Instability is the new normal in business. As Change Marketing consultants working across a range of categories, we see it in the attitudes of C-suite leaders, in the cautiousness of procurement teams, and in the move away from retainers to project sprints.
And any company relying on legacy strategy or process is getting left behind as fast-moving, high-growth startups disrupt old markets and seize new opportunities.
Many economists believe we are on the cusp of a period of acute volatility. But short-term economic cycles are the lesser threat to legacy companies. They’re accustomed to riding out rough times. The greater threat: Uncertainty may become a persistent condition.
In PwC’s 22nd Annual Global CEO survey, CEOs expressed sharply more uncertainty and pessimism about global economic growth — “with nearly 30% of CEOs projecting a decline…up from a mere 5% last year” — and a drop in confidence about their own organizations’ revenue prospects.
Several macroeconomic factors suggest the global economy is entering an era of endemic instability: from geopolitical conflict to talent shortages, and natural resource depletion to rapid, accelerating innovation.
These forces offer both outsized opportunities and existential risks. They do not offer stability. And legacy strategies won’t survive the ride.
What do we do with this? How can businesses not only survive but thrive when so much about the future is unknown?
A Legacy Of Risk-Aversion
One thing we do know is that uncertainty breeds conservative decision-making in many legacy companies, even when bold action might better serve them or open up new opportunities for growth. But boldness requires confidence, and uncertainty eats confidence for breakfast.
Instead, the focus remains on finding new efficiencies within existing ways of doing business:
• Cutting people or freezing new hires.
• Delaying future-facing investments.
• Consolidating control within the C-suite.
• Slowing and constraining decision-making authority.
• Repeating existing strategies rather than attempting a bold new approach.
Legacy companies can hunker down and wait out temporary cycles of volatility. But if stability never returns, constant caution means no growth at all.
Creating Value Matters More Than Cutting Costs
In today’s economy, if you’re not growing, you’re dying. Growth in unstable times doesn’t come from cutting costs or overthinking decisions. It comes from creating value and making an impact on this dynamic new world.
High-growth startups know this. They struggle with the same macroeconomic forces. But they know that playing it safe is a slow but certain death. Instead, they focus relentlessly on creating value. They take bold risks. Seize new opportunities. Move fast. And invest heavily in the best drivers of top-line growth: their people.
People (Not Processes) Create Value
Money is a poor measure of value and impact. Efficiency ratios are math too myopic to spot opportunities for transformative growth. What are you actually accomplishing? What value are you bringing to the world? What opportunities are there to grow beyond anything your present business model could foresee?
Conservative legacy analyses can’t calculate these potentials. It can’t cost-cut them into being. You can only find them with imagination and only realize them with risk. It takes people to do that — talented people who care about the value and impact of their work, and who are eager to travel with you through uncertain lands, blazing new trails as you go. That’s why progressive startups focus on employee effectiveness more than operational efficiency.
Attract, Retain, Develop, Sustain
To become more effective and create more value, high-growth startups invest in attracting, retaining, developing and sustaining talented people. Here are a couple of examples:
MailChimp
MailChimp was named 2017 Company of the Year by Inc. magazine. According to an interview with its Director of Talent Strategy Aynn Collins, MailChimp attracts and retains talented employees in three ways:
• Offering a sense of connection to the community, both within the company and with Atlanta, where the company is headquartered.
• Giving employees a sense of purpose through meaningful contributions to the company’s vision of empowering small businesses to succeed.
• Creating opportunities for learning, growth and development.
The company develops and sustains employees with:
• Employee resource groups on topics requested by employees.
• A “Chimpanion” program that builds employee relationships across departments.
• Professional education through MailChimp University.
To a legacy mindset, these might seem like inefficient expenditures. But efficiency isn’t MailChimp’s measure. It’s investing in a more effective workforce that can create real value. MailChimp knows this is its best strategy for lasting success.
Airbnb
In 2016, Airbnb adopted the slogan “Belong Anywhere.” Hotels are institutions of anonymity. But as an Airbnb guest, the brand message says, you should feel like you’re staying somewhere you belong.
To live this brand identity while retaining and sustaining a talented workforce, the company had to make it real for its employees. Mark Levy, then global head of employee experience, said, “We need to create a place where our employees feel they belong … Belonging starts here.”
So it designed workspaces inspired by actual host properties. It provided libraries, meditation spaces and an indoor atrium that evokes a home garden. It organizes frequent pop-up celebrations based on holidays in host communities.
Airbnb sees this as an investment in retaining and sustaining its most important brand ambassadors. By creating that sense of belonging for its employees, it’s better equipping them to create it for its customers. And that, Airbnb believes, will fuel its top-line growth.
Invest In Effectiveness For Lasting Success
There’s no guaranteed path to success in uncertain times. With any risk taken, failure is an option. But progressive startups know the one certainty in times of endemic instability: Obsess over efficiency, and you’ll be left behind. Success comes from creating value and having a meaningful impact.
Spreadsheets won’t get you there. Only people will. You have to invest in their effectiveness to find your own. They’re the only chance any company has to survive and thrive in these volatile times.
