CEO’s are managing in uncertain times – their CPO can play a key role in helping them succeed
CEO’s are having to rethink their business strategies in the uncertain times that are the ‘new normal’. Their strategies, usually centred around certain business assumptions or “indisputables” that are driving growth are being tested. None more so than ‘how consumers spend’.
Robert Zoellick, president of the World Bank, said in Singapore on 11 November 2009:
“it’s hard to believe that US consumers will play the role they played in past recoveries because the US consumer has to de-leverage and has to rebuild savings”
More recently, Lawrence Summers, director of the White House’s National Economic Council, said
“There is no way our import-led growth is going to be the driving force for the rest of the world’s export-led growth going forward.”
Summers called for a “rebalancing” of the world economy in which U.S. consumers play a less significant role.
For many Asian companies who have relied on the US consumer this “indisputable” will have significant impact upon strategy, where the real question in the ‘new normal’ is; how you move from over-reliance on US consumer demand, to find better balanced multi-polarity growth?
Strategic options include developing new products, new markets, mergers and acquisitions or a combination of these. However, companies are coming out of this recession with very different balance sheets, so their available range of options is very different. Asian companies must also expect that the global recovery is not going to be symmetrical so markets will need to be targeted systematically to secure additional poles of growth.
While no one can predict what 2010 will bring, the environment in which CEO’s are setting strategy has become more complex. Furthermore, the rapid pace of economic events is challenging CEOs in their efforts to focus on the long term, and to keep the organization and its processes well aligned with shifting strategic priorities. The key to success in this environment is ‘Agility’. Driving agility into their business requires CEO’s to balance long term strategy with market changes. So instead of preparing the budget and then not changing it much over the course of the year, companies must review priorities at least quarterly and make the necessary adjustments to balance the long term outlook with shorter-term flexibility.
The CPO can play a key role when managing in uncertain times through:
- Cost Management – by keeping cost down until the “indisputables” have been tested.
- Market scanning – converting uncertainty into knowledge which managers can use to make strategic adjustments and speedier decisions.
- Risk management – to identify risk, quantify, investigate causes, and manage and monitor its effects.
- Collaborating with suppliers to drive innovation that in turn drives growth.CPO’s must ensure they maintain organisational alignment to keep on track.
So if strategy drives structure and structure drives processes CPO’s must ensure changes in corporate strategy are reflected in their structure and that their processes support where the CEO wants to go strategically.
Nuff said …
This post is writen by David Henshall and first appeared in Chaina Magazine