In 2008 the world economy faced its most dangerous crisis since the Great Depression of the 1930`s. The collapse of Lehman Brothers, a niche global bank, in September 2008 almost brought down the world’s financial system. The blood bath was not limited to the financial sector, as companies that normally rely on credit suffered heavily because of this. This had an enormous impact on world’s business climate, the effects of the same are still being felt, eight years on. So, exactly how have the events of 2008 changed the way we do business? In countless ways, but I'll highlight the major ones.
Ethics, sustainability and responsibility have come into focus and so have regulation and risk control. People in customer facing roles will appreciate how these things have shot up in importance.
Ethics and responsibility go hand in hand. A survey done prior to 2008 revealed that the most important criteria for selecting top level executives was Ethics. Unfortunately, it was never played out that way in real business. Also when economies are doing well there are powerful pressures not to rock the boat. So people could play around with screws so long as the boat was still running. Not so more now. Customers have become smarter and want to know ins and outs of everything that matters. It’s all about honesty now. Honesty in how you sell, what you sell and what you do after selling. Honesty demands transparency and that is why every deal and every penny spent should be accounted for. This has forced sales and marketing folks to work harder and harder to ensure that they are delivering everything with honesty and complete transparency. The direct fall out is deals are taking longer to get closed, its taking longer to convince the customer and its taking longer for the payments to come in. People are learning new skills of the trade and using latest in technology to be a smarter sales man.
Cash is king and saving is the norm. The fall of Lehmann created panic in the markets. Suddenly, nobody trusted anybody, so nobody would lend. Non-financial companies, unable to rely on being able to borrow to pay suppliers or workers, froze spending in order to hoard cash, causing a seizure in the real economy. Companies learnt this hard way that cash is the king and the less they spend better it is for them. Many companies today are sitting on piles of cash but they do not spend the way they did earlier. The others who do not have piles of cash now want to buy only that much that they can afford. There is a fear of spending and the fear comes from the fact that there is not enough confidence in the world economy. Companies are afraid that the market could tank again and they would simply lose millions. The result of this scenario, few new RFPs and RFIs being floated. Contracts getting re negotiated with heavy discounts but stricter agreement. Almost done deals falling through at the last moment, because customer decided to postpone his buying decision by few months/years. Customers trying to focus more on streamlining existing process and programs and make the best out of what they currently have.
It’s all about pleasant experience ! It’s not about great product or service anymore, it’s about pleasant overall experience. Customers are more educated, more empowered and have more options available to them unlike ever before. Customers want choices, but to engage, they must trust the brand. Companies have a choice and the smart ones choose to better understand their customer’s needs and then rigorously focus on iterating and improving their products and services to consistently deliver on their brand promise. It calls for enhancing the customer experience at every touch point and also must include his emotional and psychological quotient. This calls for customer engagements like never before. Continuous improvement on a company interacts with customers. This calls doing smart work at every level of an organization and costs time and money.
Dynamics of collaboration. Businesses are engaging in varied models of collaboration to improve their own, and their customer’s resilience. Businesses banding together to learn from each other and support each other is nothing new. What is new is the that have galvanized action on economic regeneration, social inclusion and responsible business practices. Corporate Social Responsibility is the new mantra. I am not sure how much this adds value to the top line directly but yes, it does effect the brand value of the business. Another new trend that is subtly visible if one tries to look a little deeper but never acknowledge publicly is the trend of competitor’s collaborating with each other. Companies collaborating with competitors, to address specific problems of the industry is not new. Refrigerants, for example, brings together Coca-Cola, PepsiCo as well as Red Bull and Unilever in an alliance with Greenpeace and others to develop more sustainable refrigeration technologies. What is different now is competitors collaborating for getting business deals. It’s like ensuring that you win here but I do not loose somewhere else. This new dynamics of collaboration has its own opportunity cost in terms of money, time and value.
What I have narrated above are some of the major changes that have happened post September 2008. The direct impact of these have been on the way business get conducted worldwide. As everyone now says, the world of business has become very different. It indeed is different and much more difficult then it previously was. However, like all challenges there is an opportunity for business world to pull up socks and create an environment where trust, transparency and responsibility are the new pillars on which they can paint the world.