Tag Archives: economy

Business in Vancouver: Boardroom Strategy (Aug 4-10th)

Mike

Boardroom Strategy: Mike Desjardins

Friday, 07 August 2009

Ten tips for leading businesses in turbulent times

There’s no denying these are turbulent times. But there are things that you can do to lead your team and your company to success against the odds.

Here are the top 10 things that you can start doing today to adapt past approaches and lead through to success.

Simplify the strategic message. The easier your strategy is to understand and communicate, the greater the likelihood that it will be executed successfully. The idea is to have people understand what the top three to five goals are for the year. Stephen Covey took this idea one step further in his book The Eighth Habit, in which he describes the concept of a “Wildly Important Goal” – the most important goal for the company this year, which everyone in the company must be able to understand, feel compelled by and repeat. Simplify to make the message easy to spread.

Use a reverse one-, three-, five-year approach. Short-term thinking can drive organizations to make decisions that are not in the best interest of stakeholders long term. This situation is exacerbated in turbulent times. View decisions from three unique perspectives: one, three, five years in the future. Ask your (future) self what decisions you wish you would have made. What do you regret? What advice do you have for yourself?
Drive revenue, reduce costs and monitor cash flow tightly. Drive revenue by getting in front of the market while your competitors are inwardly focused. Reduce costs by looking at each major expenditure in its own light, not based on a sweeping percentage. Educate your top people on how to monitor cash flow. Cash is like oxygen to a business; without it, it’s game over. It astounds me how many executives are able to rise through to the senior ranks without understanding cash flow.

Stand out while everyone else is standing down. One thing that you can count on in turbulent times is a decline in ad sales.

Not only does this mean less clutter and a higher probability of reaching your audience, but when ad sales go down marketing mediums get hungry and drop prices. Lock in long-term contracts now at the lower rates.

“Confront the brutal facts but move forward with healthy optimism anyway.” In Good to Great, Jim Collins writes about being realistic about where you’re at, while at the same time putting together a positive plan to move forward.

Think of it as realistic optimism with three steps:

•be clear about what the situation is today – pretending things are better than they are is ludicrous;

•explain what the changing conditions mean for the organization or for your division; and

•share what the strategy is to move the company forward in the right direction and what each person can do to contribute to the plan’s success.

Operate based on a one-page strategic plan. Distil your strategic plan into one page that encompasses values, goals, relevant financial data, key performance indicators and actions for three to five years, one year and the next quarter.

This is far easier for people to digest than a 50-page diatribe. (For a sample format visit my blog at http://www.mikedesjardins.com).

Keep your strategic plan dynamic. The most successful companies we work with review, evaluate and revise their strategic plans each quarter.

Adapting your strategic plan to meet changes in the market, industry or company creates a document from which decisions can be made rather than another dusty binder for your shelf.

Be candid and speak authentically. Whether things are good or bad, the rumour mill has a way of spinning them into whatever is easy to pass on. By focusing on the candid facts and how people are being affected by what’s happening, a sense of community and camaraderie can be built around finding a solution.

Cut fast and cut early: Multistage layoffs are far more damaging to corporate culture than one large downsizing. The death of a thousand cuts leaves people constantly realigning priorities each time there’s a layoff and wondering if they’re next. Lead people back to engagement and productivity by listening to what they’re experiencing and helping them regain focus.

Start doing, stop doing, keep doing. When fear sets into an organization it can lead people to the point of inaction or what we call “analysis paralysis.” Have people ask and answer three simple questions: What should I start doing? Stop doing? Keep doing?

If this is a topic that you are interested to know more about, visit this link for a recorded webinar that goes into more detail and examples: www.virtusinc.com/webinars. •

Mike Desjardins is the Driver (CEO) at ViRTUS, an organizational development consulting firm with expertise in strategic planning and implementation, leadership development, change management and succession planning for medium to large organizations.

This article from Business in Vancouver August 4-10, 2009; issue 1032

Webinar: Leadership Lives in Turbulent Times

Link to the recorded presentation:webinar
http://tinyurl.com/mjdrn2

Books I mentioned:
Good to Great by Jim Collins
Eighth Habit by Stephen Covey
Winning by Jack & Suzie Welch

Link to our website:
http://www.virtusinc.com

One company’s response to the economy

recessison

 

 

 

Morgans Hotel Group has decided not to participate in the Recession.  In fact, they wrote a terse letter and posted it on their blog, http://www.recessison.com, (that’s right Recess Is On!) to it letting it know that the “inn is full.”

I’ve spoken to a lot of CEOs, Executives, Entrepreneurs, business for self, and blue collar workers about their thoughts on the economy lately and it’s amazing the response I get when I ask this question:  “What is the exact effect that the economy has had on your personally?”  In many cases the answer is either “I’m worried about” or “I just read/watched/saw/heard.”  When pressed for a personal example the response becomes, “well, nothing yet.”  The biggest issue one CEO raised was that his borrowing power for acquisitions was down and he didn’t want to use equity financing so they had to wait until they had more access to capital from the banks to acquire their next group of businesses (they’ve purchased over 25 in the past 8 years).  Granted he followed up by saying their equity partners are more than willing to fund the acquisitions but they (the management team) did an MBO (Management Buy-Out) so they don’t want to dilute their ownership positions.

I’m not saying the recession isn’t real and that the economy isn’t suffering, I’m saying let’s not start making decisions based on CNN and instead take a look at how we are personally or corporately affected and act prudently. Why create a self-fulfilling prophecy?  

As side note, there will be lucky and unlucky people as a result of the economic situation we’re living with.  The thing is it turns out after a 10 year study by Richard Wiseman on the subject of luck, there is no statistical difference between lucky people and unlucky people.  The only difference is on how we perceive what an event means.

The economy and strategic planning.

The CEO of one of the companies we work with asked me this question over email yesterday: “Should a short term economic condition (or is it) affect strategic direction?”  I decided to share my answer since I know this question is on the minds of many CEOs, entrepreneurs, and executives right now.

Here are my thoughts:

The Darwinian approach fits: it’s not survival of the fittest but more survival of the organism or in this case the organization that is more able to adapt to a changing environment.  In a strategic sense this means reviewing the strategic plan to determine whether or not the change in the economy or economic outlook is greater or less of a force when compared to when the strategic plan was completed.

Since the economy is a threat in more SWOT analysis’s right now the uncertainty and variability that comes along with this threat underscores the need to review the organizational strategy on a quarterly basis to ensure that any adverse effects of the economy against the strategy plan can be taken into account.  It’s through this process of review, evaluating, and revising, that strategic plans become dynamic and remain relevant to things like changes in the economy.  The opposite approach most often leads to the strategic plan being shelved while executives shift into reactionary mode.  I think Jim Collins said it best in Good to Great when he described the Stockdale Paradox, “confront the brutal facts but maintain an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts.”

An unexplored threat that gains mindshare with executives can lead to distraction from the key initiatives that are moving the organization forward towards its long term goals.  By examining the threat it can be treated with the appropriate amount of appreciative inquiry instead of potentially allowing it to become a self-fulfilling prophecy.

The practical answer to this is to spend an hour in your next monthly executive meeting to discuss the facts and the concern the executives have about the economy to see if anything percolates through and requires adjusting the strategy. In this way the issue can be tabled, discussed, and then executives can focus on their key priorities.