Extraordinary Leadership for Challenging Economic Times
by Nan Andrews Amish
Between Fannie Mae, Freddie Mac, Merrill Lynch, Bear Stearns,
Washington Mutual and the $700 Billion Wall Street bailout …
it isn't your "business as usual" economy. And while regulators,
congress and other politicians talk about "the crisis of confidence"
and the need to "keep the economy strong", we need strategies
that promote growth and profitability in a challenging economy,
not just in strong ones.
When the economy is going gangbusters, it is easy to fall into
the trap of believing it will last forever. Yet every college
econ student knows about economic cycles. They know that what
goes up must come down.
Slow Down to Speed Up
The good news is that a downward economic cycle provides the
time to actually slow down long enough to develop strategic
plans which will serve in both expanding and retracting economies.
It also offers unique opportunities to invest in customers,
employees, innovation and improved processes which promise strong
long term ROI.
During most economic slow downs CFOs provide excruciating analysis
of where to cut costs, and what activities to eliminate. Most
firms follow this advice to the letter: they cut services, tighten
credit, eliminate advertising, stop training, do layoffs. Wall
Street tends to approve of these short term measures.
However while these measures provide short term savings they
also can create long term damage. Customer relationships are
damaged. Intellectual capital and key contacts are lost. Motivation
and productivity slows.
Wise firms reject short term cost slashing. They know it takes
6-18 months for employees to become fully productive and costs
3-7 times as much to acquire a new customer as it does to keep
an existing one. They see an economic slow down as an opportunity
to invest in their people, clean up their processes, build stronger
relationships with their customers and build their next generation
of innovation based upon customer priorities.
Talent: The Last Sustainable Advantage
The firms who believe get that talent IS the ONLY sustainable
advantage support training and development in all its forms.
Firms who don't get it, cut training because it is hard to measure.
With flattened hierarchies, training and coaching are more critical
than ever before. Workers in team environments seek assistance
influencing without authority. Communication, leadership, emotional
intelligence all provide powerful tool sets for improved productivity.
Younger, older and ethnic workforces alike seek tools to deal
respectfully with difference and to resolve conflicts cleanly.
And there is always need for getting the most from technology
investment. While formal training provides the foundation, creative
assignments help provide the mastery.
Pairing workers with different skills on a project with metrics
which include developing each other's expertise can be a powerful
strategy. Participants may be able to cover for each other in
a pinch, and workers will be better able to do their existing
jobs because they have a larger view of the big picture and
how their skills fit in it. Leading a task force or team project
can also provide leadership experience with moderate risk.
Meanwhile our executives need coaching on how to motivate and
retain their best talent, controlling less and empowering/delegating
more.
Executive coaches, peer coaches, and mentors can support our
people in mastery of new skills. This will be critical as baby
boomers retire or choose less critical roles, and Gen X and
Gen Y employees need to grow quickly to fill their shoes.
Gallup research suggests employee satisfaction is driven by
having good bosses, friends at work and the ability to build
their resumes. These sorts of developmental activities guarantee
that your top talent will want to stay because their resumes
are expanding as they build strong work relationships.
Advertising and Marketing
During economic downturns, most companies cut marketing, advertising
and promotional efforts because advertising is difficult to
measure. Companies who choose to advertise when everyone else
is cutting back have three competitive advantages.
First, they tend to be successful in negotiating very competitive
rates. Opportunities increase to form powerful partnerships
with targeted media. PR opportunities may be yours for the asking.
Second, there is less advertising clutter so messages stand
out, creating stronger positioning, and stronger branding. Growth
through expansion into a new market is faster, launching a new
product more powerful. Add a strategically placed article or
two and the messaging is amplified.
Third, when a stronger customer relationship results, the loyalty
of that customer who is sold during a down economic time tends
to be greater than that of a customer who is acquired during
an expanding economic time. Studies from two competing consulting
firms suggest that promotional spending during tough economic
times creates 2-3 times more payback than spending during good
economic times. The studies also suggest that the gains are
not eroded when the economy gets better either.
Customer Support
When times are tough, customers may require more trade credit,
more favorable payment terms and more flexible delivery options.
Yet this is the time when many firms tighten credit and/or increase
interest rates on delayed payment.
The firm that appreciates the challenges its customers face
in a tough economy and helps them address these challenges earns
loyalty that transcends business cycles. The customers become
top testimonial accounts.
When a customer becomes your cheerleader, they want your success.
They share their priorities and their timing freely.
This creates developmental synergy while supporting good marketing
decision making. Your employees become more market/customer
oriented while building knowledge of how your product is actually
deployed. This ultimately will help marketers craft better positioning,
sales presentations, and more. And the loyal customer usually
remains loyal for years to come, a huge ROI for the favorable
payment terms during the down economy.
Contrarian Long Term Thinking: Getting Out of the Box
When the economy is in a downward cycle, it takes strong leadership
to:
Nan Andrews Amish and Big Picture Perspective
offer facilitation, member surveys, management assessments,
tools, workshops and keynote addresses to help associations,
leaders and teams increase their effectiveness by seeing the
big picture perspective. Nan knows associations. She is past
president of a 1000 member New England regional marketing association
and current board member and 2002 Member of the Year of the
National Speakers Association/Northern California.
Permission to reprint this article is granted,
provided original author is given credit, and a link to www.BigPicturePerspective.com
is included.
