Setting a new course for your organization may generate some anxiety for you since there are no guarantees when an economic turnaround will be firmly in place. You may feel like it’s time to turn right… but the economy might make a few more left turns along the way and leave you as road kill.
These feelings are shared by most leaders right now. But it’s the leaders who can chart a course built around a culture that thrives on the unanticipated who’ll successfully roll through the next few years of uncertainty.
Revalidate your mission and stakeholder value propositions to give you confidence to charge forward. Google has consistently attracted the best and the brightest ever since the 2001 dot-com bust. While others retreated, Google recruited talented people who were being dropped by its rivals. Google took these bold steps because it’s kept a clear eye on its core mission of enabling search and other online services that flourish even during a market meltdown.
Your value to customers or how you need to approach the market may have shifted significantly during the recent past. Crystallize your value proposition with two simple statements:
- I specialize in working with [the typical decision maker] in the [industry and/or market segment].
- I help these people do [exactly what] to satisfy [their specific need or want] to achieve [this goal] and avoid [this consequence].
The value statement provides the solid foundation to identify your action plans. Here are a few key areas to consider for your action plan.
- Employees: Follow the Google example… now is the perfect time to find your next superstars. New hires should be viewed as an investment so you can seize the best opportunities as the economy recovers. Invite your current “A” team to play an integral role in mentoring the new crew. And get the hard decisions over with now and let your “C” team move on to help pay for your investment.
- Outsource: Still nervous about hiring? Take advantage of the large pool of highly productive talent that prefers contract work.
- Customers: Consider the unthinkable… fire a few of your customers. Many companies have under-performing customers that drain resources that could be focused on building better business with your top accounts. Some companies even have customers that cost them – not only in real dollars, but in time and resource allocation. Know where you are making money and the real cost of doing business. The old adage about selling hot dogs and losing a dime for every one sold, but you’ll make up for it in volume, definitely does not play out in the new normal.
- Brands and products: Like employees and customers, brands and products fit into basic performance models such as the 80-20 rule or a bell curve. There are probably 10-20 percent of your brands and/or products that have little chance of thriving and can be easily cut. Give the “middle performers” that make up 70 percent a good SWOT (strengths, weaknesses, opportunities and threats) analysis to understand how to maximize their return. Finally, study your top performers for their success characteristics and support needed to further their impact.
- Communicate: If challenging times require double the communications, then preparing for growth requires triple the communications. Slowdowns are relatively black-and-white communications… “money is tight and we need to cut back.” However, communications can quickly go off track as growth brings on competing priorities, nuances about shifting market opportunities and new personalities joining the company. Be sure to create the discipline of ongoing communications to all your stakeholders.
- Measure: Every company has a few prime cost and revenue measures that accurately predict the future. If the 12-month sales average dips, trouble looms. Cash for growth won’t be available if the average accounts receivable aging goes beyond 22 days. Maybe it’s simply gross profit per employee. Communicate whatever your “number” is regularly so employees are instilled with accountability at every level. The more employees understand the business, the better they are able to do their jobs and make the daily decisions required of them.
Anticipate the Unanticipated
Famed organizational theorist Karl E. Weick, business professor at the University of Michigan, coined the term “high-reliability organization.” HROs are teams or companies that succeed in chaotic environments because they focus on achieving the objective, yet can adapt quickly to unexpected situations.
HROs can be large or small.
- Oracle, the behemoth database company, concentrated its offerings first on large mainframes as its competitors chased the growing popularity of PC computing during the early 1980s. The focus enabled it to thrive as competitors battled it out in the low-margin PC market.
- Roy Velasquez was an out-of-work construction worker during the Great Depression when he borrowed $5 to buy a taxi license in Austin, Texas. Roy quickly discovered the town already had many cabs and too few passengers. But he also noticed that no cabs would pick up African Americans. So, he focused on the untapped market. Roy was rewarded with a highly loyal clientele for a business that continues today.
Oracle and Roy’s Taxi followed the same HRO principles. They kept focused on their core mission, but quickly adapted to their situations. They learned from what was going on.
A recovering economy will quickly separate HROs from the rest of the pack, a fact supported by a recent Bain and Company study that found more businesses fail after a downturn than during a recession. Why? Bain’s study discovered that many companies are simply too weak from cutbacks to easily switch back into a growth mode. Employees are demoralized and customers are disillusioned.
It’s not too late to embrace an HRO philosophy. And evolving to an HRO is relatively free because it comes down to focus and attitude:
- Trust your intuition: Don’t hesitate to shift if something isn’t feeling right. Often this intuition comes from the front line employees who can spot warning signs long before top brass. A genuine effort to solicit and consider this feedback will instill confidence among your team.
- Embrace shifting scenarios: Simply being emotionally ready for the upcoming economic shifts is half the battle. Change will happen faster, more often, and potentially more dramatically. Preparing yourself and employees at all levels that shifting scenarios are the “new normal” will reduce anxiety so you can effectively execute your plan.
- Understand the complexities of business: The natural tendency during these times is to simplify everything. While casting off inefficient processes or under-performing products usually makes sense, HROs never do so without validating assumptions. Good scenario planning that digs into the details often can uncover competitive differentiators that you would never find by simply cutting your product line by 20 percent.
These are exciting AND perilous times as the economy slowly awakens. Preparation right now is like flying an airplane. You might have a flight plan, but you’ll still miss your destination if you aren’t prepared to adjust along the way as the economic winds push you off course. But those leaders who ready for the bumpy ride up ahead will successfully land where they want to, safe and sound.