RecessoStratoMatic
Easily the most popular topic coming across my inbox these days is advice on how to conduct business effectively during the biggest recession anyone in the current workforce has ever witnessed. Every newsletter, every e-magazine, every spam (even the virility offers) have a connection to weathering the economy. Isn’t this a great world we live in where even when we are in the financial crapper we can make money off of it?
Therefore, I think it would be irresponsible of me if I did not contribute to this important topic and offer you my advice on navigating the turbulence. But I am going to up the ante and not just give one idea for how to be successful, but offer four different strategies for you to choose from. It is a veritable cornucopia of strategic advice.
To make it easy, I am going to offer up a single name for each strategy to make it easier to decide which one will fit best for your organization. They are: Trim, Sell, Love, & Change.
Trim
Without question the most common strategy, and the knee-jerk reaction to a troubled economy is to figure out ways to cut costs to match the projected loss in revenue in order to remain cash positive or at least minimize the red ink. If you own an auto manufacturing company, you are probably thinking along these lines right now and I would probably agree that it is a good idea. But this strategy does not have to follow a slash and burn policy. Trimming can include the concept of using a tough time as a sound reason for driving out some bad things.
The founder of one of my past employers, Ken Olson of Digital, was often quoted as saying that success hides a lot of sins. When things are going well you can get away with dumb things. Well, this is your chance to drive out the dumb. Chances are high that you will cut out some stuff that wastes money. I have been working with a client that had two different groups doing the same thing. They not only were redundant, but also often in conflict. The cost was high, but when times were good and everybody was busy, they got away with it. That ended about a month ago and the consolidation did not cause a layoff, rather it liberated some folks to do more productive work for the company.
Sell
When I started out my career decades ago at IBM I was given a small book that offered a bit of an overview of the company history. I read it out of obligation, but one passage has stayed with me for a quarter of a century. IBM, at the time selling nothing more sophisticated than typewriters, faced down the Great Depression with a different strategy than the rest of their industry. They doubled their sales force. You can question the strategy, but you cannot question their results.
I believe that it is possible to sell yourself out of a recession. Adding feet on the street is one approach, but an expensive one. You can also add feet on the phone, which is a lot less expensive. You can expand your geography or market segment, which is a bold one. Or you can move up a product release, which is even bolder. Using muscle to get through the recession is a riskier proposition, but if you have the confidence it could put you way past the competition when the cycle turns. And the cycle will turn.
Love
One of the lines of advice that have been consistently coming across my inbox the last few months is all about showing the customer more love. When it is 1:45 AM and last call, love related behavior can be that of desperation. Love does not have to come in this form, but one version of cozying up to the customer is offering up deals. Give a two-fer or circulate some coupons. Sweeten the deal to entice activity. I don’t think that this is a true form of love, just a fast path to poor margin. On the other hand, if you are swimming in excess inventory, maybe it is for the better. The downside is that it cheapens the relationship. If you do it too much you train your customers to expect it.
A better form of love is attention - better service, a renewed focus on relationship quality, extra visits, proactive focus on needs, perhaps even some new extra-loving services. Show your customers that you care and reward their loyalty with your affection. This seems dopey even to me as I type the words, but the reality is that I know it is effective. Even just the act of calling your customers and asking them what would help them out right now is a great act of love. Hey Valentines Day is coming – maybe you still have time to crank out a campaign…..
Change
For those of you who know me it may not come as a surprise to hear that this is my favorite of the four strategies. You have all heard the saying, “when the going gets rough, the tough soil themselves and have to change”. Well, now is the opportunity for a new outfit.
One of the things that I know about the dynamics of organizational change is that there are certain conditions that enable making significant changes easier. A crisis is the most extreme of those conditions. But if the world offers you lemons, I say make lemon daiquiris.
This strategy takes elements of the other three approaches and pushes the envelope. Use the opportunity provided by the downturn to change a part of the organization that has become a proverbial millstone. Use the volatility in the marketplace to test out an expansion into a new service line. Offer your best customers an opportunity for a new level of intimacy based on their specific needs. Whatever. But, if you have an idea that you have wanted to try out, but were hesitant, this is absolutely the time – your employees, your customers, your board, everybody is primed for change right now.
Good luck with whichever strategy you choose, but be aware of one thing. Of the four strategies offered above please note that there is one specifically not proposed. Doing nothing as a strategy seems like a really bad idea to me right now.