3 Priorities for Cannabis CEOs in Turbulent Times
“I know of no case study in history that describes an organization that has been managed out of a crisis. Every single one of them was led.” Simon Sinek
2023 could be the end of the line for many cannabis firms. This doesn’t have to happen if the company has bold, focused and sensible leaders. Its time to get down to brass tacks. If CEOs are not prioritizing these 3 initiatives in 2023, look out:
1. Smarter cost reduction
Most cannabis companies are caught between a rock and a hard place: declining wholesale & retail prices and increasing costs for key inputs like fertilizer and packaging. This margin compression is unlikely change in the next 12 months. Headcount reductions will help but are often painful and clumsily applied.
Wise leaders will use a scalpel not a chainsaw to cut the fat while retaining the muscle. CEOs will prune their bloated product portfolios, bolster input cost & vendor management (e.g., centralizing procurement, vendor reduction), dump obsolete inventory and outsource non-core business activities such as IT and recruiting.
2. Genuine efforts to improve employee engagement
We are way past the time where love of the plant will guarantee someone’s loyalty and productivity. When cultural toxicity and financial instability meets a tight labour market high employee turnover and disengagement ensues.
The C suite needs the stones and persistence to make employment engagement a priority. Some proven ways to reengage workers include leadership modeling of desired behaviors & values, enhancing training schemes, promoting free flow communications across the organization and revitalizing those tired vision & purpose statements.
3. Better product Innovation
For cannabis firms of all types, growth is dependent on regularly introducing ‘hit’ products. Fickle, price-sensitive consumers want newer and better products, consistently supplied. Delivering on this imperative requires the business to correctly segment the market and maintain a deep understanding of target consumer and channel needs.
Many firms would benefit from a retooled new product development process. For example, with flower products finding the right phenotype of a genetic that delivers product/market fit can be a complex, risky 10 month undertaking. Staying close to consumer trends, truly understanding your grow environment and partnering with skilled breeders can de-risk and accelerate phenohunting.
Of course, there are other mission-critical enterprise needs such as improving governance, building brands and enhancing financial management. These should not be neglected. However, a typical CEO only has so much time and goodwill to devote to critical initiatives. For most companies in cannabis, my top three is a good starting point.
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