Managing is relatively easy when all is going well and for nearly a
decade most chief executives, along with their organisations, have probably
been coasting on the booming economy. But with signs of recession in the
offing, you need to be ready and able to manage your organisations and
employees through the economic turbulence ahead; 'to ride the tiger'. After
all, it doesn't follow that the skills that make you a successful
'peacetime' leader will translate well when the business world goes to war.
The warning signs of trouble ahead are usually obvious and with
economic uncertainty, come complexity, nasty surprises and hysteria -
typical reactions to these signs are stress and fear. They are primitive and
often intense emotions that can harm your business, affecting both your own
and your employees' motivation and abilities to think rationally. Although
you recognise that ill-judged or hasty actions can aggravate already
difficult situations, it is important to remember that we are all human.
Fear and stress are manifested more powerfully the more there is at stake,
which, as chief executive, means your reputation and organisation are on the
line.
There is a real risk of captaining a sinking ship if you do not
react to the warning signs and identify a winning strategy. Whether fear or
survival spur your fighter instinct, depending on your sector, there are two
possible directions in which to take your organisation and both mean growth.
Your sector may offer opportunities for growth in difficult times and you
can take advantage of these for your business. If your sector is under
pressure, you can still plan and manage for success, thereby growing market
share even in a receding market place.
First and foremost, you must think through clearly with your Board
the appropriate strategic path for your company, but whatever the route,
there are three key and common success criteria: Be leaders, not followers.
Invest for growth no matter which path you take. Communicate your strategy
clearly and convincingly
Chief executives must take 'the tiger by the reins' and lead their
organisations. It is important to remain calm, rational and focused, setting
an example for employees and ensuring that they are prepared to make
effective and, perhaps, difficult business decisions, such as redundancies.
They must also be prepared emotionally to cope with the inevitable turmoil.
As such, many organisations choose to recruit for the position internally
where candidates know the business inside out and can hit the ground
running. It is therefore important for organisations to identify and retain
their key human capital. Alternatively, if organisations seek the
opportunity to grow business in new directions, they may want to think about
attracting high quality people and potentially poaching from competitors.
Organisations need to be leaders not followers to ride the storm.
They need to dare to think differently and not follow the pack or come up
with formulaic solutions. Innovation is vital for growth in new areas but
also for differentiation from competitors in growing market share. Although
pioneering measures are often only thought of as symptomatic of the good
times, it is during the hard times that companies have to innovate to
ensure that they do not flounder with the rest of the herd.
No matter what, organisations must invest for growth. To maintain
business but grow market share, you should redirect investment and focus on
your organisation's existing high performing areas and products, and protect
better working practices and culture. Alternatively, when seeking to grow
business you should redirect and add investment for growth, continuing to
focus on high performing products whilst seeking innovation and market
leadership. It is important for you not only to protect best practice but
also to incorporate new ways of working.
Although it may seem counter-intuitive to spend during the hard
times, wise investments both internally and externally will help lead to
growth. Companies should take a close look at old spending habits, identify
spending priorities and be stringent on cutting back on the expenses that do
not contribute to growth. Unfortunately, cutting back on expenses, (such as
biscuits as the BBC recently did), may ring of miserliness but by enabling
the company to invest for growth where it matters, the ends will justify the
means!
Finally, it is vital to communicate and advertise an organisation's
positioning both internally and externally. Internally, this is key for
keeping employees on track and motivated. Externally, it is vital for
marketing and protecting shareholder value. Gossip can be one of the most
damaging forces to organisations, particularly at a hint of trouble.
Scaremongering becomes rife and if the wrong message spreads, it leads to
unfounded assumptions, disenchantment, demotivation and possible
resignations. Communication lines with employees should remain straight and
open, and tight control must be kept over the messages conveyed both
internally and externally.
Senior management needs to keep an ear to the ground, be in touch
with the grumbles but able to control them. Listening is therefore a vital
skill in effective communication. Managerial deafness can, in fact, lead to
the downfall of an organisation, as Barings found out by not listening to
Nick Leeson. It is therefore pertinent that trouble is pre-empted by
listening to the small rumbles on the Richter scale. Nevertheless,
communication and listening are easier said than done and many barriers
exist to clear understanding between employees and management. During
difficult times, it may appear that more pressing issues should be dealt
with before listening to minor grumbles. However, listening equips
organisations with knowledge from which senior management can make informed
decisions and devise thoroughly researched strategies, smoothing the path to
growth.
The right market position to take depends on the business sector. To
this end, it is important to understand the marketplace and the impact that
it has upon your business. It is up to you whether you choose to cage or
ride the tiger but by taking the initiative and leading rather than a
following, the battle is almost won. You must remain calm and focused and
avoid the psychological traps, invest for growth and communicate your
strategy. Keep the future in mind and you will not only harness the tiger you will be ringmaster.