So if the powers that be are to be believed the end of the economic doldrums is finally in sight. There are the usual caveats and a fair amount of caution (we all remember the premature ‘green shoots’ statement) but growth is up, employment is up and there are even signs that investment is increasing (unless you bank with RBS of course).
So the question is are we ready for growth? It might sound like a strange thing to say but the bunker mentality is actually a hard one to shift once it’s set in. For many businesses across the UK, bunker mentality has been the norm for years now. The focus has been on cutting costs, scaling back. Words like innovation, creativity, culture and investment have been rare beasts in the boardroom.
The problem for many companies now is getting out of the siege mentality and learning how to look outwards again. When I started my business in 1990s, in a recession, we still flew through the first 10 years, innovating, investing in the business and of course the Internet. Then suddenly, in 2001, the world changed. The Internet bust and events like the collapse of Enron and the fall of the twin towers changed the mindset. Suddenly we were struggling. Other consultancies were falling like dominoes all around us and the future was, to be frank, looking pretty bleak.
The temptation was to build the business equivalent of a bunker and go and sit in it. And to a certain extent we did. We scaled back significantly in terms of capital investments, cash flow became critical and we were so relieved that we had maintained a strong balance sheet, not accepting all the VC debt laden offers but actually keeping cash in the business. We understood that a highly leveraged company would stand little chance of survival.
That’s not to say we didn’t invest however. And to this day I believe that the investments we made during the tough times that enabled us to be quick out of the blocks when the market improved – stealing a march on our competitors and enabling us to get back to growth fast.
There are three areas where I believe investment is critical when times are tough:
Talent: It’s when the market is depressed that you will often find the people on whom you can build the business going forward. Not only is there more talent on the market but the talent that’s out there is hungrier. The fight for jobs is more intense; people have to go further in developing their skills and ensuring they have the right attitude. The hires that I made during the recession – sometimes without a specific role in mind but purely based on the knowledge that an individual was too good to pass up – that became the backbone of the company’s success in later years.
Culture: Culture usually goes hand in hand with talent but a great culture can often be the first casualty when economic conditions toughen. The pressure of the bottom line can squeeze the passion out of anyone. Maintaining the focus on team, hiring people that are passionate about what they do and encouraging creativity, innovative thinking and an eye on the future are all important in maintaining a strong, positive and resilient culture.
Strategy: One thing you won’t be short of in a recession is time. The temptation is to spend it all either drumming up business or obsessing over balance sheets. Both are important but while you have the time you need to invest in developing a long term strategy for the business. What are the strengths, weaknesses, threat and opportunities? Are you making the most of your assets, have you worked out which opportunities deserve exploration? How do we become truly client centric in what we do? Where will the next business and technology trends meet to create the perfect growth storm? You have to focus on the day to day and ensure you survive the tough times but having a strategy ready for the recovery is critical. The more you can do the better place you will be in for making the most of the upturn when it comes.
As a CIO your department is your business. These three investment rules apply just as much to separate business divisions as they do to individual companies. Technology and the team responsible for it is the engine that drives the business forward and it needs to be ready for growth as soon as the market is. If the bunker mentality has taken over then your competitors will steal a march on you and you’ll be playing catch up. The point at which the market takes a turn for the better can be just as dangerous to the business as the recession if you don’t have the people, culture and strategy to take advantage of it.