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.