With 2022 in the rear view mirror, businesses around the world are steadying themselves for more unpredictability, tightening budgets and trimming headcounts to weather a recession that has been looming — but not yet arrived — for over a year now. While battening down the hatches seems like an intuitive approach, Asutosh Padhi, McKinsey’s Chicago-based North America Managing Partner, argues the contrary: now is the time to commit to profitable growth.
History has taught us that economic downturns are a temporary situation, and while competitors are seeking ways to cut expenses and shrink down, companies that invest in research and development, marketing, and mergers and acquisitions will be better positioned to surge ahead when recovery starts. Hitting the gas on growth can have ripple effects in the larger economy as well: growing companies foster innovation, create new jobs, and draw in top talent.
According to Padhi, companies that want to make the choice to be growth leaders and set it as their top priority can take three specific actions to drive profitable growth in tough times.
Businesses that make the right trade-offs are able to deliver short term results without compromising long-term growth, strengthen their core business, cut spending in some areas in order to raise it in others, and systematically take advantage of M&A opportunities.
Growth-minded leaders place their focus on securing resources and breaking down silos, empowering middle and frontline managers to make important decisions instead of micromanaging.
Lastly, businesses focused on growth make a committed effort to put their customers first, using formal and informal methods to understand their emerging needs while acting decisively on the best information they have available.
It’s entirely reasonable for leaders to want to hunker down and weather the approaching storm, but for companies that want to do more than just survive and pick up the pieces afterwards, the time to make an intentional choice to grow and then act on it is now. Bad times don’t last forever, and those who choose to make the most of them will be ready to take the most advantage of the good times when they return.