WINNING IN TOUGH TIMES
Tough times that are as pervasive and as volatile as those we are living through, are caused in part by a general perception that the world, at least as we knew it, is coming to an end. While that sounds portentous, it is an end to some established status quo. In this case, excessive financial leverage that was under-regulated and companies that placed bets on the myopia of a perpetual upside.
Rationally, in the aftermath, we can all cluck our tongues and disparage the gamblers and scoundrels who have landed the world in the mess. But before rushing to unrestrained condemnation, let’s remember that Group-think is a hard thing to buck.
In a moment of rare, unscripted candor, the AIG chief said when challenged about going on a $500,000 ‘high performers’ junket AFTER needing to be bailed out, “It’s standard industry practice.” He said so as if it were a self-justifying response! And while it certainly isn’t…psychologically the push of the ‘normal’, the ‘expected’, is hard to buck.
As the dot.com bubble attested, and as this sub-prime bubble has attested, no one wants to be the first to leave the party. When enough people are caught in a feverish upside wrangle, it seems petty, or small-minded, or somehow limited, to bring up some basic realities. Even though the people who were bringing up such realities and warning us we were headed off a cliff included people like Warren Buffet and George Soros.
Also, as everyone then replaces myopia with knee-jerk panic, we have to equally beware group-think then. Opportunities come from seeing what others don’t, from placing bets that are different or made earlier than that of the herd, and from being constant in areas where others demonstrate fickleness or inadequate staying power.
So I strongly recommend that every leader, team and organization, stop aping what everyone else is doing now, and take a look at their own balance sheet, their own viability, their new and shifting competitive landscape, redefine ‘success’ for the short-term and medium term, identify the key big bets given all that, and focus passionately, urgently and imaginatively there. Leave the hand-wringing to those who have nothing more creative to do.
Fundamentals Matter Again
Aristotle was quite right to preach the Golden Mean. Any idea, no matter how sound, taken too far, becomes egregious, simplistic and borderline idiotic. This applies even to things like patriotism, courage, rationality, you name it. Patriotism taken too far becomes a potentially militaristic, xenophobic nationalism (Albert Einstein called nationalism the ‘measles of mankind’). Courage taken too far becomes recklessness, folly and dangerous bravado. Rationality extended beyond it’s scope dehumanizes love, friendship, romance, aesthetics and potentially even joy.
Sadly, in response then we tend to switch to the other extreme. Then we can become in contrast, country-hating, self-doubting or superstitious in response to previous extremes.
This has happened relative to the fundamentals of business competitiveness and success. Peter Drucker rightly forecasted that the knowledge component of all business would increase, that the knowledge component of the value of almost every business would also go up (in relative terms to say their physical assets the brand, know-how, talent, proprietary methodologies, processes and intellectual capital would become increasingly important). He said therefore the future would belong to the knowledge worker. He was right…up to a point.
We went from that to assuming a brand WAS a company, and that the stories we told about ourselves (even if we detach ourselves from the utterly spurious belief that hype, PR and self-congratulation could turn the proverbial sow’s ear into a silk purse), would transcend everything else. It was hollow, narcissistic rubbish. That such an intellectually gossamer position created a cottage industry of zealots is a tribute to our collective gullibility.
Yes companies are to a very large extent the stories that are told about them — by customers, markets, employees, stakeholders, allies and more. But the stories are hopefully underwritten by a measure of reality. If the IPhone didn’t actually wow us technologically, all the ad campaigns, and emotional connection created with customers, wouldn’t win the day. Of course, JUST having technological edge, without design, imagination, passionate representatives, consumer insight, wouldn’t do it either. So we must again beware of throwing the baby out with the bath water.
The fundamentals, the deals we can offer, the functionality, the real differentiation in the lives and aspirations of consumers and customers, will now matter and be an admission ticket to telling great stories, creating soaring design, and solidifying emotional engagement. It is just that in crisis, we go further down a business equivalent of Maslow’s Hierarchy of Needs at least initially, and need the foundation to be secure, relevant and attractive.
So let’s do make sure that part of our story is also strong, let’s put innovative priority there alongside the deployment and story-telling, and let’s make sure the fundamentals of the business whereby we deliver our proposition are unromantically good. And romance is a good metaphor here. If you arrive at a date, late, ungroomed and in tacky attire, with no thought as to venue, slipshod as to arrangements you said you’d make, your ‘inner Casanova’ has been given a much higher bar in order to captivate your date. And someone shell-shocked or going through a challenging time, is unlikely to find such carelessness ‘charming’.
Make Sure You Separate Muscle From Fat
Everyone is likely to do a measure of downsizing, cost-cutting, freezing initiatives, delaying decisions, going into a ‘wait and see’ bunker. All evidence suggests this is counter-productive. The dangers are legion.
First, what we are going through is unlikely to be a quick dip. If it were a usual six to nine month correction, indeed you can take these kinds of reflexive measures, await the next upturn and at that time rehabilitate your investments in technology, people, customers, or otherwise. But all estimates point to a prolonged, multi-year recession or at least adjustment. That’s far too long to wait in suspended animation.
Indeed, you can and should do some of this…but judiciously and strategically. If there are non-performing parts of your business, this may be the time to jettison them. If indeed your staffing is bloated, or you needed an incentive to confront non-performers, by all means take this opportunity to do so.
If like most companies you have poured money into training, and never related it back to strategic outcomes, have never tracked application in the aftermath, whittle this down and focus on those interventions that make a difference to your business competitiveness, your leadership and team effectiveness, and your customers.
If you have too many brands and some are causing losses, then despite legacy attachments, you can use this time in business history to let go, and refocus on where you can really win.
If there are dysfunctional, inefficient, costly and ineffective processes that require rework, duplication, and which impede quality results, but you were reluctant to fight the battles necessary to re-engineer or better yet, re-imagine them, this may be the time to take that on, so you emerge leaner, and fitter for growth.
However if you mindlessly slash every investment in people, their development, in servicing your customers, in upgrading your products, you will tarnish your brand, your reputation, your integrity, your attractiveness. And as this is unlikely to be a brief dip, you cannot begin such erosion and easily pull back. And once you start down that path, people realize you didn’t mean much of the high-sounding rhetoric they heard from you earlier. Everyone can do the right things when it’s easy.
So you need to sell your shareholders on not only making strategic cuts where they make sense, but also in investing to win in the medium to longer term. Selling that distinction, sticking to it, and executing accordingly, will be the essence of leadership in such times. (Don’t for example ban your salespeople from travelling to customers, as over five years, that will get you murdered, as others pick up your relationships.)
Focus on Thriving
It is very likely that some companies will not make it. There will therefore be a push for acquisitions and consolidation. Be careful however that you acquire only where there is a real strategic fit and a strong argument that you will be able to serve customers more profitably as a result. That something is ‘for sale’ is not a good reason to buy — consumer frenzy during holidays to the contrary.
Similarly, as other companies start indiscriminately cost cutting, differentiate yourself in keeping key value intact. If you have to adjust some things, discuss them with customers first, don’t just inflict it on them. Safeguard what truly matters to them, and if you have to dispense with anything, make sure those are frills. Caution: ‘frills’ have to be defined by the customer, not your internal bean counters.
As I’ve written earlier, customers are nervous too. So companies that can be a source of stability, confidence, leadership, engagement, partnership, integrity, trust and solidity for them as they get necessarily more selective, will thrive and deserve to. They will also emerge from this period with enviable customer loyalty.
The selectivity phenomenon is quite interesting. Someone said to me in New York the other day, despite the slowdown beauty salons are still full of women customers, and strip clubs of male customers. We still need oases to retreat to, of whatever type, it seems.
People are still going to restaurants, but less often, and are getting more selective. Either they want great value, or they want an exceptional experience. They may not go for as many of them, but they truly want something good (in terms of value or artistry) when they do.
This is likely to be true of vacations, car purchases, choice of advisors (lawyers, accountants, consultants), items for the home, or virtually anything else.
Rather than decrying the slump in demand or the increase in selectivity, let’s get busy being the ones they select, come back to, and advocate to others.
Teams and Talent
If you’ve shared up times with your teams, asking them to share some of the pain in difficult times is a more credible request. But either way, top talent will be in greater demand, not less. People again will be more selective in terms of who they hire, and will want the best they can get for their investment. Equally, top people will be more selective about the companies they join. As the variable financial rewards may not be the immediate selling point, they will look for companies additionally with inviting cultures, where they feel they can make a difference, where the company stands for something they admire.
At such times, teams really have to perform. There is less time to waste on infighting, numerous pass-off chains, mutual sabotage, reluctant execution of agreed priorities, turf wars and other forms of typical organizational ‘life as usual’. Therefore, getting some key teams in the business aligned, getting them to commit to some common aims, creating space for them to forge better relationships and have some critical ‘brave’ conversations, to hold the individuals within them constructively accountable, and to ensure they are energizing rather than alienating much less polarizing those who report to them, is a critical and inescapable need. The faster it happens at this time, the better.
Such teams of leaders become then an antidote to stagnation, sagging productivity, customer apathy, or slipshod delivery. Getting key teams and leaders enrolled, engaged and aligned in this way is a fundamental leadership imperative at any time — but particularly in challenging times.
When we can no longer carry on as we did before, that is an impetus to innovation. Andy Grove spoke about innovating through ‘inflection’ points. Spencer Johnson created a world-wide phenomenon by speaking in metaphorical terms about letting go of ‘old cheese’ fast and going through the wrenching but potentially liberating challenge of aiming for ‘new cheese’. John Kotter penned a fable about penguins on a ‘melting iceberg’ who had to find a new home, rather than pretending the current one wasn’t disintegrating beneath their feet.
So this is the time to look at radically new ways to provide value. The reason we usually don’t is because when times are stable and money is coming in, why disrupt everything? That is the essence of what has been termed ‘The Innovator’s Dilemma’. It is hard to be radically, disruptively innovative when things are working.
Okay, so now, let’s innovate rather than regurgitate the past (particularly not with less quality and lower service). Look for new profit pools; provide a new platform or functionality; change the way the game is played in terms of how you charge or distribute, package or price, advertise or create customer contracts. Expand the services you can offer around your core offering, so you become the ‘trusted advisor’ and can really become part of the customer’s value chain in this regard. Look at how to go for concurrent development, mobilizing all key stakeholders in your business to co-create in real time, as a way to streamline bringing a new offering from planning to reality. Unleash some rapid prototyping, go outside for innovative stimulus, partner with a disruptive pioneer….use the problems you may encounter as source material for your creativity.
Problems have within them the seeds of their solution. Our job is to find those seeds and make sure they fall on fertile soil.
Urgency of Big Bets
As you define your new ‘big bets’ for this period, create real urgency behind them. By pruning the non-essentials, you are going to be left with crystalline clarity on what matters, and how you win at this time, and in fact what ‘winning’ means. Pick a few key numbers to track, the most critical brands or services, the most crucial and profitable customers or customer types, the most abundant and promising markets.
Link rewards, recognition, promotions, inducements, and whatever else, to these big bets. Put your best people onto game-shifting projects in this regard, and give them all the champions, resources and support needed.
Ensure your key stakeholders are aligned behind the big bets, so your energies go towards delivering on them, not justifying them.
Ensure the big bets have some ‘quick wins’ identified as a result of ‘bold courageous steps’ that can be kicked off right away. Celebrate real progress in this direction, but make sure those intermediate milestones have the urgency of the final result. That is the primary reason for milestones, they are intermediate deadlines with the psychological and emotional immediacy that a longer term outcome just can’t have.
It has been said by top global CEOs that you show your priorities through your calendar. Show us what you spend time on, and we’ll show you what you value.
As a leader, your calendar should reflect, based on your function and role, these big bets. It should also showcase the need to overcommunicate at this time, and the priority of team engagement and customer and/or stakeholder engagement (again based on your function and role). It should show that you are spending time involved in key projects, and stimulating or spearheading necessary innovation or renovation. It should NOT highlight time spent on bureaucracy, mindless admin., endless meetings, or butting heads with colleagues.
Reconnect With Life
Make sure you keep your life perspective. Wake up grateful, try to go to sleep that way too. Many of us have lives that are blessed, even if buffeted with some temporary difficulty.
If you are lucky enough to have people you love in life, spend more time with them, connect more deeply with them, celebrate not through being materially excessive but as much through greater intimacy and being more ‘present’ for each other. Give emotional attention to each other and everything you do will have greater piquance and appeal.
Pick the joys and pleasures that really matter to you, safeguard them, and enjoy them. Focus on those that really pay you back in terms of energy and zest.
Eliminate a few non-essentials, just like your company will. Take good care of your health. Read a few more books, retool yourself for the time ahead. Be there for neighbors and friends. Don’t contribute to the nay-saying.
It’s time we as a world cleaned up our act: financially, environmentally, hopefully militarily, and stopped indulging in ‘magical thinking’ whereby we think if we ignore problems, they will go away. They don’t. They just escalate. The opposite of that is ‘leading the future’. Whereby we meet crisis early, and help transform it into a way forward. That is the very essence of leadership. It takes emotional vitality, compassion, courage, resilience, imagination and perseverance.
Take a stand for leading the future. And don’t undertake whatever you’re facing alone. Do it together. Crisis also inculcates community. If we can nurture and even rejoice in that community, many of the most emotionally draining challenges that dog us during challenging times are on their way to being potentially transcended.
If we can work on growing up together emotionally, attitudinally and paradigmatically, we have a far better chance of growing through this time and perhaps even remaking it.
Let’s help lead each other in that direction!