By Paul Plotczyk, President, WSA
We can no longer pretend that the world is as it once was. Cash flow is tight. Markets are in turmoil. Layoffs abound and employee morale is at an all-time low. Now is the time to question the practices, methods and processes we use just because we've always used them.
No Sacred Cows
Successful companies, particularly those that have enjoyed a relatively benign market, find it extraordinarily difficult to reinvent their business models. As challenging as this time of turmoil certainly is, it does create an opportunity for change: an aggressive attitude, bold action and fast reflexes are required - which often means making a break with the past.
We have come up with the Top 10 things to consider to before unleashing your Big, Bold Fast response to these challenges times. We actually have thrown in 5 extra tips because in times like these we didn't think 10 were enough.
Top 10 Tips + 5 More
- Cash is still King. Liquidity: it is the life blood of every organization in a severe downturn. Collect it. Hoard it. Sell unnecessary or unusable assets at fire sale prices. Offer more discounts to customers who pay early. Be creative. Don't wait for a bank or Washington to bail you out.
- Face reality. This is not the time to indulge in wishful thinking. Bite your tongue if you hear yourself say, "Things will be back to normal soon." We all know that the future is still a mystery, but you can things will not be the same again - ever!
- Get accurate information and act on it. Ask your top leaders, "How bad is it?" and "How bad is it likely to get?" Listen, discuss, and then act quickly and decisively. Identify those things which can be done immediately and do them. Recognize that some things will take time to sort out but you can make the sorting out process a priority.
- Cut your salary. If your cost cutting involves layoffs and/or wage reductions, reduce your salary by 20-25%. That will send a powerful message to shareholders and employees. Also, it will make you part of company folklore!
- Cut once, cut deep. This is probably the toughest decision any leader has to make. We all know that job loss creates ripples of emotional turmoil in people's lives. It takes a heavy emotional toll on all - as does waiting for the other shoe to drop. Don't set your organization up for a slow, painful decline. Instead, position it for a remarkable turnaround.
- Expand your customer base. Competitors may have taken their eye off the ball, cut back on their services or are spending more time naval-gazing in "paralysis through analysis" and not attending to customers. While your competitors are faltering, this may be an opportune time to solicit new customers.
- Buy another company. Cash-strapped rivals may be ready to listen to your offer. And they may be willing to agree to some very favorable terms that could even strengthen your balance sheet. However, now is not the time for shoddy or cursory due diligence. This acquisition will be around for the long term!
- Hire more good people. Competitors may not be ready to sell, but their employees could be very anxious. A rival who typically keeps information close to the vest may have created gut-wrenching anxiety for employees. They may be changing their business model and not telling their employees how they will be affected. Hire away their best people and you may even get a few new customers in the deal!
- Ask your employees for help. Ask everyone to identify 3 to 5 actions they can take immediately to conserve cash and/or lower costs. You may be surprised at what turns up.
- Decrease your product or service offering. Lower your prices and find ways to increase efficiency. Be bold. "Simplify your mix,"as they say in the retail world. Focus on your core business. Sell, close, discontinue, abandon products or services that do not fit. Now is the time to "stick to your knitting."
- Innovate. The same employees who came up with ideas for saving cash and lowering costs may have some great ideas for new products or services that you can roll out quickly with a small budget. This could position you well for the post-downturn future.
- Step down. If your picture could not be found in the dictionary next to "willing to force radical change," "tough as nails" and "inspirational," then it may be the right time for a change of leadership. You may have been the right leader at the right time in the past, but as one of our military clients has said, "You can't fight a war with a peace-time General." Remember, there are no sacred cows, not even you.
- Communicate. Everyone with a heartbeat knows we are in a recession. Explain in non-technical language the effects of the financial crisis on your company and what your plan is. Make sure your employees grasp the urgency of the actions you are putting in place and the expected outcome. They also need to know that there will be more to do, depending on the status of the global economy over the next year or two.
- Be tenacious and patient. You didn't get into this position overnight and you won't get out of it overnight. Think through the various scenarios,
- Re-read our previous article, 4 KEYS TO SURVIVING THE ECONOMIC MELTDOWN. The 4 Keys are:
- Get the Right People on the Decision Bus
- Get the Right Information
- Take Swift and Bold Action
- Monitor and Measure Results
One key element of Step 1, Get the Right People on the Decision Bus, entails forming an agile, quick-acting Action Team that can instill a sense of urgency, gather the right information and suggest specific prioritized actions - without weeks of study!
Virtually all executives know that in crisis, they are at their best when they acknowledge and leverage the expertise of a few, trusted individuals. Get the right people involved NOW!
We suspect that no one would disagree with the advice offered in our Top 10 + 5 list but realize that applying these ideas to your real world situation can be very challenging. If you would like to discuss how to apply the principals of this article in your organization please contact me at 781-343-4005 or paulp@wsa-intl.com.
About the Author
Paul Plotczyk has previously been a Trustee of the U.S. Justice Department for Chapter 11 bankruptcies, and was a principle in the Business Performance Group a management consulting firm specializing in working with financially troubled organizations.
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