Invest in Transformation during a recession

As the global economy faces a prolonged period of low growth, high interest rates, and increasing inflation, many businesses may be tempted to focus on preserving cash and reducing capital investment.

However, these tough times can also be an opportunity for businesses to address underlying constraints and invest in areas that will set them up for long-term success.

There are four key areas in which businesses can invest during a recession: growth, the workforce, organisational transformation, and adaptability.

1: Invest in growth

Investing in growth can seem counterintuitive during a recession, but it is important for businesses to prioritise this area and explore market opportunities that may present themselves. For example, a company like Next has been selling its customer platform to other retailers and buying up failing competitors while also continuing with other strategic initiatives. It is important for businesses to consider the risks and rewards of such growth initiatives carefully and to ensure that they are funded and managed appropriately.

2. Invest in the workforce

Investing in the workforce can be crucial during a recession, as employees may be more likely to consider leaving for new opportunities. By providing support and flexibility to employees, businesses can strengthen their workforce and retain top talent. This may involve offering flexible work arrangements or investing in pay deals that both reward and retain employees.

3. Invest in transformation

Organisational transformation can also be a valuable investment during a recession, as it can help businesses prepare for the recovery and position themselves for long-term success. True transformation requires the involvement of the entire organisation, and businesses should focus on creating a sense of ownership and alignment among all employees. This may involve creating scenarios and challenges for teams to work towards, as well as building a long-term orientation towards growth and taking measured risks.

4. Invest in adaptability

Finally, investing in adaptability can be key for businesses that want to thrive in the aftermath of a recession. By using forecasts and modelling to help teams become more agile and responsive to different scenarios and by creating a flexible resource plan that ensures the right skills are available to respond to opportunities, threats, and crises, businesses can build the adaptability they need to succeed in the long term.

Overall, while it may be tempting to focus on preserving cash and reducing costs during a recession, there are also many opportunities for businesses to invest in areas that will set them up for success in the long term. By exploring growth opportunities, supporting and retaining employees, initiating organisational transformation, and building adaptability, businesses can position themselves for long-term success and gain a competitive advantage.

Image (c) Shutterstock | fizkes

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David Cruise

Group CEO David has led large scale business transformations both in-house and as a consultant. To contact David please email david.cruise@changeassociates.com

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Invest in Transformation during a recession

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