One of the biggest challenges a leader can face is to be confronted with a declining market.
Here’s the scenario: the leader has a record of past success, measured by growing sales, market share, revenue or profit (preferably all four). Reputations and expertise are built, often on the back of product or service innovation. The executive gets promoted, or takes on an exciting new role at a new company.
And then the market turns, a global event takes place, or a disruptive outlier creates a compelling alternative, and what was once a certainty now becomes a seemingly insurmountable challenge. Think Amazon, Tesla, Google, Brexit.
Yet declining markets need not be the end of a successful executive’s career, although it is often the end of the career in its current guise. Let me share some of my personal experiences on staying focused to win.
Refocus to stay ahead of the curve
At Lenovo we face many such challenges, in particular the ever-evolving makeup of the PC sector. What was a commodity business five years ago, in which we and our competitors chased margin based on price, price and price, has now segmented into a market with multiple shades of grey, not just a choice of black or silver.
Users now define what a great PC means to them by the specific requirements they have, with this newly-segmented market now embracing gaming, multi-mode systems, super-lightweight PCs, tablets, all-in-one desk-top PCs, and more. Add the alternative contexts of mature markets (in which users are changing their demands) and emerging markets (in which users are expressing their preferences for the first time) and I hope you can see that what has changed for Lenovo, and for my teams and I, is this: our focus has changed, and it’s no longer business as before.
By embracing the opportunities of a diversified marketplace we can pivot from chasing margins to creating more products to meet different customer needs. We have had to become a company that continues to change and redefine our business, always seeking to be just ahead of those “curves of disruption.”
I’ve been part of a number of those changes during my time at Lenovo. I was one of those executives who had a record of success in an expanding market who then joined a new company confronted with a declining and diversifying market (certainly one that was morphing into something very new). I joined Lenovo from IBM to run the Hong Kong business. I discovered a business under stress, and the focus became very clear, very quickly: to turn the business around with the support of a superb team. We achieved that in three quarters to regain the number one position for the region, and we were then given the opportunity to repeat the task in our Taiwan and Korean businesses.
What worked for us, and what challenged me personally, was the fundamental change of mindset we all had to deploy.
What you need to do to
Changing mindset is an essential first step because it creates the foundation for the new strategy you need to grow.
Next comes a new operations model, because the market is now different, with new competitors, new pressures, and new corporate demands. You cannot continue to run your operations as you did last quarter or last year because those legacy operations can’t help but deliver the wrong results for the new market you now find yourself in. In our case, the PC market is shrinking overall by about 10% per year, but there’s a clue in the sentence: overall the market is static, but within it are growth opportunities. Market share is also there to be taken from competitors. So we now have a new objective, and a razor-sharp new focus: grow market share in a market that is not growing.
Easy to say, difficult to deliver, but nonetheless true.
This new focus embraces agility and mobility: for a company as big as we are, we are now surprisingly nimble, something that my colleague Amar Babu addressed as APAC COO when faced with the triple-challenge of Indian demonetisation, the death of the King of Thailand, and the currency devaluation in Malaysia.
The solution here is quick mobilisation of resources and their expertise, your capital and financial assets, your partnerships, and any other aspect of your operational ecosystem, all mobilised to focus on taking advantage of the new opportunity.
I will summarise my experiences into a few points of strategic focus:
- Coming up with a sound strategy is not the most difficult thing to do. Execution is harder and matters most.
- If I see a corporation fail, it is usually due to them wanting to do too many things. They dilute resources which is especially dangerous in a declining market. The learning is: limit the number of big bets you make (usually not more than three); learn how to reduce rather than constantly add (people are better at addition than reduction); and realise that adjustments should be seen not as cost cutting, but as the reallocation of resources to the correct area of growth.
- Change management must be well addressed. During the course of any adjustment, you will need to change. The fact is human beings don’t like change, we know that. So you must OVER COMMUNICATE the following : What is the change? Why do we need to change? What is the benefit of changing? And what do each of us need to do?
- Aggressively reach out and listen – really listen – to your customers. The amount of insights you can get from hours of internal reviews pale in comparison to a select number of coffee breaks with your key customers. Trust me on this.
- Surround yourself with really good people. And they have to be better than you . There is an old Chinese saying – ‘the boat rises with the water level’! It’s a similar wisdom to the phrase, ‘the rising tide lifts all boats’. Great people and great teams will lift the whole company to new heights.
These five tips make all the difference for how I stay focussed running the business in Asia Pacific. Market conditions will always change, but the key is retaining focus on fundamentals while adapting as needed.