Since the financial crisis of 2007/2008, volatility has returned to new highs. When faced with turbulent times, leaders in business, politics and society tend to relay contrasting responses. Experts from London Business School have outlined tactics to business leaders handle volatile economic climate.
London Business School’s Adjunct Professor of Strategy and Entrepreneurship, Dominic Houlder and Executive Fellow of Strategy and Entrepreneurship, Nandu Nandkishore believe the future belongs to leaders who ignore the pressure to slash jobs, capture value and retreat, and instead choose to pursue sustainable value creation.
They have drawn up a list of tactics to help business leaders handle today’s volatile economic climate:
1. Be agile
Where in the past companies might have developed a strategy and created a step-by-step process to execute it, today leaders need a more iterative approach that lets them respond to the sheer pace of change and number of sources of disruption.
2. Build resilience
Resilience and robustness is also required – an ability to absorb shocks. And while large corporations are often written off as lumbering dinosaurs, they are more like saltwater crocodiles who might look like dinosaurs, but when the opportunity is there, they’ll snap it up.
3. Stay true to your purpose
It is vital for a leader to understand the sense of purpose that exists in an organisation. And a leader should be very careful about tampering with it or changing it. In times of turbulence, it is up to leaders to understand, legitimise, spotlight and celebrate the motivations and values that underlie an organisation and communicate them through storytelling.
4. Create platforms to respond in good – and bad – times
Any company will have good and back luck events in its life. What marks a company out is what it does when those events happen. Leaders can’t plan for those events but they can create a platform that makes it possible for them to respond to events.
5. Look to the medium term
Leaders and management focused on short-term profits are more likely to cut out spare capacity, but that will also decrease their ability to respond to good luck and bad luck events. And although public companies always state a long-term vision this tends to be set so far in the future that it becomes meaningless.
What gets missed is the medium-term – and this is the time frame that lets us consider the health of the platform, the meaning and purpose of the organisation, and the company’s absorptive capacity.
The key to surviving in turbulent times is to choose to pursue new opportunities to create value. Hold on to the five pillars of agility combined with resilience, purpose, platforms and a focus on the medium term to help navigate the stormy times ahead.