ENGAGING HUMAN PERFORMANCE TO DRAMATICALLY IMPROVE STRATEGIC BUSINESS RESULTS
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July 2009

BEING UP IN DOWN TIMES

I was about to put inverted commas around the “up” and “down” in the title. But I’m writing from the Shaw Festival (an annual theater, wine and walking pilgrimage in the picture-perfect Canadian town of Niagara-on-the-Lake). While here, I recently came across Shaw’s revulsion for gratuitous apostrophes and quotation marks. He called them “uncouth bacilli”. Of course had a modern journalist been covering that, the headline would have been, “Shaw slams apostrophes”. Everybody is slamming something or the other these days. But, I digress.

We’re in for a long haul of corrections, challenges and revisions. As one writer has opined, this is the equivalent of what the Alps are to the Tour de France. They are punishing times, but this is where champions are separated out from the also-rans. This is where those who were once leaders of the pack fall away and those with the reserves, and that Promethean fire within, blaze forward.

I have written elsewhere that since a crisis is upon us, we had best stop fighting the reality. We can have a problem (and that we can engage with, solve, respond to, outgrow), or we can have a problem with the problem, and then we’re truly stuck. Then we succumb to despair and temper tantrums, rather than utilizing the crisis imaginatively. The difference that makes the difference between companies will be based on who emerges with the best return on crisis (ROC).

It’s Global

The challenges and rip tides are being felt everywhere, but not in the same way. Nations like China with a high savings rate are sitting on piles of cash. Nations like the United States have consumers who are acting counter-cyclically. Normally you save in good times and spend from those savings in lean times. That’s part of what helps shorten recessions. However, this time, in the US and Europe, people are having to save during the recession, which prolongs it, and extends it. Therefore being aware of things of this ilk, companies have to craft strategies responsive to these realities. And these will be different in different parts of the world. Chinese consumers need more credit cards, and US consumers need more sane credit with less predatory terms from their own credit card companies, for example.

But equally marketing messages will be different. Products, packaging, payment terms, benefits and features, all of have to morph and evolve. I am not sanguine that the message by the Dubai government on a recent Emirates flight saying “Forget the recession, go shopping!” will resonate particularly well with a lot of people. That type of myopia won’t be helpful. The eerie echoes in the empty shopping malls in the once booming Emirate suggest that new strategies are needed to restore vitality.

We Have Ignition

Here’s a chance to embark on any and all changes you’ve ever wanted to. I’m amazed that some companies have chosen to freeze like deer in the proverbial head-lights.

Any change expert worth their salt will tell you that you have to create a rationale for change, a sense of urgency, a burning platform, some catalyst. If not, it’s hard to get the organization-wide support for a wrenching, even if ultimately beneficial, change.

Okay, here it is! And we’ve all got the license! So instead of targeting the ending of fruit deliveries, or telling people they can’t travel to see their teams and customers (hardly bright at a time when you want engagement and customer loyalty!), pick those improvements that will really drive down costs, amplify productivity, jump-start flagging innovation (R&D budgets among companies that do well in downturns have historically been found to, counter-intuitively, go up), remove laggards, acquire top talent that may be on the market, kick-start dormant but critical projects, eliminate stifling bureaucracy, re-energize teams central to our success, reconnect with customers, dismantle key silos, improve collaboration across key interdependent business units. Tackle one or more of these areas that will have the highest impact and are most do-able. Build momentum and see if this can’t be the period of adaptive breakthrough. Why not? Why hunker down and bunker down and thereby lose the creative moment, and aggravate panic and downward spiral thinking?

Survive and Thrive

Such periods tend to be periods of consolidation. Companies are wiped out. Those that survive have a bigger share of the market, or niche, or opportunity once the economy starts growing.

I mentioned we’re in Niagara-on-the-Lake. We’re friends with the owners of Classic Cars here. They’ve continued to thrive and extend their services from winery tours, to transport for seniors, to airport drops, to London cabs, to wedding parties in vintage cars or Limos and more. They’ve set up packages with partners throughout the region. All around them, competitors with dodgy drivers, uncertain standards of hygiene, lacking any initiative or a service mindset or heartset for that matter, have closed down. Even good companies, without imagination and edge, have found it hard to be profitable. But these guys thrive, and deserve to. They exhibit what the founder of Maersk, A.P. Moller called, “constant care”.

That said, every company tends to think they are the ones that will survive. And they can become antagonistic to any input that suggests that they are heading in the opposite direction (see the last newsletter, “fear of feedback”). And so they over-invest in things that are peripheral to their business, their own style gets more swaggering and magisterial, naysayers are shut out, politics and infighting predominate, and thus giants disappear into the sands of time.

So indeed, it’s a great time to distinguish yourself. But that means a renewed zeal as to the core of what you offer, humility in the face of contrary facts – though always with the courage to face them and the imagination to transcend them, and rallying and engaging your team to execute relentlessly and consistently where it matters most.

New Times, New Responses

Everything is to some extent cyclical. But dividends in the fourth quarter of 2008 were cut more than in any quarter since Standard & Poor’s started keeping track in 1956. The Bank of England has cut interest rates to their lowest levels in the Bank’s 311 year history! Even China pumped in close to $600 billion in stimulus spending, a new adventure for the People’s Republic to be sure.

Equally though, not all panic made sense. Some in mainstream personal care companies in businesses like soaps, shampoos, laundry, went into a galvanic panic as if they were issuers of sub-prime mortgages or owners of luxury condos in Florida. People are still buying these things. In fact, they haven’t downgraded as much as expected here either. People tend to protect small mercies in their life, and getting the shampoo you really want, even if it’s pricier, may be a small dignity we opt to afford ourselves.

In the restaurant world, people ARE spending less. But we’ve got to be careful. The financial testosterone we were all on is unlikely to be replicated. So if restaurants that were used to people buying $500 bottles of wine, benchmark against that, they will perpetually dissatisfy their own expectations of success. That was froth, that was the Gold Rush. We’re not going to see it’s like for a while. We have to re-set what “success” means in light of more sober, but hopefully more sustainable realities.

The legendary hotelier, Kurt Wachtveitl, a good friend, stepped down from his extraordinary stewardship of The Oriental Bangkok after some 42 years as General Manager. In addition to this meltdown, Thailand has been buffeted by political unrest leading to airport closures, street strikes and more. Despite that, the Oriental was doing quite a bit better than its competitors, though being far below where it had been in 2008.

Kurt rightly told his Board and shareholders, “We’ve been around for over 130 years. We can panic because of these results, cut corners, and while we’ll do a bit better, we’ll no longer be The Oriental (despite Mandarin Oriental’s attempt to re-brand it, for those of us who know it, it’ll always be The Oriental). So we can jettison 130 plus years, or we can make our peace with this one. And then we can take aim at the next 130.”

They agreed…thankfully. In fact, the reason The Oriental was still 30% ahead of many of its competitors was its cadre of return guests. We are among them. And we return because of the exquisite, reliable specialness of the place. If we return, and don’t find what we come back for, we’ll stop returning. And the secret weapon of The Oriental – guests who love it enough to come despite political tumult and downturns – will then be gone.

Develop Yourself

As I wrote in LIBERATING PASSION: HOW THE WORLD’S BEST GLOBAL LEADERS PRODUCE WINNING RESULTS, it is clear that talent may be a natural proclivity, but it is forged and fulfilled through what researchers are calling “deliberate practice”.

Its essence is you break down a skill to key elements that can be practiced and consciously improved, and which together contribute to an overall performance. And in these areas, you set yourself specific challenges, things outside your current abilities, which stretch you intentionally.

Companies fabled for developing leaders like GE, Microsoft, Pepsi, P&G, give people challenges through job assignments that are “just” beyond their current ken, and give them a chance to practice developmentally with the right mentoring and guidance so that their practice is fruitful.

During this recessionary downturn, all sorts of leaders and managers are placed in that position naturally. And smart companies will avail of this to offer them adaptive challenges, and commensurate rewards should they pull off the performance and the results. The ancillary benefit will be that this will enable and perhaps even fast-track their own development. They will then have grown into larger and more capable leaders, and their development, even if hard-won during this debilitating crisis, can then be amortized over many years in various additional opportunities and contexts.

A.G. Lafley of P&G credits having to handle the Asian crisis, for example, as a crucible for the development of the leadership skills and style he has displayed at the helm since. Jack Welch will say the same about taking over GE at a time when US businesses were being pounded by the Japanese.

During this opportunity, we can have numerous leaders take on unfamiliar and stretching challenges. But for this to work, they have to be mentored by seasoned leaders and additionally, judicious external coaching can help (see the May newsletter for more on this). Essentially leaders have to become clear on what they most need to improve, and how to practice it in a way that meaningfully stretches them. This applies in terms of skills, aptitudes, attitudes, behaviors and more. And leaders at all levels need to be challenged to aim for more over this period, not less (eschew using the downturn as an excuse for perpetuating a plateau). This has to be Grad school not kindergarten. Where else will leaders show their mettle, their ability to strategize, execute, build teams and grow other leaders, connect with customers and carve out new value space, build coalitions and invent a better story to make real, than in this once-in-a-generation challenge/crisis/opportunity?

Take The Times

When Margaret Fuller announced in an apparent epiphany, “I accept the universe!” curmudgeonly Thomas Carlyle is alleged to have retorted, “By gad she’d better!”

Indeed and so had we better do like-wise.

If we take these times and decide to learn from them, leverage them, re-imagine our businesses, reinvent our leadership capacities, and follow Peter Drucker’s injunction to “create a customer,” we’ll thrive.

Or if we recoil from the challenges, and await normalization (whatever that means), or some upturn to ride the waves of, we’ll miss this opportunity to dramatically differentiate our businesses, our results and our lives. We’ll then be one of the pack, no more.

Let’s not do that. Now more than ever, let’s decide to maximize this experience, this involuntary investment. Let’s wring this crisis for every benefit, every opening, it can yield. Let’s lead!