It’s Time to Make Lemonade!
For the last two and a half years, we in the business community have been operating under conditions of extreme uncertainty in highly volatile markets, and there is no credible sign of a return to our previous, altogether more comfortable circumstances. We have watched customers, competitors and suppliers go out of business in unprecedented numbers, seen massive transfers of control from the private to the public sector, and noted with some alarm the ever-darker predictions of many economists and observers that we are at sustained risk of widespread economic disaster…
All this, though, is now old news. There have been so many economic, political and social train-wrecks in the last 30 months that they no longer have the power to move us, except when they are truly outlandish. What remains are two key questions: What have we learned, and how will it help us succeed?
What have we learned?
In my day job, I have the unique opportunity to evaluate the lessons our own business hands us, and those we are called upon to help our clients learn. There are, of course, dozens of potential themes – but here are the three that I find most significant:
(i) Only People Will Get You Through
If there is a secret sauce to success in the current climate, it can be found in your people. These difficult times place exceptional demands upon them in both their professional and their personal lives, and there is nothing like knowing, and having your customers know, that your people will go the extra mile to ensure successful outcomes. Whether in the front line of delivery or in the back office keeping the wheels on, great people and the high impact teams they form are critically important to survival and prosperity.
(ii) Marketing Really Matters
Yes, at the end of the day, marketing REALLY matters! In a time when your customers are struggling to find a dime for a phone call, getting them to focus on your message long enough to make a buying decision is incredibly difficult, even if your message is that you can help them find that dime! It takes smart marketing to get the initial attention that puts prospects in the pipeline when times are tough.
(iii) Frozen Processes Will Ice Your Business
Waiting out rather than reacting to the recession has killed thousands of businesses that looked like sure winners up through mid-2008 – so the third key to making difficult times work for you is adaptability and agility. Keeping on doing business in the same old ways only guarantees that you will lose business to competitors who are reinventing their approaches in recognition that frequent high-impact change is the new norm for trading conditions.
How will it help us?
These lessons will only help us if we can overcome the decision paralysis that is affecting so many of us right now, and actually make and follow through on impactful, strategic decisions. There is always some horizonal event, usually set one to two quarters in the future, that looks like it will signal a turning point after which there will be more certainty and a new consensus on direction – right now, the US mid-term elections are the excuse I’m hearing most often for doing nothing. Get over it! Your market isn’t going to ‘improve’ any time soon – so you need to improve your ability to compete in the market you’ve got!
First, People: The worst thing you can do right now is to start thinking of your people in abstract terms (like, for example, headcount), regarding them as a commodity because high unemployment leads you to believe that they are readily replaceable. This is the road to ruin, because intangible institutional knowledge, cultural affinity and integration within a team are not commodity attributes, and you need them now more than ever. Additionally, high turnover will result in increased recruitment and HR costs, and will erode loyalty across the board. This can become a death spiral quicker than you would believe! Instead, look to invest in people, focus on creating high performance teams, consider sharing a higher fraction of your total margin with team members through performance-linked incentive schemes, and if you find you do have to let people go, do so with sensitivity and dignity. Consider building strength by selective recruitment of high-value contributors whose presence will help motivate the whole team. Above all, trust your team, share as much information as you can with them, and actively solicit their input on any specific challenges facing your organization.
Next, Marketing: The second worst thing you will ever do is to reflexively slash your marketing budget in a misguided attempt to reduce ‘overhead’ costs. In difficult times, you need to be spending every cent you can afford on marketing – and the trick here is to figure out how many cents you can afford. The right mindset with regard to marketing spend is to optimize it in support of specific business objectives – and you may be surprised to find that this actually results in increasing your marketing spend! The key is to connect marketing activities (and dollars) directly to measurable objectives – customer retention, new customer acquisition, account value expansion, market share improvement – that are meaningful to your business.
Finally – Processes: Now is definitely the time to review every aspect of the way you do business, because it is certain that wasteful, inefficient or ineffective processes have become institutionalized and are costing you revenue, profit and customers. Whether it is petty bureaucracy in the back office or a compulsive aversion to risk in the front office, the value leakage you will find will more than pay for any changes you need to make. Three key concepts will help you focus on improving your processes: (i) Do I need to do this at all? (ii) If I must do it, how can I do it faster, better or cheaper? (iii) Could it be done using technology instead of people? (and no, this last question doesn’t contradict the ‘people’ focus above – if it can be done by technology, it should be done by technology. People should only be asked to do things that only people can do!)
The Bottom Line: Unless you make a solid commitment to continuous, agile adaptation, you may not make it through the next 30 months. Recruit, invest in, retrain and retain the best people you can find; spend smart money on marketing; and, take a hard look at every aspect of your business through the lens of faster adaptability, improved cost and revenue cycles, and tighter engagement with your customers. Or, as many grandfathers (including mine) have told many grandchildren – when life hands you a basket of lemons, it’s time to make lemonade!
Copyright © 2010 Mark H. Robinson All Rights Reserved
Mark – excellent points, especially #3. Too much thinking around process is based in the historical ways things have been done and not in what is the best way that they can be done given the current state of technology and the current state of the global business environment and labor market. Business and governments need to think how they would organize if they were “starting over” but couch the “clean slate” approach with the reality of needing to migrate their existing environments to a new and improved operating models. Too often those undertaking this task over-engineer it and either end up doing nothing or trying to do too much and not getting enough done. Success at this requires a combination of vision (what are they key things that make my business better than the competition and valuable to my customers – focus on horizontal specialization) and execution (how to get from point A to be point B as efficiently as possible with as little pain and suffering as possible but recognizing that some amount of pain and suffering is inevitable and healthy). The bottom line is that much of what western business and governments do today is a waste of time and resources and performed because of legacy ignorance, skewed special interests or in response to deviant non-market forces (like governments). While this is nothing new the risk of adhering to this model continues to grow as the global market becomes more competitive and the cumulative regulatory and cost burden of the socializing of western markets and governments continues to expand.