Although prospects for many manufacturing firms in Scotland can appear bleak, there is room for optimism if business leaders focus on what really counts, says Claire Kinloch
These are tough times for many businesses in Scotland where a lot of the certainties of the past have simply disappeared.
Covid and Brexit, plus a falling demand for oil have been a triple whammy for manufacturing firms, particularly in the oil in gas sector.
In recent months I’ve spoken with many business owners and MDs under significant stress and looking for a way forward.
And the good news is, there is light ahead – although the journey may involve some pain.
For a lot of firms, the first challenge of the lockdown has been a downturn in orders stemming from a drop-off in customer contact. In oil and gas, many firms’ pipeline has come through well-established personal relationships, where bumping into contacts at Offshore Europe and meeting people in the usual round of industry events has done the job.
This ad hoc approach worked well in times of plenty, but lockdown has exposed a lack of continuity planning and clear understanding of buyer behaviour in many firms. Who are your customers (both current and potential), what do they want, what are their challenges and how can you meet their needs? How do sales actually come about and what, in strategy terms, is the ‘buyer journey’?
To thrive, a business needs to develop a powerful understanding of their stakeholders and what makes them tick. Successful companies recognise the value in customer relationships, and put considerable time and investment into developing robust, auditable processes for customer relationship management, lead generation and sales.
In many respects, your customer relationships should be viewed as an asset on the balance sheet.
In parallel, you need to take a forensic, 360-degree view of your business and its competitors, and spend significant time finding out about your customers, your own business and how it creates value in understanding emerging trends.
What is your capability, what are your weaknesses, what makes you different and where does the opportunity lie?
Does your management team have the right mix of skills and outlooks to thrive in a rapidly changing world?
Many boards have a wealth of technology expertise but may be lacking elsewhere such as in human resources, marketing or sales – despite a growing body of research that shows a strong correlation between board diversity and business growth.
In Scotland today many manufacturing firms rely on ‘technology push’, whilst the ones that will survive and indeed thrive learn to seek out and truly understand ‘customer pull’.
By taking the time to gain real strategic insight, businesses can transform themselves from a point of chaos and survival to becoming a truly entrepreneurial concern.
‘One thing is clear – we are not going back to the way it was. If a business is to survive and thrive in the new normal it will have to innovate and be agile’
Complete clarity about your capability, your differentiation and the opportunity – and what your customers really want – can create an energised and motivated workforce ready to embrace growth and change.
And the good news is, the opportunities are there. Recent announcements by both the Scottish and UK governments underscore long-term commitments to the energy transition.
So what does this mean for you? What new customers are out there?
Can you offer the same product or service to a new sector, such as pharma or distilleries, or offshore wind or hydrogen? What can you deliver that they need?
Do you need to diversify, acquire or merge?
Or is it a new product for your existing customer base? Or should you look overseas?
Lots of questions I know – these are really uncertain times, and there are no simple answers and there is no same answer for every business.
But one thing is clear – we are not going back to the way it was. If a business is to survive and thrive in the new normal it will have to innovate and be agile.
This year, real clarity about your business and your customers will be key.
Claire Kinloch is CEO at strategic consultants Genoa Black
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