Board and Business Strategies
Over the last year, our focus has been on helping businesses not just survive, but thrive in a challenging economic environment. While some in the media are pushing the "survive until '25" mantra, I believe business leaders should aim much higher. So, how can companies ensure they thrive in 2025 and 2026?
The graph above (S&P Capital IQ & Bain Sustained Capital Creator Analysis) shows that companies that took decisive steps during the global financial crisis fared better and were better positioned for post-recession growth. Conversely, those that didn't adapt struggled both during and after the downturn. This is why many fail as the economy begins to grow.
While this data is general (not industry specific), our experience has been that businesses that address their challenges early, explore their options, and make decisions to preserve profitability are now well-placed to expand market share.
This second graph (Bain Analysis) summarises generic strategies that can be applied to different markets, products, or services. It illustrates that even businesses poised to "play offense" benefited from consolidation, cost management, and efficiency improvements before pursuing growth.
Preparing for Growth: Key Considerations for Boards
1. Exploiting Strengths: Building Resilience
Initially, businesses should focus on optimising their core strengths. Here are practical steps boards can consider:
Revisit Risk Regularly: Actively address areas of shareholder, governance, and management risk.
Return to Core Business: Focus on what the company does best, ensuring it's well-resourced, profitable and prioritised.
Understand the Customer Voice: Stay close to your customers and their evolving needs. This provides clarity and confidence.
Maintain Financial Prudence: Ensure cash flow, working capital, and profitability remain a focus & healthy.
Right-Size People Capability: Retain key talent and experience. Update the company's talent matrix to reflect current & future needs.
Enhance Systems & Processes: Streamline these for maximum efficiency and to provide future scalability.
Collaborate & Network: Seek market intelligence and explore new opportunities through strategic partnerships.
2. Exploring Opportunities: Preparing for Growth
Once resilience is established, boards should set the stage for growth. Here's how:
Lift the Horizon: Dedicate regular time to long-term foresight, accessing data, expert opinions, and collaboration with other boards.
Build Trust and Realign: Strengthen the board-CEO relationship, review the board composition, and ensure alignment.
Align on Growth Strategy: Clarify growth strategies, whether through organic expansion or acquisition.
Future Vision: Engage in strategic conversations about where the business could be 10 years from now. Then pull the CEO & leadership team out of short-term problem-solving by spending much of board time defining the 2-3 year strategic outcomes.
Bank Wins and Build Momentum: Celebrate successes, lead the changes, and move deliberately to build momentum.
Future-Proof with Succession Planning: Prioritise leadership development and succession planning at both the board and management levels.
Businesses that proactively build resilience and explore growth opportunities will be well positioned to grow in 2025 and beyond. By focusing on core strengths, revisiting key strategies, and fostering collaboration and foresight, boards can help their organisations not just survive the economic storm but ready to thrive.
Contributed by Kendall Langston, Partner