Faced with changes in rules and the economic difficulties that are looming, business leaders have no other option but to adapt their business model. The four variables in this equation are: investment, employees, customer orientation and personal distance-resistance-resilience.
No more doubt: the economic deal has definitely changed. The various announcements and positions taken around the government plan on energy sobriety since the end of July 2022, the ECB’s decision to increase three key rates on September 8, or even the multiplication of debates around the increase in recruitment difficulties and the reality of the “great resignation” phenomenon in France are direct expressions of this.
New rules of the game
The rules and models that have prevailed over the past 30 years are largely obsolete. It is indeed the end of a period when prices were stable, when interest rates were low, when money was cheap and abundant. It is now necessary to reflect on the development of its activities taking into account inflation, the rise in interest rates and the tightening of access to financing (credit, fundraising).
Another new element of the equation: access to raw materials is becoming more complex, supply times are getting longer, and their weight in the total cost of production is increasing. A business manager can no longer bet on schemes based on just-in-time management, he must return to a logic based on anticipation and inventory management.
Finally, the time of mass unemployment when it was the recruiter who set the rules on the labor market and had the last word seems to be over. Not only have certain skills become difficult to find because they are rare, but employees are also more demanding of companies. Finding the right levers to attract and retain employees is a major concern for managers of SMEs and ETIs.
Added to all this are new subjects for attention: the environmental and societal impact of the company’s activity; practices and trade-offs to be adopted in favor of energy sobriety; or again the agility and the ability to rebound that are required because of the speed at which changes are taking place on the ground and in ways of thinking.
Business leaders are experiencing a tipping point towards a new economic paradigm, very different from the one on which they have been able to design and develop their activity so far.
Four axes to think about business model
Once the observation has been made, in front of the mountain that stands in front of the entrepreneurs, all that remains is to seize the right lines of work to evolve and pivot its business model in order to ensure sustainable development in the medium term.
First line of work: investing
Second line of work: always give priority to the human
Third line of work: guarantee its profitability
Fourth area of work: preventing overheating and the risk of burnout of the manager
The need for investments
Faced with current and future shocks, companies can no longer wait to make a massive investment in order to improve the competitiveness of their production instrument and make their supply chains (this applies in industry as well as in services).
Concretely, how to go about it? To arbitrate between the different options that present themselves, the manager must prioritize digital, energy and environmental investments. It is impossible to give general advice as each sectoral and entrepreneurial issue is specific. What is important is to keep a common thread: the priority of investment must always serve to strengthen the competitive advantage of the company, even if the return on investment is longer. Then, to climb this mountain, we must define a point to reach and advance one step after another.
It is obvious that this investment effort will require a strong need to strengthen equity (which poses the problem of the orientation of savings in France…but that is another subject).
The critical human issue, a new approach to HR
For human resources, it is also an investment approach that must be taken. A company’s ability to perform, a condition sine qua non of its success is based on the quality of its teams. Faced with the new expectations of employees and the difficulty of having access to rare skills, which in any case will cost more in the future, we will have to reinvent what we have been taught to call “HR”.
What is sometimes called the “great resignation” is in fact an increased mobility of employees that will last. So how do you attract and keep the best? Here too, there is no miracle recipe, but the “classic HR recipes (career management, remuneration, GPEC, etc.) and managerial ones (management by objectives, etc.) are absolutely no longer sufficient.
What does the expression “give meaning” mean, which we hear wrongly and wrongly? Simply that we want to know where we are going and work for an adventure that we share collectively. This is the sine qua non of team commitment. The responsibility of the business manager is immense here because he must (to stay in the mountain parables) indicate the summit to be reached and, despite the shocks, be the guarantor of perfect coherence between the speeches and the actions in the company ( and be a perfect example himself).
The CSR, societal axes or the improvement of living conditions at work are essential to involve the younger generations, provided that this is not “washing” and that they are concretely part of the strategy and the choices of all in business – starting from the top.
Focus on the customer
It’s a bit of a cream pie but it should always be remembered: the real asset of a company is the recognition and loyalty of its customers. Too many SMEs and ETIs are still thinking about their development by working on their offer (with the corollary investments) without giving enough thought to the customers for whom it is intended – their needs, their priorities but also the ethical and responsible dimension carried by the offer, etc.
All leaders agree that what matters is that the offer meets its market. It is clear that on this point, there is still too much discrepancy observed between the rhetoric and the facts.
Prevent loneliness and …burnout
Last key point: keep a cool head. Faced with the speed of shocks and changes and the involving decisions that the times require (especially in terms of investment), it is normal to have questions, to ask questions… The number one problem for SME managers is loneliness and lack of time. However, nothing is worse than making decisions under the influence of stress and without hindsight, any business leader knows it… Still it is necessary that he gives himself the means to take this necessary hindsight and to talk to the right people before deciding.
Today many studies show that the risk of burnout is very significant among SME managers. On this subject, still no revolutionary recommendations but always the advice to listen to weak signals and feedback from your professional and personal entourage, to keep moments of valve, and to exchange with and rely on peers, whether business leaders or operating partners.
Time is accelerating, business leaders no longer have time to wait. They must be on standby, move quickly, have a long-term vision and the ambition to be part of tomorrow’s world. It is time to act now.