Inflation-Proof Your Business
Recent Office of National Statistic figures reveal that GDP fell by 0.3% in April after falling 0.1% in March, the first time the economy has contracted in two consecutive months since the start of the Covid pandemic. Inflation is between 7.8% and 11.1%, depending on which source you believe, and the cost of borrowing, as Money Box presenter Paul Lewis puts pithily, ‘can only go one way – up, up and probably, up.’
With no end of the war in Ukraine in sight, inflationary pressure will continue for the foreseeable future. We can count ourselves fortunate to live in a country that isn’t being blown apart as is Ukraine, but nonetheless we have an insidious war to fight of our own: against growing poverty, public services stretched to breaking point, and the very real possibility of stagnation and recession. Rocketing fuel prices and post-pandemic issues are pan-European, but in Britain we have fallen behind our European counterparts in the important matter of investment. At just 10% of GDP, capital investment by UK businesses is lower than the OECD average of 14%; there’s a growing innovation gap between UK SME performance and other countries; and depressingly, research at the London School of Economics reveals that the quality of management in British firms is below that in the US, Germany, and France.
Form Your Battle Cry
Our backs are against the wall, and it’s time to focus effort on recovery. The battle must be fought by every business, small, medium, and large, across the country, and the unifying cry must be for increased productivity, growth, and innovation. Every business needs to examine its strategy, re-calibrate as required, and above all, implement its strategy to greatest effect. Lamentably, we haven’t needed failing supply chains and rising prices to perform badly in the past. Pre-pandemic research by academics, professional bodies, and even within businesses themselves, reveal that a third of leaders rate their organisations as poor, or very poor, at implementing strategy, and two-thirds of well-crafted strategies fail to achieve all intended effects due to poor execution. But help is at hand. Implementing strategy is so often left to trial and error and experience, but when time is in short supply, calling in the experts can reap massive efficiency benefits, and consultancies such as Skarbek Associates are specifically designed to help companies in this way. Clearly, there is room for improvement in the private sector, and in the public sector too. And rather than wait for diktats from above, every organisation, school, council, general practice, and hospital, has it within its power to look at its implementation of strategy with a critical eye and make changes for the better.
Sound ambitious? Yes, but possible. Purpose is a strong motivating force and there is no lack of that now: to put food on the table, to at the very least maintain our struggling public services, and to tackle the big existential crisis, climate change, whilst all the while servicing significant debt.
Learn From Others
Researching my book Making it Happen, Lessons from the Frontline of Strategy Execution, I encountered exemplars in strategy execution from multiple sectors. Dr James Morrow, a GP, turned around his Cambridgeshire practice to be rated ‘outstanding’ by the Care Quality Commission, an island of excellence and innovation, with the adoption of core business principles to improve flow and productivity whilst not for a minute compromising patient care, and incidentally, not spending one additional penny from the public purse. Tamara Rojo worked miracles at the English National Ballet, courageously challenging the traditional and introducing ground-breaking choreography from far corners of the world. John Clarke of GSK Consumer Healthcare more than doubled growth within five years by innovating hard and examining every granular detail of strategy execution as a strategy unto itself.
The combined science and art of implementing strategy isn’t something to be left to chance; it’s a broad-based skill that can be learned. There are three elements: methodology, the process and the skills; technology, a constant journey of improvement and efficiency gain; and, the big differentiator, human dynamics. The latter cannot be underestimated. We need people with vision and commitment to the cause and an ability to focus and intensify effort on the most important…and the ability to communicate. Nothing of scale or significance is achieved alone and so the objective must be understood by every player in the team, to understand in what direction to travel, and why – a shared consciousness, if you like – is reliant on trust and a lot of hard work.