Blog Credit: Megan O’Brien, February 1, 2023 (5 Ways to Manage Through an Economic Slowdown, According to NetSuite’s Founder | NetSuite)
In a recent webinar(opens in new tab), Oracle NetSuite founder and executive vice president Evan Goldberg discussed how to navigate a changing business environment. Goldberg’s advice is based on experience weathering past downturns, like the Dot Com crash and the 2008 Great Recession.
In this blog, we’ll highlight five main takeaways and explain why now is a timely opportunity for businesses.
Takeaway 1: Sharpen your business fundamentals. During an economic boom, companies often adopt a “grow at all costs” mentality. But during a recession, leaders need to refocus on efficient growth, which means bringing it back to the basics.
“In my previous experiences of going through these times, we used them as an opportunity to sharpen our pencil on those business fundamentals,” said Goldberg. “That really helped us not only survive the downturns, but ultimately come out of them with a lot of momentum and thriving from those changes we made.”
Important components of efficient growth include prioritizing high output over high employee count, reinforcing your core products, cultivating a deep understanding of customer needs, and reducing overhead.
Taking a systematic approach and examining each internal and external aspect of the business can shed light on opportunities for savings and efficiencies. For instance, can you shelve skunkworks projects that won’t produce revenue any time soon, renegotiate expensive vendor contracts, or automate time-consuming processes?
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Takeaway 2: Nurture your current customers. In response to the 2008 financial crisis, NetSuite redirected its focus towards existing customers, a decision Goldberg credits with helping the company not only survive the downturn, but thrive afterwards.
Recessions affect different sectors differently; some thrive, others don’t. Goldberg recommended undertaking a customer-by-customer review. Once you know how the downturn is affecting each, you can offer specific help based on their situation. Maybe you offer deals to retain those who have been hit hard and offset that by expanding the use of your product by companies that are doing well.
“Really deeply understanding our customers and helping them navigate whatever they’re going through is a discipline that we’ve maintained,” said Goldberg. “It has paid off in dividends during times of plenty and times of scarcity.”
Takeaway 3: Prioritize visibility and effective software. During the financial crisis, NetSuite got better at understanding how customers use the suite and what they think of it by taking a deeper look at metrics like product usage and customer sentiment. Many of the processes put in place then continue to be used today.
Gaining that increased visibility in business operations, according to Goldberg, is critical during recessionary periods. Insights into the costs to create and deliver a product, the industries and regions of your customer base, and the productivity of your team — just to name a few — are important for better managing your business.
“In order to make improvements, you have to know what’s going on,” said Goldberg.
In today’s economy, business leaders will likely find they didn’t always make the best choices as they acquired new software at breakneck pace at the outset of the pandemic.
“People during the good times bought a lot of software — they’ve got a hammer for every possible type of nail,” said Goldberg. Yet many relatively expensive tools are not delivering the value that purchasers expected.
Switching to an integrated software system with broad capabilities instead of an assortment of point solutions allows companies to gain insight into fast-changing value streams that become more important in a recession. Think acquiring and growing customers, creating and delivering products or services, and optimizing cash flow and profitability. More robust software also empowers employees, increases productivity and efficiency, and thus lowers labor costs.
Takeaway 4: Balance your data with intuition. As the founder of a cloud-based ERP provider, it’s perhaps not surprising that Goldberg advocated a data-first approach to handling an economic slowdown. But that came with some words of caution: It’s data first, not data only. And not all data is created equal.
“Data, in my opinion, is necessary, but obviously not sufficient,” said Goldberg. “And that’s where we bring in our experience, our knowledge, and our intuition.”
That intuition plays a prominent role in determining the validity of a data-informed assumption. A little data can be a dangerous thing, so leaders need to tap into their own knowledge and common sense to gauge whether something is statistically valid or simply anecdotal.
A basic knowledge of statistics to effectively analyze the relevance of data — like where it’s from, how it was collected, and who was part of the sampling — can help with making smart data-based decisions.
Takeaway 5: Be opportunistic — but keep your eyes on the prize. Companies that are forced to think creatively about how to be successful in tough times often hit on breakthroughs that benefit the business for years to come.
However, while this is the time to be opportunistic, Goldberg cautioned against losing focus. When companies are seeking business anywhere, distraction is a likely outcome.
“I don’t want to minimize the importance of being opportunistic,” said Goldberg. “But [when I look at the businesses I’ve been involved with], I see their ability to keep focus on that Northstar — why they originally started their business, the vision that they had, and why they’re in it in the first place — as key to their success.”
While there is room in these times to think outside of the box to benefit the business, tough decisions need to be made to make sure initiatives still align with the overall purpose of the company. That focus will pay off in the long-term as you continue to make progress towards the goal the business has always had, despite the slowdown.
[ Using the business alignment model, leaders can arrange a company in a way that optimally syncs work, structure, and resources to the designated purpose of the business. ]
Whether or not the economy will enter a recession is an open question. However, that does not impact the ability of businesses to start implementing these strategies.
“The biggest thing that I wish we had done differently in hindsight is I would have done some of these things when times were still good,” said Goldberg. “It’s going to take time to get [initiatives] going and to really see the success from them.”
Particularly as many companies pause new spending to see if the slowdown becomes a recession, it’s an opportune time to start thinking through ways to make your business run as efficiently as possible.
“Now’s the time to make your business run the best it possibly can — to be the finely honed machine that will help you survive and then thrive in the future,” said Goldberg.
An objectives and key results — OKR — framework empowers employees, managers, and teams to keep moving in the right direction and provides tools to define and measure success. Learn how to make OKRs work for you.(opens in new tab)