We all have experienced a dramatic increase in the rate of change in our business environment over the last two years. The “new normal” is still evolving, but agile thinking appears to be a permanent requirement. An example is the semiconductor industry, which has struggled to meet greater demand. As a result, they have increased their raw inventory levels. Though the Russia-Ukraine war has stopped the major supply of raw material to the industry, manufacturers are saying their inventory and alternate suppliers are allowing them to continue producing at full speed.
Another major problem for companies is recruiting and retaining employees in a tight labor market that is likely to continue for years due to demographic and lifestyle changes. The evolution of Silicon Valley over the past two years is a good example of how companies must be agile and creative. Employees have demanded to work remotely and have left high-cost areas such as Silicon Valley, New York, and Seattle for Atlanta, Dallas, Denver, Kansas City, and St. Louis. This rapid out-migration and the realization that costs are just too high in California have caused Tesla and Oracle to move their HQs elsewhere. A recent survey by Upwork found that five million workers have moved since 2020 and nearly 19 million are planning to do so to either work remotely or freelance.
It is critical to understand what employees want in this evolving environment, and employer thinking needs to change. A 2021 Pew Research study shows that only 17% of the adult workforce now see their career as a source of meaning. Additionally, 20% are examining their work-life priorities because of the pandemic and are motivated differently than two years ago. Most employers have not caught on to this change, as only 8.5% of job listings mention remote work. This is a stark example of long-term thinking in a short-term world!
So, how do you change your thinking to deal with rapid change and still grow your company? Follow the example of the semiconductor industry, which increased inventory as a hedge against continuing inflation for the next 12-24 months. Set up a buffer stock system from another supplier or begin using multiple suppliers to build a stronger supply chain. If your inventory is perishable, you have fewer options, but diversifying your suppliers will allow inventory management to be more agile.
Most importantly, examine your operating processes to determine if some may be outsourced. This will decrease pressure on employee retention and diversify your supply chain. While examining these processes, look for functions that can be performed remotely and during off-hours that may attract high-caliber talent. For example, set up jobs that start at 8:30 AM and end at 2:30 PM to attract the working parents who need flexibility to cover childcare. These people may be happy to work in an office to get out of the house!
Your long-term strategy for your business may not have changed, but the logistics to get there certainly have. Broadening your thinking and shortening the decision cycle will allow you to prosper over those whose thinking remains stagnant.
C Squared Solutions provides interim or fractional CFOs, COOs, and CEO advisors in nearly all industries. We analyze and advise on these issues frequently through sophisticated modeling and experienced management. Give us a call and we can offer more information and details. We have been there and done that!