We are seeing companies across many industries make difficult decisions during this recession.
These moves beg questions such as “Do companies need to revisit their growth strategy during a recession?”, “Should they revisit their portfolio?” and most importantly, “How should they drive growth during a recession?”, all of which are highlighted in this webinar.
Goutam Challagalla, IMD Professor of Strategy and Marketing, and Misiek Piskorski, IMD Professor of Strategy and Innovation, Director of Digital Excellence Diploma and Dean of IMD Southeast Asia and Oceania, explore examples of strategic decisions that companies have recently implemented.
Professor Piskorski explains that in times of crisis, cash is king. Customers will only spend on essentials, which has tremendous implications for growth during this period. Growth is indeed possible, but only if you can solve customers’ immediate problems.
“All the old clichés from business schools like customer centricity and loving your customers’ problems are even more important than ever before,” says Professor Piskorski. Two ways to apply these principles in a new, digital manner are to take a deep dive into your customers’ data, and to make your customers fall in love with your data, according to the marketing expert.
Companies who have done precisely this are Bayer (Monsanto) in the Crop Science division that sells a commodity – seeds and fertilizers. Monsanto used extensive data and predictive analytics to provide a new digital platform for farmers, which gives precise recommendations to improve yields. Additionally, customers are put at the very center with outcome-based pricing. While this hasn’t been fully implemented, use of this system is growing.
In the pharmaceutical world, companies typically sell patented products that are mostly provided to sick patients.
“The question for growth is how to expand by solving patients’ fundamental challenges,” insists Piskorski. “In this case, advice and diagnoses can be provided via data analytics.”
Chest scans are just one area where manual diagnosis can be easily replaced with basic artificial intelligence. Particularly with the COVID-19 crisis, increasing chest scans and the ability to quickly determine who is sick or most at risk is vital to saving lives.
Professor Challagalla then presents his own example of a company that succeeded during a crisis, proving that “By leveraging what you already have, you can drive growth among customers.”
One company – a professional series firm called SMA – is perhaps the first company in this domain that experimented with a platform model (drawing from platform-based companies like UBER and eHarmony). Although a typical management consulting firm, it is specialized in very complex areas like defense, with extremely high win rates. A year or so earlier than COVID-19, it had a financial crisis and debt restructuring after several acquisitions.
SMA had to rethink its whole process of client relationship-building, pricing and project staffing. By streamlining the project staffing process in particular, SMA started to put the data in the hands of customers. By creating a platform that utilizes “talent on demand”, the system provides recommendations of consultants that match customers’ needs.
During the two Q&A breaks, the session delves into the areas of solution-selling and data privacy. The professors agree that collaborative selling is nothing new, but now, the importance of getting data in real time from customers is paramount.
With regard to data privacy, regulation varies worldwide – this makes insights dependent on the region, product and industry. Individual rights to privacy regarding health information may also come into play, posing ethical dilemmas.
But the key takeaway according to Professor Challagalla is that trust is number one.
“Most organizations believe they are in the trust-building business,” says Professor Challagalla, “but they forget two key dimensions of trust: credibility and working in the customers’ best interest.”
Most consulting companies believe they are indeed working with their customers as a priority, but do they really have the expertise? Professor Challagalla believes that the only way to show customers you truly are trustworthy is to be transparent, especially regarding pricing.
“Let customers see what their options are,” he insists.