Hate the budget? Turn the problem into an opportunity to growth - Sunday Times

Retailers fearing the impact of the higher costs imposed by Rachel Reeves might feel like they’re doomed. But they should stop grumbling and act

Scrolling through the TV channels the other night, I stumbled across an old episode of Dad’s Army. Captain Mainwaring was leading his battalion into yet another mishap, at which point Private Frazer solemnly declared: “We’re doomed. Doomed, I tell you.”

It always makes me laugh. But this time I was reminded of the latest salvo from Britain’s biggest retailers, expressing well-founded fears about the economy. More than 70 companies — including Asda, Marks & Spencer and Tesco — wrote to chancellor Rachel Reeves about the damaging impact that her national insurance and minimum wage increases will have on profits and prices. Costs, they say, are going to increase by £7 billion a year.

I also object to those changes made in Labour’s budget, but my attitude is different. We’re not doomed. We’re just in a tight spot and need to do everything we can to get out of it.

The collective mindset of British business, at least the one portrayed in the media, feels like an echo chamber of crisis after crisis — banking, Brexit, Covid, the cost of living and now a business-unfriendly budget. Well, the government is not backing down, so we should stop grumbling and act.

To turn problems into opportunities, you need resilient leaders. And we have them. The signatories on that letter are people of enormous skill, tenacity and vision. So here’s my first piece of advice: now is the time to show the country some of that can-do mentality.

There has never been a moment in my career when external problems have not threatened to hold back business growth. Which is why my philosophy is that out of every problem emerges a bigger opportunity. You may not see it initially, but it’s there.

One of my best former chief executives at HomeServe used to say, “Let’s not waste a good crisis” — and, during the drought of 1997, we had one. The late John Prescott forced water companies to provide a free repair service for underground pipes and I immediately thought HomeServe would collapse. Why would anyone now buy our insurance?

And then I talked it through with my team and external business partners, one of whom got me thinking about pivoting towards a potential solution. We developed upgraded cover that would reinstate people’s lawns or flowerbeds if and when they were damaged by pipe repairs, as well as any internal work on the pipeline that might be required. Within two weeks, we were communicating these changes to every customer of the water companies we worked with. The result was one of the fastest periods of growth in signing up new customers.

The despair of Private Frazer, played by John Laurie in Dad’s Army, has been echoed by retailers through crisis after crisis

Navigating the storm, containing damage, pushing for recovery and building resilience all require strong leadership. But they also require something else, which is the second piece of advice. Seek the guidance of other people who can provide multiple perspectives — diverse voices who can help uncover new approaches and stop leaders falling prey to their own biases and unthinkingly repeating the same old strategies.

Leaders throughout an organisation need to be more adaptable, flexing according to the situation. The more people you can turn to, the easier it is to shift priorities and forge a new direction. That means becoming an active listener so other team members’ views are built into your decision-making.

Third, alongside this listening exercise, do some grass-roots research among customers, suppliers and your network. Analyse your cashflow, then assess where and how consumer behaviours are changing and how you can satisfy needs even more fully. The subsequent plan you come up with doesn’t need full consensus; instead, set it out with the execution strategy and get buy-in from those closest to you. And ensure that plan is not too many steps away from what you’re currently doing. You want evolution, not revolution.

Fourth, put a strict time limit on this strategic reassessment. In 1997, it took us two weeks. Today, I would be planning for January 1. After this weekend, there are only five more Sundays until 2025. While the rest of the company is focused on Christmas, set up a war room in the building and second a high-calibre team to think of nothing else but how to weather this storm.

Next, ensure teams are singing from the same hymn sheet. Hopefully you’ve got a strong enough workplace culture that people feel motivated and inspire each other, and open, constructive dialogue is instinctive.

Then you need to start taking tough decisions that will affect colleagues. Many businesses are looking to cut jobs to offset projected profit losses, while there may be less cash available for investing in growth. This could be just the right moment to embrace AI. Most importantly, act quickly and be decisive. Saying goodbye to colleagues who don’t have the right attitude is easier than parting with those devoted to the job — but, with good support, they will find a new lease of life elsewhere.

So my advice is not to obsess about those external factors. It’s only a crisis if you let it become one. If you take decisions from a place of confidence and enthusiasm, rather than one of fear and trepidation, you will emerge from difficult times far stronger.

The only certainty in business is that there are always external problems waiting for us around the corner. The key is to not let them affect your pursuit of growth. Face up to the headwinds and let your rivals mope that we’re all doomed.

Richard Harpin is founder and chairman of HomeServe and Growth Partner, and owner of Business Leader