Written by: Jeremy Han, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
2022 signals the 2-year mark of the Covid pandemic. And while we hope for the best, we need to understand that 2 years change a lot of things, especially since the last 2 years were not natural evolution but one that was accelerated due to the pandemic. While some of the problems discussed by everyone are more obvious like the Great Wave of Resignation predicted, there are other changes with strategic implications that would affect businesses going forward that nobody is talking about, and CEOs must spot and deal with them before they rear their ugly heads. And it will come for sure, because these are the problems my clients are talking to me about these last few months.
Brittle Culture
The first thing I want to highlight is Brittle Culture. Many commentators are talking about the Great Wave of Resignation coming but I think there is a problem festering in many companies that is less obvious than people leaving in troves. Culture has become increasingly brittle after 2 years of Covid-caused isolation. What does that mean? It means while ‘work’ can still be done effectively online, relationships are fraying quietly and with explosive outcomes.
There will be issues that require high-trust and deep communications to resolve, such as the close-knit huddling of senior leaders to solve complex issues facing the company or to plan for the uncertain future. Over the 2 years, I have seen this kind of close-door debate whittle down to just a small group of people, isolating the rest of the management team just when cross-pollination of ideas is needed, with all brains on deck to tackle challenges. More and more decisions are made in silos because people don’t talk to one another beyond what is needed to get the immediate job done as nobody likes to stay for an extra minute on zoom after hours staring at little squares, right?
I am working with some clients now to salvage this, as the broken relationships have led to actual problems in business execution. Brittle culture can escalate to become real problems as broken relationships lead to broken businesses.
Here are some questions for you, the CEO to reflect and observe to see if your company’s culture has become brittle.
Are the people working as collaboratively as they were before the pandemic, or are they more silo-ed now? Where once there were cross-department collaborations or learning, they have now been reduced. There is less interdependence, and more independence.
Has your decision-making circle shrunk? Do you feel that you, the leader, do not need the collective intelligence of your team as much now as you did before the pandemic? In other words, you have become used to talking to yourself.
Are there members of your leadership team, or key members of your company who no longer contribute as much as they used to? Why? Have they lost interest, or have they been cut off?
Are there more conflicts than before? Conflicts could be between people, or teams – leading to the feeling that there is more ‘us vs them’ in the company.
The opposite of conflict is apathy. Are people more apathetic or ignorant towards company-wide goals that may not directly fall under their KPIs? Or teams do not care if what they do affects others?
Strategic Relevance and Accessibility
The world has changed much in these 2 years, but has your strategy changed? And if you want to change your strategy, where do you start? Many CEOs have asked me how should they transform their business? And my answer is always to ask, “How has your customer changed?”
The customer can change in a variety of ways – their needs, their behaviors, their likes and dislikes, and also their fears. How deep do you understand the customer after the 2 years of Covid-triggered changes? There are many aspects we can dwell on regarding customer changes but I want to sum up the key issues here:
Are you still relevant?
While companies may not become irrelevant overnight, it is critical that we assess where we stand compared to our competitors in terms of strategic relevance. One particular area of concern CEOs talk to me about is digital transformation, but many of them grapple with it because they cannot connect digital transformation with changing customer behaviors and needs. For many, they see digital transformation as a project to upgrade software or hardware, not as a means to transform their business models and create greater value for their customers.
For example, real estate agents in the US use TikTok influencers to sell properties faster for their clients (need for engagement), fashion businesses like Gucci sells digital clothing and handbags for your digital avatar (need for status/identity in the digital world), construction companies use 3D printing to reduce construction time and cost exponentially (need for low-cost, environmentally friendly buildings).
How have your customers’ needs changed, and how will digital transformation help you stay relevant? These changes will only accelerate; so if you have not started planning for it, you need to start now.
Are you still accessible?
It is not enough to be relevant, but we must also be accessible to our clients in this new world. You may have heard of the term ‘the phygital world’, which means a world where both the physical and digital is connected. How accessible are you in both worlds?
How would your business be ready to serve customers in both worlds and in-between? In Japan, there are malls where people enjoy physical customer services found in retail that augments their online shopping experiences. These malls are accessible in both the digital and physical realms; they combine the experiences of both to enhance the shopping experience.
Now, with the introduction of the Metaverse, the phygital world is going to become even more interconnected. Besides online retail combined with physical shopping experiences, what about being found by customers in the Metaverse? Already, businesses are shopping for digital real estate so that they can be accessible even in the augmented reality world. Conference organizers are planning for conferences in the Metaverse, where your avatar can network, visit trade show booths and talk business just like at a real conference – in other words, to find a way to remain accessible in virtual world.
So do you have a digital strategy to stay relevant and accessible in the post-covid world?
Watch Your Cash Flow for Indirect Bottlenecks
When the Covid crisis first broke out in 2020, many companies had their cash flow affected by the drop in sales. However, as companies adapted their business models, they were able to revive their sales but another problem reared its ugly head – cash flow that stems from what I call Indirect Bottlenecks. What are Indirect Bottlenecks?
Let me illustrate with a common problem I often hear business leaders tell me. For example, you run Company A.
Company A sells to Company B, and expects to be paid.
Company B needs to collect money from Company C, to pay Company A.
Company C has supply chain issues due to the Covid.
Company C cannot pay Company B.
Company B cannot pay Company A.
Therefore Company A (You) has cash flow problems.
This kind of scenario is what I call an indirect cash flow bottleneck. The problems does not arise from Company A’s lack of sales, but it is caused by problems further down the line – not your fault, but not any less painful. Now, as business leaders, we cannot afford a nasty surprise like this, which can cause us much grief. Yet I hear of business leaders being blindsided by indirect cash flow bottlenecks because they did not anticipate it.
I would suggest that business leaders spend time to design a triage system to anticipate which clients will create cash flow problems for the company using a traffic light system of Green-Yellow-Red, so that we have a ‘Heads-up’ on potential cash flow problems, so that you can take measures to ensure you do not get a rude shock. Green would be low risk of payments delay, Yellow moderate risk and Red means high risk. Some customers could fall under the Yellow or Red category because of supply chain issues, or because their customers do not pay them on time and therefore affecting their ability to pay you.
Your Triage system could indicate how many percent of your customers fall under the Green-Yellow-Red categories. If most of your customers fall under the green category, then you can safely predict you would not have cash flow issues coming up. However, if majority of the customers fall under Yellow or Red, you need to plan ahead to mitigate the potential cash flow problems that would come as a result of these Indirect Bottlenecks. For example:
What Submarine Warfare Can Teach Us
In naval warfare, the submarine is greatly feared because if you are not careful, you only discover the threat when it is too late. So warships do not wait for submarines to appear; they actively seek them out and destroy them. These three issues, like enemy submarines, will surely come for you if you are not aggressively dealing with them first.
Every business who has survived the last two years should be seeing some light at the end of the tunnel, and deserve to reap the fruit of their hard work. However, these are the ‘silent killers’ that are either beyond the horizon or festering quietly out of sight. They could derail all the hard work that you had put in. As I speak with CEOs every day, these are the 3 recurring problems I hear and I hope that this article can help you pre-empt the and not only live to fight another day, but to turn 2022 and beyond into a great year!
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Jeremy Han, Executive Contributor Brainz Magazine
He is a certified Scaling Up coach with Gazelles International, specializing in coaching executive teams of scale-ups across the world to maximize their profits and their impact. His clients are companies in Australia, Singapore, Indonesia, Vietnam, Myanmar, Malaysia, the Philippines, China, Hong Kong, Taiwan and Nepal in a diverse range of industries. They range from publicly listed conglomerates with revenues above a billion dollars to fast-growing scale-ups between $10m - $800m in revenue size. His personal mission is to help 100 CEOs, in 10 years, to impact 100m people. Besides business growth, he has helped companies to set lasting legacy goals that spur both dynamic growth and long-term impact. Some of these goals include creating 1m jobs in 10 years, clothing 1m people in 10 years, and enabling 1m under-privileged children to attend university in 10 years.
