulfil customers’ requirements and needed to capture profits. It is no good coming up with a great product if you have to rely on a distributor to sell that product to customers who takes the lion’s share of the profits. In addition, not every firm can be like Amazon that started out as an on-line bookstore that now sells a plethora of products and that now makes much of its revenues and profits from its Amazon Web Services subsidiary that provides cloud computing services to other businesses. Identifying new markets to sell to can also involve firms’ managers thinking about the activities and related products or services that the company is really good at, and then identifying where those same activities are valued by another group of customers that the firm does not currently serve. For instance, significant opportunities exist for Welsh farmers whose skills at caring for nature can help them to diversify their sources of revenue. In comparison to their English counterparts, Welsh farmers gain less revenue as a percentage of their total income from renting out property. Similarly, selling directly to retail customers offers a further way for Welsh farmers to diversify their markets. To be able to take advantage of those opportunities, they may need to collaborate further with others to overcome, for example, their distance from towns and cities where retail customers live.
The current economic climate poses severe challenges to all firms. By continuing to invest in the employees, technology and new products, companies will be well placed to meet those challenges.
Matthew Allen is a Professor in Management, and Head of the Business, Management, and Marketing Group, Bangor University, Wales. His research focuses on comparative capitalisms, institutional theory, and organizational performance. He is currently working with businesses to improve their productivity and boost their revenues and profits. The strategies that those firms have developed to overcome current challenges have informed this blog.