When things go wrong in any business, its leaders’ initial impulse is to shift into defensive mode, cutting costs and curtailing activity in order to ride out the storm as safely as possible. However, that’s often the wrong way to go.
“In a time of uncertainty, a bit of cost-cutting may be useful,” said Sanjay Khosla, Senior Fellow and Adjunct Professor of Marketing and co-Academic Director of Kellogg Executive Education’s Delivering Business Growth program. "But you can’t shrink yourself to greatness. We suggest people get aggressive and double down on what is working. You can do better by investing in what’s already working for you.”
For example, in workshops Khosla ran with clients as the first effects of the COVID-19 pandemic hit, people’s first inclination was to focus on all the problems it caused — from supply-chain issues with companies to a change in customer demand. “We stopped all discussion about anything that they weren’t able to control,” he said. “We focused only on the ‘So what? What now?’ aspects of the situation. That’s a very different conversation. It produced quite a bit of conflict between those who’d been with their companies a long time and those who were more agile in their thinking. The long-timers wanted to wait for the vaccines to come. We said, ‘No — you act now, change and focus on where you can win.’”
Focusing on where you can win makes the difference between sinking and remaining afloat when circumstances bring unpleasant surprises, Khosla added. “People wanted to concentrate on what wasn’t working and try to fix it. We made them target what was still functioning and build on that.”
The 70/30 rule applies in such situations, according to Khosla: your organization should be spending 70 percent of its time on what is already working. “With one company, their China supply chain had been disrupted, and they wanted that to be their focus,” he said. “But their Latin American supply chain and their direct-to-consumer business were still all right. So that’s where we had them spend their time.”
The underlying process is what Khosla calls a Mine, Bottle and Scale (MBS) approach. You mine information on where you’re successful, bottle it into a system that can be replicated across your organization and scale it to reach wherever it fits. It is important as you move across markets not to just copy and paste but to copy, adapt and paste.
When another client found that COVID had disrupted their U.S. operations, their small international unit was able to keep going and even thrive. Initially, company leadership assumed that unit’s advantage came about from being located in a smaller country with more freedom to do what they wanted. But when Khosla went mining for information, he discovered that the still-successful unit was successfully leveraging Zoom for their customer service. That was the mining part of the situation. They took that information, bottled it into a replicable process for the rest of the company and scaled it out to all applicable parties in a massive international organization. The result? It was a success wherever they tried it.
“The agility mindset can make the difference between success and failure in small industries, large industries, for-profit and non-profit,” Khosla said. “It has nothing to do with the industry you come from. Agility is how you scale and have an impact. You don’t just talk.”
|Sanjay Khosla is a Senior Fellow at Northwestern University's Kellogg School of Management and a Senior Advisor at Boston Consulting Group. He teaches in a variety of Kellogg Executive Education programs, including Delivering Business Growth and Kellogg on Branding. He is the co-author of Fewer, Bigger, Bolder with his colleague Mohan Sawhney.|
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