We've received a lot of confused and overwhelmed questions on what to do to manage the turbulence of the current administration change and efficiency efforts. While there's no "one size fits all" answer, below are thoughts and insights to help you lead your teams through the coming months:
Understanding New Budget Directives
One of the most immediate and significant directives impacting the defense sector is Defense Secretary Pete Hegseth’s instruction to identify $50 billion in cuts to fund new military priorities. While it is not yet clear where this funding will be reallocated, this shift could be an opportunity for emerging technologies and innovative solutions. If your business offers cutting-edge capabilities that can increase efficiency or provide strategic advantages, now is the time to ensure your value proposition aligns with the shifting landscape.
Focusing on Mission-Critical Activities:
Organizations should prioritize efforts that directly support their agency’s core mission. When budgets tighten, agencies will focus on maintaining critical operations and reducing discretionary spending. Aligning your offerings with essential programs and demonstrating a clear return on investment will be crucial in securing and maintaining government contracts. Make sure you can communicate your value proposition as an imperative, and mean it.
Cost Savings and Efficiency
With efficiency efforts at the forefront of federal restructuring, your organization must integrate cost-effectiveness into its narrative. Demonstrating how your technology, services, or processes reduce costs while maintaining or improving mission effectiveness will help maintain relevance. Agencies will be more inclined to work with partners who offer lean, effective solutions that align with their cost-cutting mandates.
Adapt to Workforce Restructuring
Federal employment changes, including potential layoffs and hiring freezes, could significantly impact agency operations and employee morale. This restructuring may extend beyond direct agency roles to federally funded programs such as SBIR. Programs like AFVentures rely heavily on engagement from program offices that are often already understaffed. The federal appropriations process funds not only the technology but also the personnel involved in executing these programs. SBIR, and other bridge programs only support the technology development, making it an additional duty for personnel endorsing and supporting your efforts.
As personnel reductions take effect, program offices may struggle to provide additional support beyond their core workload. This means companies reliant on SBIR and similar programs may experience delays or reduced participation from federal counterparts. Stay focused on maintaining positive relationships, and be open to other means of funding.
Consider Culture
For larger companies managing multiple federal programs, this is a pivotal time to assess whether your internal culture aligns with the efficiency and innovation demands of national defense. Organizational behavior plays a significant role in how companies' weather change. The most resilient organizations are those that proactively foster cultures that adapt to shifting requirements rather than react defensively to them.
Think about the behaviors, decision-making processes, and adaptability within your teams. Are you structured in a way that promotes agility? Do your employees feel empowered to innovate? Company culture is a strategic tool—it can be intentionally shaped to not only survive change but to thrive in it. If you’re interested in deeper insights on how to align your culture with upcoming shifts, reach out directly.
Have a Resiliency Plan
In times of uncertainty, maintaining operational stability is key. Organizations should develop strategies to ensure continuity despite budget constraints and policy shifts. For small businesses, this may mean diversifying revenue streams and leaning into commercial pipelines to balance out potential turbulence in federal funding over the next 18 months.
Continue to monitor the broader economic implications of these federal shifts. Changes in federal spending will impact various industries, potentially influencing capital markets, procurement strategies, and long-term planning for businesses engaged in government work.
A major appeal of federal engagement is the stability of federal contracts and funding. The current upheaval is causing stress across those who are established in the market, and may be raising questions with those in the middle of the arduous task of becoming so.
I believe we will reach a new normal that will include faster pathways to success. That said, I believe it will be a long and difficult road to get there, and there will be irreplaceable losses in the process. If you’re a business leader struggling to decide your next move – feel free to reach out.
As always - we’re cheering you on.
Your Fan,
