SERIAL RECESSION SURVIVOR IDENTIFIES KEY PRINCIPLES FOR TODAY’S CHALLENGES Alan Lusty

SERIAL RECESSION SURVIVOR IDENTIFIES KEY PRINCIPLES FOR TODAY’S CHALLENGES

Alan Lusty, CEO of adi Group, a multidisciplinary engineering business, reflects on the principles he believes helped his company emerge stronger from the three recessions since he founded the businesses 30 years ago.

Like many companies, adi Group had a very different vision for 2020. Before the pandemic, we had ambitious plans to add further divisions to our engineering business and strengthen our offering.

We had the added prospect of celebrating adi’s 30th anniversary this month and I was looking forward to not only recognising our excellent teams’ contributions but also doing some reminiscing. Sadly though, the world was turned on its head by a microbe and our plans were shelved as we focused on meeting our customers’ evolving needs in a very fluid environment.

It hasn’t been easy for any of us. The human toll is tragic and we have to buckle in for the long-haul with both this sickening virus and a gloomy economic outlook. But this whole saga has given me cause to reflect. It’s not quite the kind of reminiscing I’d anticipated but it has made me look back over my last 30 years in business.

“Inaction is laden with risk. Being tentative early in a recession often leads to subsequent overreaction, with businesses cutting costs too deeply and inadvertently hamstringing their capacity to recover.”

Change is Part of the Plan

The first thing that strikes me is that 1990 was a world away from where we were before this whole nightmare began. You don’t need me to tell you how much technology has transformed society, but what it tells me is that change is constant and that we should incorporate it into our plans.

A new crisis or the next recession is only ever just around the corner. Call it the business cycle or think of it as the circle of life, but we have to accept that these things happen. The trick, as a business, is to find a way out of the labyrinth.

Through bitter experience, I can tell you that on three previous occasions, adi Group has been through an economic shock.

We were founded during a recession but, Nonetheless, sometimes the pressure to after each downturn, managed to come out do something – anything – is intense. With stronger. clients, employees and suppliers asking what

Now, you might ask whether that was more you’re going to do, it is easy to be rash. by luck than judgement, but each experience While appropriate steps will need to taught me lessons I believe remain relevant in be taken, the onus here is on the word the current climate. ‘appropriate’. There is no point in doing

Today’s economic challenges might be something for the sake of being seen to do it. unprecedented in their scale and nature but Your actions need to target the right problems the same principles apply and, if we make the at the right time and for the right reasons, so right calls, there is hope. go with facts rather than fear. Understand the Realities businesses are often the best equipped. Part of

It’s always a good idea for businesses to that could be a decentralised structure where carry as little debt as possible heading into people with specific areas of knowhow are a downturn. Some are easier to predict than empowered to make choices. others, but we are where we are, so you need Never rush to judgement. Be thorough to understand your exposure as in your decision-making, listen to early as possible, and to do that, you the ideas of others and, when you need to understand your risk, which cast the die, act with speed and means asking ‘and answering’ the commitment. tough questions. During a recession, the most agile

For example, how deep is this Choose Difference Over Discount hole and how long will it last? The contrast between a recession, “Your actions It is tempting during a crisis to start discounting but you should defined as two consecutive quarters of contraction, and the current need to target the trust in your quality. Stand by the things that already differentiated pandemic, which will define an right problems you, as people will look to squeeze era, is significant, so you need to understand scale. at the right time value out of every penny. Your people are part of the same

The other questions I would ask and for the right dynamic. Very often customers and are: How resilient are we? How long will our cash reserves last in the reasons, so go clients buy into the expertise and experience of your employees when worst case? Who owes us what and with facts rather they buy into your business. So, how indebted are we? These are maintain and enhance their skills, critical questions and the answers than fear.” where you can. Show them you value must be incorporated into all of your them and communicate as openly thought processes. and as frequently as possible. The

And then there are your clients. more you give them a clear sense of How exposed are they? Do one or purpose, the more they will pull in two make up a disproportionate the direction you want. amount of your revenue? Who might Without doubt there are struggle to pay you? circumstances in which difficult

Demand can fall across the board, but decisions have to be made about people when some sectors are more affected than others, you are trying to safeguard the future of a commercial airlines and online businesses business. However, even at the best of times, providing good examples at either end of the you need good people, at the worst, you need scale. great staff, so base your choices on who is going to be central in the battle ahead, rather Hold Your Nerve than simply on cost.

The anxiety felt by many in these History doesn’t quite repeat itself but circumstances has two classic responses: sometimes it rhymes. Every recession has its knee-jerk reaction and rabbit in the headlights own characteristics – 2008-09 looked very paralysis. different to 1990-91 – but there are principles

Inaction is laden with risk. Being tentative that apply to each. early in a recession often leads to subsequent So, if we can keep our heads, trust in our overreaction, with businesses cutting costs strengths and understand that this will pass, too deeply and inadvertently hamstringing we can engineer businesses equipped for the their capacity to recover. next crisis and a brighter future for us all.

BIOGRAPHY

Alan Lusty is the CEO and founder of multidisciplinary engineering firm, adi Group. Having established the company in 1990, Alan has driven the expansion of the firm’s portfolio of services in the automotive, food and beverage, manufacturing, aerospace and defence, pharmaceutical, and petrochemical sectors. Designing, constructing, and self-delivering robust client solutions from over 30 specialist disciplines, adi Group takes a holistic approach to sustainability, skills, and partnership. Having navigated three recessions and introduced an accredited educational platform for apprentices and pre-apprentices, Alan is champion of the next generation of engineers. The company was recently rewarded platinum accreditation in the EcoVadis ratings, planting them in the world’s top one per cent for social responsibility in business.