Crisis and response
Ever since the global financial crisis (GFC) began, organisations across sectors and geographies have faced an economic downturn, leading to significant implications on their positioning and economic fundamentals. Thus, CEOs are exposed to scrutiny from external and internal stakeholders, leading to augmented compliance and reporting requirements, as well as more stringent targets for cost reduction. Today´s conventional wisdom prescribes organisations to aggressively reduce cost structures by maximising operational flexibility, cutting back on investment programmes and divesting marginal and non-core businesses. In addition, organisations should focus on improving their efficiency by gathering up-to-date and unfiltered ground-level intelligence.
While it is clear that securing short-term financial stability should be a priority in challenging times, CEOs need to review risk management policies from a long-term perspective as they may be passing over unique opportunities and, in some cases, harming their long-term competitive position because of excessive short-term focus.
Navigating choppy seas
How should one navigate through such challenging and highly uncertain times? We believe the answer lies in planning and implementing various cost-optimisation techniques. Rather than adopting a single view of the future, organisations should explore a range of potential scenarios, adopt a holistic understanding of various strategic choices, identify the levers it can pull, and assess the financial implications and risks associated with each choice.
CEOs, who first detect and accept the magnitude of challenges in the market, have a distinct advantage, because they can discover new opportunities for and threats to their businesses, and respond with winning strategies. History illustrates that many organisations face problems or overlook opportunities of transformational value creation by ´following the herd´ and relying on rigid strategies, which are detrimental for success in uncertain times.
We, at JLL, have charted a path through a difficult economic environment by ensuring that we don't forget our learnings from uncertain times. We have tried focusing on high potential customers and never assumed things would return to normal. We have stayed focused on cost and kept a track of the macro and micro lead indicators for recovery so that we can bounce back quickly. Nowadays, it is common for us to develop optimistic, pessimistic and realistic scenarios so that we can pull recovery triggers when the lead indicators say so.
We have not reduced selling costs and have tried building the ability to quickly refocus. We have always tried increasing productivity and diversified across industry segments and geographically.
We nowadays prepare to do more with less and have realised that our clients have also been affected by the uncertain economic environment. We understand that detecting and accepting the magnitude of an uncertain environment is important and sometimes one needs to have the ability to take hard decisions. We acknowledge current difficulties but also communicate what is being done for long-term growth of our teams. We have gained market share and raised fees on least profitable clients. Our leaders have been encouraged to be more hands on head in than ever before. We gather ground-level information that is up-to-date and unfiltered and have tried inculcating focus, speed, urgency and flexibility among everyone in the organisation. We constantly take stock of where we are, what we know and change strategy accordingly. We have intensified monitoring and increased frequency of control and have weekly review meetings. And more than anything else, we have tried to build a confident organisation, which has a legacy of emerging victorious from uncertain times.
About the author:
Ramesh Nair is COO & International Director, JLL India, and a Non-Executive Director on the RICS Global Regulatory Board. He has 18 years of professional expertise in most facets of the real estate business and has worked across diverse asset classes such as office, land, retail, residential, warehousing and industrial, advising many domestic and multinational owners, occupiers and investors across India.