Podcast 1 - Navigating a turbulent economy

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A full transcript of this podcast is reproduced below.

"This is Dan Rasmus and I’m the Director of Business Insights at Microsoft.

One of the things that I’ve been thinking about over the last several months is the issue of navigating a turbulent economy.

Were all facing lots of challenges and I want to start, not with technology, but really with strategy, and one of the things that I think is extremely important for organisations these days is to really understand uncertainty, put a name on it and be able think about it in a way that is really robust and resilient.

We use long range scenario planning as a way of thinking through various possibilities. I often think about it as navigation charts, we talk about navigating an economy and if there are no charts its very difficult to do that.

Sometimes, executives will throw their hands up and say the world is uncertain and not really think through what that means. One of the things that we advise is that you put a name on it, so you say, ‘we don’t know how the financial markets are going to turn out, we don’t know what globalisation is going to look like in the future.' That frees you to start having an exploration of what those possibilities are and to really engage your imagination and I think, more so than anything at this point, is to engage our imaginations as we go forward.

The problems that we are facing are really multidimensional. We have a stream of research that we talk about called the New World of Business that looks at organisational issues from external factors, things we call dynamic business, whether its pressures being put on an organisation, or be it regulatory issues.

Of course, the credit crunch is an overwhelming factor right now, but I think important in dynamic business to understand is, just because you can’t get a loan today doesn’t mean that your customer expectations hasn’t changed, or that your customer expectations has changed, because they are still going to want to have information delivered to them on mobile devices, there still going to want to have first class, well-organised interactions on the internet.

When we think about the blended world there are a number things that are happening in organisations today, from blended workforces, in terms of generations, blended workforces, in terms of globalisation, different languages, different cultures, as well as the blends form mergers and acquisitions. These are just a few of the other kind of factors that organisations have to think about today from a strategic standpoint -getting insights from all the complex information that is available in the world.

When we look at all the information that is being generated by everything from RFID tags to GPS to the wealth of structured in databases it is really incumbent on leaders to take advantage of that.

In terms of technology, I mentioned insights on complexity and being able to gather information, but I think it is also about your workforce as a way that you sense what is going on the world.

Changes are very rapid, so being able to empower your workforce with things like collaboration technology, new communication channels, ways of really allowing them to bring their insights from the front edge of the organisation back in, to reason about those, to decide what actions need to taken and then to create a mechanism for allowing those actions to permeate throughout the organisation. I think that is extremely important.

We often think about technology strictly as automation, and that’s certainly important these days, because as we think about doing more things with less people, that is an important factor in the technology equation.

The other piece of the technology equation I think is really talking about nimbleness and agility. As we face the very happy prospect that some day the credit crunch and the financial crisis is going to be over, it is very important that we prepare for that future.

One of the ways to do that is to make sure that we step back and take this moment as a time to breathe and reflect on, how we manage our processes, how we manage our human relationships, how we manage our strategies and think about how technology plays a role in making the organisation more efficient, more agile, because one of the things that I’ve learned in course in 25 years in business, is that software is one of the most nimble and malleable forms of technology that we've ever invented.

And I think there is a number of very key things, that again as we think about a turbulent economy, that organisations should be thinking about.

The first one is preparing for new regulation. There is inevitably going to be a fall out from the financial crisis, especially in the financial areas (insurers) and we really have to think about how do we prepare for that regulation.

One of the things that we talk about in our new book, Listening to the future is the idea of proactive transparency of being able to say, ‘these are the things that my constituencies, my stakeholders, my customers really need to know and rather than waiting for the regulatory agencies to say they have to know them and those regulations may be incomplete in terms of what people need to know. Be proactive about sharing those.

Think about that as a strategic way of redefining a brand and get out in front of it and use it as a way of driving loyalty and brand recognition. Stay in touch with your talent base.

There is going to be high turnover, there is certainly going to be down-sizing and other kinds of activities which are often regrettable, but being able to keep in touch again with the edges of the organisation, to think about the talent that you have and being able to bring their knowledge to bear on the problems that your facing, as well as the opportunities.

Again, we very much think about this as a time of cost cutting, being stringent, but I think it is also a great time of insight and growth, as organisations are challenged by these factors.

We have to also build deeper and tighter relationships with our customers. We have to think about how we engage our customers in a dialogue, because we often think about how do we grow markets and how do we acquire new customers.

In an economic downturn, probably the most effective thing you can do is keep the customers you have and be very close to them, because acquiring new customers is not only expensive, it is also in some cases very difficult to do, as their facing their budget woes. So being able to continue to show value to your existing customers is important.

I think also, creating and sharing data very effectively within the organisation, make you understand what things are going on operationally, what things are going on in the markets, what things are going on with your employees is imperitive.

And finally, being prepared on the competitive side for the need to be nimble, be agile and be able to identify where new competitors are coming from. Again, I think it’s a sensing mechanism, it ties back into people, it ties back into strategy and being able to see where these new competitive threats and new competitive opportunities are presenting themselves.

All of this is sometimes difficult to imagine, as we are thinking about our cast positions and the health and success of the organisation. As I was writing a paper recently, I said that you couldn’t cut your way to prosperity and I think that is really a key her, in that, as we are trying to survive, going into the future we have to be able to think about what thriving is going to look like going forward.

We can take our organisations to a lean point, we can be very effective and efficient in our processes and we can get very process oriented, but innovation, as much as the process of innovation is something we can be efficient in, the idea generation, the creativity of the organisation is something that we really have to think about unleashing at this time and being able to prepare ourselves for what comes next.

Which, I think, is going to be a new level of prosperity, perhaps very different from what we have seen before, with different opportunities, different markets, but I think it is something that is going to be quite exciting as we move forward past this financial crisis."

Daniel W. Rasmus is Director of Business Insights at Microsoft, guiding the research that allows Microsoft to envision how people will work in the future. Based in Seattle, he is also the Microsoft representative on the Board of the Directors for the Institute for Innovation and Information Productivity and serves as a advisor to the (US) National Workforce Center for Emerging Technology. Rasmus attended the University of California at Santa Cruz and his fifth book Management by Design will be published later this year.

www.microsoft.com/uk
www.danielwrasmus.com