2020 was a challenging year for businesses.
Despite Australia leading the world in terms of its response to COVID-19, every small and medium business has been impacted in some way by the pandemic.
Perhaps that is why, in August 2020, everyone seemed shocked when data showed a fall in unemployment. For whatever reason, people were reluctant to acknowledge that the engine of job creation – the 250,000 SMEs that account for 38% of Australian jobs – contained many business that were not just declining or struggling to stay afloat. They were actually growing.
At the Australian Centre for Business Growth, we were not surprised. Between May and July 2020, we analysed data from 583 SMEs and conducted in depth interviews with 16 CEOs. We asked them how their SMEs were affected by COVID-19, what key decisions they made and what kind of innovations and investments they made during this time.
The results, detailed in our report, Australia’s JobBuilders… “Lucky” or Consciously Competent?, shows that competent CEOs – who have the ability to recognise and calibrate risk, make quick decisions about how to respond, what to stop, postpone or start and where to focus attention – were able to navigate the pandemic successfully. Many were even able to find growth opportunities in the changes taking place.
Through this research, we uncovered several key factors that demonstrate conscious competence in the CEO of an SME.
Spot opportunities; be adept at pivoting
The SMEs that advanced during COVID-19 have been able to assess external risks quickly and use their executive teams to develop a holistic response.
It is worth noting that the CEOs and executive teams that we spoke to did not wait for government directive to determine what their responses would be. They stepped into the crisis and actively changed the impact that the pandemic would have on their businesses.
Data tells a story, you need to listen
All CEOs mentioned that they had made extensive investment in software, databases and hardware, and many were using cloud-based products and services that made transitioning to working from home arrangements much easier.
Access to accurate data was vitally important to the quality and speed of the decisions that leadership teams made throughout the pandemic and their technology investment more than paid off during this time.
Your customers’ customers matter most
The pandemic is and continues to be a time of upheaval for everyone. Many SMEs looked at their positions in their customers’ value chains and how they could help them meet the ultimate customers’ demands.
It was a time for business empathy as well. Companies extended lines of credit, donated perishable food stock and worked collaboratively with their customers to find solutions to the challenges they were facing. These relationships ultimately deepened and moved beyond being simply transactional.
Acknowledge that the right people are your superpower
Although technical and functional competence is necessary, it is not enough. Employees also need to be a solid match with a company’s values and culture.
This is especially important during a time of crisis. Employees who were a good fit with a company’s values trusted their leaders, were able to handle change, and took on new roles and responsibilities at short notice.
Lead with laser focus; execute with alacrity
Without question it was the CEOs, MDs and executive teams that either made or broke their company’s performance this year. Leaders create the culture, determine who to hire, which strategies to pursue, which customers to sell to, which assets to invest in and how to lead and manage. The leadership teams of growth SMEs were filled with creative problem-solvers who were able to reframe many of the challenges as opportunities.
Remarkably, only one out of the 16 CEOs we spoke with ever doubted that their company would make it through the pandemic, but they also realised they would need to make some difficult decisions in order to survive, quickly made those decisions and moved on.
No one knows the full impact that COVID-19 will have on Australia’s economy. But our research suggests that if we want to create the jobs and growth that Australia needs to emerge stronger in the post-pandemic, we need to develop and support more conscious competence in the CEOs/MDs of small and medium companies in Australia.