Focus and Find Your Footing in an Upside-Down World
Picture this scenario…Jeff just had to lay off half of the people on his team. Some of the individuals had been with the company since day ONE. Last week during a board meeting he found out that one of his executives was threatening to sue the company. Just two weeks earlier an investor who was about to sign a big check pulled the plug on the deal. All of this in the midst of a global pandemic that is deeply impacting the economy. Looking at all of these events you might think Jeff is on the verge of losing his company. Here’s the truth…while what is happening is definitely stressful, there were already serious underlying issues that were creating real gaps that would have hindered his growth, crisis, or not.
You see Jeff has a great product, but he is doing too many things for too many people, massively impacting his profitability. His team is well-intentioned but fat and unfocused. There are too many people who are not A+ players. He is tolerating too many performance issues because he doesn’t know how to fix it. There are no systems in place to allow his team to understand the metrics around being accountable and successful. So he ends up wasting his day fighting fires and trying to control everything, while not being able to be the leader his company needs him to be.
The turnaround for Jeff would be if he realized that this is the season of opportunity for him. During the impending slowdown, he can prepare his company to be ready when things speed up again. Right now is his time to get lean and focused. Clean house and top-grade his team. Take advantage of the talent flooding the market. Strengthen the foundation of the company by putting the systems and leadership development in place that allow his team to flourish. And most importantly, have the time to develop even stronger relationships with his employees, his customers, and his community.
Past Lessons to Apply to the COVID Crisis
Just as in today’s crisis, executives during the 2008 crisis were faced with making quick decisions in an extremely uncertain situation with very limited visibility. Decisions that would impact employees, customers, shareholders, and, in some cases, the survival of the companies. Now I realize that there are important differences between the COVID-19 crisis and the Great Recession, but there are definitely some key takeaways we can observe and learn from.
In the 2010 HBR article “Roaring Out of Recession,” the authors found that during the most recent recessions, 17% of the 4,700 public companies studied fared particularly badly: They went bankrupt, went private, or were acquired. But just as striking, 9% of the companies didn’t simply recover in the three years after a recession—they flourished, outperforming competitors by at least 10% in sales and profits growth. More recent research by Bain using data from the Great Recession reinforced that finding. The top 10% of companies in the Bain analysis saw company earnings climb steadily throughout the period and continue to rise afterward. So, what was the difference? Beyond being well-positioned financially (which is huge), those CEOs who were able to take a big picture approach – being able to focus on growth, fixing internal processes and doubling-down on relationships – were the ones who successfully navigated through tough times.
Be the Company that Survives and Thrives
Based on research these are the 3 key factors to consider:
- Focus on Growth Opportunities. When leaders reflect on strategic decisions made during the recession and what they would have done differently, the most common answer is that they would have focused more on an opportunity mindset. They wish they had shifted from preservation to growth earlier and regretted not investing more heavily. While some companies started reinvesting in growth within the first six months of the Great Recession, others waited until after the recession was over. So, what is meant by growth opportunities? It means you taking a good look at acquisitions, leadership development, product lines, acquiring better talent, etc. Leaders in the research group resoundingly said their competitive positioning suffered as a result of not having a change in strategy as early and aggressively as their industry peers.
- Focus on Internal Excellence. A global crisis doesn’t have to be seen as catastrophic, but actually as a redirection. Now is the time to focus on other parts of your business that you may not have had time to “fix” for without a pandemic. Internal processes and team functioning is at the top of the list for those companies that survived and thrived. This includes restructuring roles, setting new goals, and reorganizing information. It’s time to evaluate each position and what role it plays in meeting your business goals. This may include shifting one member to a new role, restructuring what a current role does, and possibly getting rid of a specific role altogether. Bolstering a team by redefining clear goals is key as well. Finally, taking time now to organize physical AND digital resources will allow you to put more time into shifting everything back to the physical space once the pandemic is over.
- Focus on Stakeholder Relationships. Anyone who touches the business – employees, vendors, customers, shareholders, and the community – all are stakeholders who are equally important. Being able to take care of your employees by providing clarity, being empathetic, and supporting their efforts, is essential. Vendors and suppliers will be anxious about the relationship and need some direction about what the next few months look like – take the time to do this because it will pay off in loyalty from that group. Proactively work with customers who are challenged with continuing to pay for services at a time when they’re most needed. Customers will remember companies that helped them during difficult times. Shareholders will be looking to you for directions and answers. Be sure to over-communicate and collaborate with this group so you all stay on the same page. Finally, the community – in an economic downturn being able to “give back” in any way that you can is key. And with all of these stakeholders make sure you continue to emphasize your “Why” and your core values.
Our hope and prayer is that all of you are leading well throughout this crisis. Please know that you are on our mind constantly and will do anything we can to support your efforts towards continuing to build great places to work!