Faster Profits in Slowing Economies
You cut, slashed,
and hammered costs till your knuckles bled. Now what? Is there
another, perhaps faster, way to grow profits?
successful companies find profits grow faster in challenging times
with approaches contrarian to typical slash and burn methods. Some
of these approaches have ancient roots. It’s not the first time
organizations have encountered threats to their survival. And it
won’t be the last. But managing through this current episode may
require to you to reconsider the typical approaches we so often use.
years of management history reveals a few insights that prove
valuable in helping us thrive. These contrarian methods prove
profitable by companies using them even today. Adding them to your
arsenal may be the best decision you make. What can you do to learn
from these leaders?
Historically, economic downturns show winners don’t retrench out of
fear, but strike early. They accelerate their business by taking
advantage of the fact that now their competition weaker than ever.
But striking takes two things: strategy and passion. Do you have a
strategy? Are you sure? Studies find that most strategic plans end
up being mere tactics. Avoid this mistake by:
meeting with your staff.
Laying out your
challenging the assumptions. Does the plan show how you shall
outmaneuver the competition? Does it show what position you seek
in the competitive landscape? Or how you will exploit competitor
Getting strategy is
only half the battle. What about passion? Our brains light up when
we see something inspiring. Touchy-feeling mission statements are
out. Sagas that inspire perseverance, unselfishness and sacrifice
for the strategic win are in. It’s not a new idea. It’s been used
for centuries. But we don’t teach the crafting of stories anymore.
captured your strategy into a compelling saga?
condense your winning strategy into language that inspires
passion for the strategic result.
Then edit and
re-edit. Remember, it’s about crafting not analysis.
Hire the brave, not the desperate. Samurai training found that cowardice stops leaders from
challenging the status quo, holding others accountable, and exposing
weaknesses. Cowardice hinders decisive action by stopping the
essential act necessary to accelerate profits and survive a
recession – tell the truth.
Cowardice eats truth. Lack of truth eats profits. Telling
the truth can upset people, and desperate people don’t dare risk it.
But organizational cultures that promote bravery, and the speed of
execution that comes from it, love it. It drives accountability to
new levels. The alternative of keeping the truth at unspeakable
levels only produces collateral damage like:
dead-weight of marginally performing employees
real issues thwarting meaningful change and profitability
doomed projects far too long
organization and enhance competitive advantage by enrolling and
Group think is good.
We’ve been trained to feel that if everyone thought like us it would
be a bad thing. In some cases that’s true. But fast companies train
their employees to think alike; they train them to think like a CEO.
Do your employees
know how every decision affects the balance sheet? Field experience
finds that employees placed in simulations where they have to run a
company achieve new levels of understanding. With a balance sheet
and a P&L statement in front of them, employees realize how every
decision requires movements of cash. New perspectives forge as they
have to decide how to go to market. What price? How much volume?
Where do we advertise? Choices for growth and expansion become
visceral AND real.
these employees go back to their jobs with fresh insights on how
their actions affect cash flow. They find money. They detect waste
and inefficiencies. Opportunities for improvement surface which help
companies needing to accelerate profitability.
Say “no” to
Ancient battles were often won by knowing where to strike, and where
not to. There was an interesting story about Southwest Airlines.
Co-founder of Southwest Airlines, Herb Kelleher received a scathing
letter from a passenger criticizing how they made jokes during the
safety instructions required by the FAA. Fun is a key value at
Southwest, and humor helps us pay attention versus falling asleep
during these standard reviews. This particular passenger was not
amused. Kelleher wrote back a one-sentence letter: “We’re going to
How many times do
you try to do too much for too many? Such mistakes stretch
resources, distract strategic focus and decimate morale. Instead:
Assess what the
Return-on-Energy (ROE) is for your customer segments (how much
profit customers bring for the total cost of selling and
clients whose ROE is minimum or, gasp, negative.
“We’re going to miss you” letters.
Eventually, and hopefully soon, we’ll all emerge from the recession.
Until then, don’t hesitate to act now to accelerate your business.
Remember, retrenching and waiting for it all to pass only gives your
competition an opportunity to outrun you. Take the lead. Just
because times are slow, doesn’t mean you have to be.
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