How to recession-proof your company

Posted on May 30, 2022.
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There’s a lot of doom and gloom at the moment in the headlines. Most prominently, many economists are pointing to a looming recession caused by a variety of factors including the pandemic, the war in Ukraine, inflation and the supply chain backlog. In the nearly 25 years I’ve been working professionally I’ve come across some version of this economic outlook multiple times. It started with 9/11 and then the first dot com crash followed by the financial crisis in the late 2000’s and now the pandemic and other challenges. Looking backwards, the companies that survived – and those that even thrived – in these tougher times are always the most agile companies. 

Agile is an adjective, not a noun

You’ll notice I didn’t say, it was the companies practicing “Agile” that survived. I used a lowercase “a.” This is by design. If we think about this from the perspective of output and outcomes. Implementing any kind of process, including Agile, is an output. We are taking an action and deploying a new process in the hopes that it elicits some kind of behavior change. In this case, our desired outcome is to become agile. Agile, the adjective, describes an organization that behaves differently regardless of what method or process it’s using to build products and services. 

Agile businesses are able to react quickly to changing market conditions. They have repeatable, respected sensing mechanisms in place that feed insight and information to the product teams. These teams, in turn, can work largely independently to determine what to do with this information and then act to take advantage, prepare for or avoid the impact this information teaches them. These pivots, driven by organizational agility, ensure that regardless of what the world throws at these companies they are prepared to adjust course. In many cases, this is the sole reason they are able to avoid the significant impact of a recession. 

Organizational agility is a key factor in recession-proofing your business

I wrote about three types of businesses that survived the pandemic well due to rapid “sense and respond” capabilities here. The thread that runs through all of these is their ability to distribute decision-making throughout the organization rather than panicking and centralizing it. The latter creates a bottleneck that slows response time. The former enables rapid experimentation, learning and pivoting based on evidence. These organizations realized that there is no one genius or singular silver bullet that would save their business when the lockdowns kicked in 2 years ago.

To survive these company-killing external events they resorted to even more learning and risk taking, not less. The risks they were taking were small. This allowed them to learn quickly and to adjust as the situation in the economy shifted on a nearly weekly basis. We find ourselves in a similar situation now. A month ago, there weren’t enough engineers and designers to fill open roles. Salaries for top tech companies were north of $400k. Today there are hiring freezes, funding is drying up and layoffs are stacking up. 

We aren’t fortune tellers

We can’t predict the future. As your company faces down this current string of events, ask yourself, “How well equipped are we to make rapid decisions? What could we do to increase the amount of learning in our organization? How do we empower our teams to act more independently?”

We face an uncertain path right now. The truth is, we always do. The current volatility is just more extreme than normal. As leaders, our job is to help our teams navigate through this uncertainty. Making shipping, sensing and responding the path of least resistance enables the agility of our organizations. The faster we can learn and pivot the more likely we are to adjust the ways we deliver and capture value in an infinitely changing business environment. What can you do tomorrow to increase the agility of your teams and recession-proof your company?