Right now, you need to be thinking about how you will emerge and thrive from the recession ahead of your competition. What should you focus on? Which leadership qualities do you need? How can you motivate and energise your people? To point you in the right direction, here are Max McKeown's thoughts about dealing with the waves of recession and financial crisis.
What advice would you give to leaders and managers with no experience of recession?
First, survival comes first BUT survival isn't just about cash today. It's about cash today, cash tomorrow and a story of how you will emerge and thrive from the recession ahead of your competition.
Investors, customers, and employees need answers to today, tomorrow, and what happens next. Great things have always happened during tough times.
Second, use crisis to stimulate reduction of waste, new thinking, and urgency
To what extent will lack of available credit impact on entrepreneurial activity?
Easy credit has diminished. But funds for real entrepreneurial activity are still there. In fact there's more money for good ideas because the number of people trying to be entrepreneurs has fallen due to the lack of confidence.
So governments, the task is to (1) encourage hope among would-be-entrepreneurs and (2) distinguish between the "I've lost my job" entrepreneurs and the "I can change the world" entrepreneurs.
For the investor, just remember that the best of the best are still out there. Just have to find easier ways to find them, encourage them, and improve their ideas into world-beating businesses.
How can you stay ahead of the competition in a serious downturn?
The competition is saying the same thing! So in one sense, the game is still being played. The difference is usually that the penalties for being in last place or the bottom 20% are more serious. You lose.
The way of staying ahead (or moving ahead!) is to figure out how to increase the perceived value premium of your service. How much more is it worth than you charge for it. And the answer there involves hundreds of small and big, CLEVER changes that your competition doesn't understand because they are focused on margins rather than value.
So cut what customers don't notice. Find out what they hate, what costs them time, and figure out solutions - including solutions for people facing tough times! A beautiful idea is never perfect which means that there are always ways of improving what you do that will revolutionise your offer in your customer's eyes.
Should the focus be on core competencies or innovation?
Both. But the main focus should be on using existing core competencies to innovate in ways that the customer values that move you ahead of the competition. To do that involves changing the way your meetings, planning, and execution happens so that urgency, creativity, and making a difference lead to high-energy, high-value solutions. It's not what you do it's the way that you do it.
Is technology the starting point for innovation?
No. But it has to be in the mix. Ignorance of technology is losing companies and governments serious (trillions) money. You should never start with a blank sheet of paper. Modern technology allows answers off the shelf that are many times more powerful than answers that are custom-built and designed.
Customer needs are the starting point for innovation but these need to matched to answers. It's the garbage can approach. If you have enough smart answers floating around then you will be able to solve the problems that are facing you!
Is turning around an organisation like turning an oil tanker?
Only if you insist on trying to turn it around rather than making the small changes that matter. It's rare that the oil tanker is facing completely the wrong direction. So don't waste time and people's patience trying to turn it 180 degrees. Instead figure out how to quickly adjust it a few degrees with the help of your employees and the few experts who really know what they are talking about.
Apple did it in 12 months. Disney did it in 6 months. Nissan did it in 3 months. It's possible and there's a recipe for doing it right and wrong.
Should our attitude to risk (outside the banking sector) change dramatically in a recession?
Our attitude to stupidity, ignorance, and wilful indifference should change dramatically. They are all risks. If you mean should we invest less in ideas because we don't have any money then that all depends on the risks involved with doing nothing, or doing nothing special. Woolworths didn't go bust because of too much innovation! They went bust because they did the same old things in the same old ways while the world changed.
Which leadership qualities come to the fore when pressure mounts?
Obviously calm helps at first (think Obama Vs McCain) but it's not enough. Leadership is about describing a destination that attracts enthusiasm and figuring out road maps that lead to engagement. That is as important as ever.
Often leaders just keep going in the same direction because they fear looking weak or because they just can't think of a new direction that makes sense. Top leaders have to be able to notice trends, patterns before the competition and then adapt the resources of the company to those patterns WITH the help of employees who can see those trends and understand the resources. Think Gertsner at IBM rather than Fiorina at HP.
Again, you have to be able to surf and recognise that you can't control the waves. It stops being about managing your career and starts being about how to share hope, can-do hope, and engaged direction.
How do you deal with scepticism, cynicism and defeatism?
I've touched on this already but each of these has a different variation of the same answer. First, hope has to be restored. That includes general hope by giving perspective on other success stories, amazing inventions, breakthroughs, accomplishments, and inspiring achievements. It also includes specific hope by giving perspective on the current situation for your particular team, department, or company.
Second, a change in pace, style, tone, and content of meetings is necessary. The divisions between levels of hierarchy, and the deference given to leadership have to change. Get people talking. Cross-functional teams. Big, fast paced, meetings focused on building a bigger brain of collaboration between groups, internally and externally.
Part of this is building relationships, including fun back in the workplace, and developing ideas from vague, unpolished, incomplete off the top of people's heads into polished, specific, complete, change the market plans in a matter of hours, days, and short weeks. If you want to overcome scepticism you must engage the sceptic. If you want to overcome cynicism you must make the situation appear possible because impossible situations lead quite naturally to defeatism.
What skills and attributes should employers now be looking for?
An understanding of trends, technology, fashion, and possibility. You want people who want to work hard to achieve amazing things. You want people who aren't listened to in normal times who can be heroes in a time of crisis. You want curious people. And you want people who like other people. Who make other people laugh, feel better about themselves, who oil the wheels of collaboration. And you want people who have seen impossible achieved before. You'll want a mixture of those people and then get someone to mix them all up into a resilient, adaptable alloy.
How do organisations retain and motivate key staff when times are tough?
It is an unhelpful paradox that sometimes the best staff go to do great things when times are tough while the worst staff bunker down and stay where they are. Don't assume that the best people will be scared at a time like this, they may feel liberated to go and try something new. For them to stay requires a belief that this time something is going to change.
Think carefully about who the key staff really are – perhaps the key staff have changed in tough times. It may not be your top money-earner last year. It may be the black-sheep, the background genius, the visionary, or the crank.
Create an environment where the people who matter will feel engaged, hopeful, and do their best work. It's also pretty easy to give great profit sharing deals, or share options, because the real entrepreneurs will only see the upside and work accordingly to realise it.
How do you make strong-willed individuals function as part of a team?
Well you may find it hard to make them do anything. But purpose is what generally brings people together. So find out what your strong-willed individuals love, what gives them a buzz, what turns them on. And if it fits with the goals of the organization then you just have to find a way of plugging their abilities in.
If they are rebels (don't care, won't care) then you can often let them move on. But if they are mavericks (break rules because they do care) then you have to organise so that they believe that they can contribute and that the blockers, haters, and the jobsworths (keep the rules because they don't care about the company) are kept out of their way.
Oh – and bringing in outside facilitators who are just as strong-willed but know how to work with people quickly is a good short term and long term investment! Don't just butt heads, move onto ways of working that share power and overcome apathy.
Will recession dramatically change previously-assumed medium and long-term trends?
That's a big question. It will speed up existing trends regarding value, design, and technology. People will turn to brands and solutions that offer well though through, excellence of design delivered at superb value/price combinations. It will temporarily reduce the unthinking spending and investment. It will paralyse some necessary investment that will have long-term consequences. It will speed up the cull of organizations that are unfit for purpose. Movement to lower cost centres will accelerate. But there are great opportunities to get on those trends because they are about increasing the intelligence per dollar, pound, euro, or yen that is spent.
Which business / entrepreneurial skills are most needed in a growing public sector?
Connecting the dots: The ability to connect each part of the value chain (what we do for our customers) from the front line all the way back so that the public sector spending actually improves our economy and our life-styles.
Overcoming change fatigue: The ability to engage employees with the work so that they don't shut off and let the latest change programme pass them by. Creating living strategy that involves the best that everyone can think and do. Making people care. Leadership styles that overcome indifference.
Making Progress: Knowing the difference between change and progress so that what you know (your experience) doesn't get in the way of better solutions that can overcome problems that seem insurmountable. How many times can the same problem occur before you try something different