Every week seems to bring new news stories for Canadian business leaders to contend with when considering the international geo-political landscape. In this post-globalization era of interconnectedness, the consequences of a trade war are not simply the trade that might be lost, but also the impact to capital markets, foreign investments, lower dollar values and slumping stock prices. This has been brought to the fore recently for Canadian business leaders with tariff concerns from the US as well as recent troubles with speaking out over a humanitarian crisis in Saudi Arabia.
The question for a business leader is, how to navigate such an uncertain situation. We at Focused Improvement believe the answer lies in PEST-proofing your business. It is important for a business leader to be aware of how these changing political and economic factors can directly affect one’s business and to navigate the situation (or react positively), however more important is to have a strategic plan that proactively prevents your business from adverse effects of such changes. Some options available to business leaders are outlined below:
- Improve Productivity – An idea stemming from Lean thinking about achieving continuous improvement, a business leader must look to improve productivity to maintain competitiveness in a changing political environment. By implementing Lean thinking throughout the organization and committing to building a culture of continuous improvement, a leader can maximize the returns from existing capabilities.
- Diversify supplier base – One of the most crucial supply chain considerations for a business leader is to have a robust and diverse supplier base. It is essential to diversify the supplier base in terms of the number of suppliers but also look to expand the countries from which sourcing is done as a hedge against the increasingly uncertain geopolitical situation.
- Diversify product lines – A business leader must make sure his business is continuously working on the products and services being produced and make sure there is a steady pipeline of innovations resulting in new products and services being introduced to the market. This strategy can ensure a company can look to overcome the traditional product lifecycle where most of its products are reaching maturity and decline stage and instead have new products that have the potential to allow the company to keep growing.
- Invest in technology – Disruption is a fact of modern business, with every sector of traditional companies ripe for disruption due to technological advances. It is imperative then for any business leader to be aware of the trends and technological advances in their industry and be actively investing in new technology to ensure competitiveness going forward. Leaders that do not embrace this mentality run the risk of their companies being left behind while the industry moves on to a new way of doing business.
- Reduce headcount – Never an ideal scenario, however when faced with a touch situation great leader need to make touch choices. Any business function that does not directly add value to the business should be eliminated. Identifying where these non-value adding functions exist is one of the most important jobs for any successful business leader and requires continuous re-evaluation to ensure only value-added functions exist within the business.
This is not an exhaustive list of options, however, any business leader can PEST-proof their business. Some or all these options are critical to ensure the long-term success of a company.
For more information and help implementing some of these measures, please reach out to Focused Improvement Consulting at [email protected]. We specialize in helping leaders of mid-sized businesses achieve long-term success and guarantee results.
PEST stands for Political, Economic, Social and Technological factors