In this constantly changing business environment, leaders need the ability not only to predict change but also prepare for its resulting consequences and any potential opportunities it may present. Having a Plan B is important for addressing any problems or disruptions, but that may not be enough.
When the potential problems that a company leader identified three, six or even 12 months ago continue to evolve, Plan Bs must also evolve. Managers must have a routine to address any deviations, changes or unexpected factors and determine whether a plan remains applicable. At the same time, it’s important to be flexible
The COVID-19 crisis is one example. At Ceratizit, a global manufacturer of hard material products for wear protection and cutting tools, we wanted to move production and raw materials from one country to another, but found that instead of four weeks for ocean transport, it would take 12, 16 or 20 weeks. It was a big issue and completely changed our course.
We asked ourselves how COVID would affect our customers and whether they all would react to it the same way. For example, would our U.S. customers act differently than our customers in Europe? We found that real differences did exist, especially in terms of outbreak timing, and we adjusted our plans accordingly.
In Europe, pandemic restrictions occurred two months before those in America. We found that while production virtually shut down in Europe, American customers were ordering more out of fear of disruption, and that caused an imbalance in the company. We had to relocate capacity in order to supply our American customers.
Understanding Customers’ Needs
COVID did not drive the development of our Plan B to address potential disruptions and supply chain shortages. Instead it drove plans to change and adapt our original Plan B. We closely evaluated what we could and couldn’t do and the resulting consequences of COVID. We asked ourselves how COVID would affect our customers and whether they all would react to it in the same way. Would our U.S. customers act differently than our customers in Europe? We found that real differences did exist, especially in terms of outbreak timing, and we adjusted our plans accordingly.
Companies that value flexibility stay ahead of change and are more proactive in anticipating those changes. But how can one predict change? The answer lies in determining which reference points are bellwethers for a particular company.
For example, Ceratizit’s customers always have been a major point of reference, along with our market share and capacity for growth. When our customers in automotive told us chips were becoming a problem, we knew that at a certain point the chain would be affected, and we had to plan for a reduction in sales.
Tracking, anticipating and predicting customer expectations and needs is the key to progress and growth. It also helps determine the direct in which a particular market is headed, and shows customers that the company they are working with recognizes their changing needs.
COVID is just one example of how doing business has become a moving and unpredictable target. More and more, leaders are working on multiple plans simultaneously, which makes faster reaction routine or even second nature.
Communicating the Plan
Regardless of the plan of action, success hinges on communication: keeping your team informed. Team members must have a clear understanding of exactly what is happening and why the company takes specific actions.
At the beginning of the pandemic, we opened several communications channels so employees around the world knew what measures we were taking daily. It was extremely important to communicate that we had a plan. Panic, unnecessary stress and a lack of control can be more damaging than virtually any other conditions. Continuous, extremely honest and transparent communication is key to motivating people. People remember what you do and don’t do for them. You are either honest, fair and transparent or you won’t be taken seriously.
Changes/crises present an opportunity to take new business directions that not only win you increased market share but that also differentiate you from the competition. This will only happen, though, with effective and flexible plans in place.
Mirko Merlo is the President of the Americas for Ceratizit Group for all business units. He is an experienced leader with over three decades of business development, global sales, and executive managerial success.
