Four Transformational Solutions To Conquer Economic Whiplash

Whiplash can be defined as a a jerk or jolt that can cause impact and by implication damage. It is not always predictable. That is exactly what we are all experiencing with labor costs, supply chain issues and inflationary pressures right now. Whether you are a potential summer vacationer in the UK hearing that Heathrow is asking BA to not book any more flights this summer into the airport, or that there is now a fuel surcharge of 20% on an order you placed last summer for furniture. Maybe you are making job offers to candidates that now have six offers in hand when yours comes over. If you live in Europe, the inflationary pressures seem to be getting even worse in some countries, (over 70% inflation rates in Turkey).

However, whiplash rarely happens as an isolated event. Everybody, every company has an economic whiplash story to tell. The mix might vary, from inflation to demand stalls and some supply chain issues to scenarios where demand is changing and there are skilled labor shortages. Whiplash is maybe not 100% preventable but it can be treated, and we have a choice of how to react both positively and negatively in this situation; either batten down the hatches and brace for more of it, or focus on this painful experience as an opportunity for transformation.

Are you looking to solve whiplash challenges in a transformative way? Here are four transformational solutions you should be looking for that build a more resilient future ready environment.

Automate as much of the mundane as possible to get future scale

As we move to a more data centric, software led world the need to drive automation in simple processes becomes exponentially more critical for success. Add to this skilled labor shortages and the pressure mount even more. Companies that can get digital scale with their process automation will thrive as they become less and less dependent on additive human capital to solve basic workflow challenges. For every dollar you might invest now on a new member of staff, ask yourself what percent of that salary or overhead should be focused on automating those workflows.

Fractionalize economic elements, the future of micro services

BMW just started to charge a monthly subscription for a seat warmer. I know you might need to read that again but look it up on Google. The Ford CEO, Jim Farley, has publicly talked about selling cars directly as a frontline distribution strategy. In periods of significant change, traditional assumptions about what creates value for a company need to be questioned.

Add in periods of economic whiplash and it starts to become clear that what got you here (car dealers and cars with heated seats included or additional) may well not be what gets you to the next place. Selling micro services if you have deep customer intimacy through the sales cycle, or even selling cars directly, (online configuration, up sell and side sell learnings, one distribution network) can completely change the economics of your future business now. Every industry has this micro services potential but as leaders we need to ask questions about how we can logically fractionalize traditional economic models for a new subscription future. Periods of economic whiplash should encourage this thinking. People and companies spend far more in total when they are flexible (OPEX) than when they are CAPEX driven, because choice/flexibility is worth something.

Look for exponential opportunities now, not in a year’s time

It might be tough to imagine a world as we go into a potential recession, or the world afterwards. However, it is fair to assume that the world afterwards will be radically different. Generally, post recession periods amplify under lying trends from the preceding period because consumers and customers are very open to doing things differently. Think about Uber and Airbnb. The time to think about what that could mean is now and not then because a typical recession lasts six to twelve months. Some of the best-known companies in the world are borne out of these periods of economic whiplash: GM (1908), Hewlett Packard (1937), Hyatt (1957), Trader Joes (1967), Microsoft (1975), CNN (1980), Electronic Arts (1982) and Airbnb in 2007.

All these companies looked to answer the issues of what was going to be exponentially different afterwards and how would they thrive. They did not wait for the recession to end to change. Asking that question about exponential change and opportunity is the first step. Just think about the automotive industry and EV’s. We know from recent research from Cambia Information Group that the tipping point for EV in the US is 2025. Now imagine how you could accelerate towards that model right now. Ford and BMW are thinking hard about that now.

Coach your customers on your learnings

Economic whiplash does not happen to one of us, or just once to all of us. We are all struggling to handle various combinations that drive this. This is the time where sharing best practices with customers and partners will hold more sway than at any time because the power of transformation is how it changes others and not just you. Dell, Oracle, Amazon, Adobe and Microsoft have done exceptional jobs at sharing their stories with customers and partners. Imagine explaining to a customer how you automated 95% of all your software TQM test with software. Or how you were able to drive 25% more margins and increase customer satisfaction using a subscription business model.

Now is the time to ask these questions around fractionalized economic models, opportunities for exponential shifts, mass automation of the mundane and how you can share and coach customers on how you are transforming for a recession and a post recession world. The very act of having the conversation indicates a level of understanding and belief in your organization’s future that in its’ self might be a competitive advantage.

Just battening down the hatches will not set you up for growth.