Friday, August 1, 2008

Staying Competitive during economy downturn

I have came across many people asking me in surviving the turbulences of economy challenges particularly to some business owners feeling hopelessly about it. I asked questions to lift them up as a coach, giving them some ideas and making their brain run wild for a moment. I told them there is no silver bullet out there except for lots of hardwork and determination. Then I accidentally read through one of the articles by John Spence, a well known consultant to some of the Fortune 500 companies. He stated 6 key strategies for success even if the economy downturn is expected.

After reading through, I felt it is an excellent piece of article to tell some of my business owner friends about it. I believed the advice highlighted is refreshing but practical and something do-able. The best part of it, most of the key strategies relevant for an organization stay competitive no matter what circumstances it be. Here goes he mentioned:

1. Measure key drivers relentlessly: when times are uncertain and the pressure is on, you need to become a fanatic for watching your critical factors very carefully. Cash flow, accounts receivable/payable, margins, inventory, G&A, vendor relationships, strategic partnerships, employee performance… whatever the most important drivers of business health are in your organization, need to be watched by the entire management team - all the time - and managed to the penny. I am not saying slash budgets, only that you need to watch them closely and make prudent business decisions based on real numbers and facts not fear or guessing. Those who panic will perish, those who are prepared and disciplined will thrive.

2. Create a solid “Survival Plan”: I had the pleasure of attending a talk by a top economist this past weekend and his professional forecast… for the foreseeable future (10-14 months) things are going to be really tough. His prediction was a growing recovery start in about Q3 of 09. That means for the next year or so it is NOT going to be business as usual and your “normal” business plan will likely not be adequate to get you through these turbulent times successfully. You and your management team need to sit down and create a strong and realistic strategy, based on the hard truth and solid evidence, for how you will position your company to come out of this recession (or near miss) on your feet. You will probably need to make some very difficult decisions and might have to take some drastic actions, the sooner you realize, admit and act on this, the better chance you will have of being one of the survivors.

3 Own the Voice of the Customer (VOC): your customers are what drive your business success - period. I cannot stress strongly enough how incredibly important it is to build strong, trusting partnerships with your customers and listen, listen, listen to them. Your customers will tell you and your team everything you need to know about how to survive and thrive if you will simply ask good questions and listen. Robust, open and honest communications with your customers is absolutely essential. Talk to them, survey them, take a top customer to lunch every week and make sure they are very happy with your products and services - and if not, why (then fix it immediately!). Your customers are the key to your future - they pay ALL of your bills - they should be the center of your universe.

4. Be “Professionally Aggressive”: Also on the subject of customers - you simply cannot sit and wait for them to come to you. You and your team MUST have a high sense of urgency in meeting customers where they are. This means refining and refocusing your marketing efforts (not cutting them out!). This means looking for new ways to add value and increase your appeal. This means delivering the highest quality product possible, with consistently superior customer experiences, following up superbly and then asking for referrals. Customers today have higher expectations then every before. They demand quality + value (not lowest price) + excellent personalized service…and they want it right now! This is incredibly hard to deliver - but for those who can, you will be a winner in this down market and dominate when the market recovers.

5. Top Talent: a close second in importance to customers are your employees. Without loyal, motivated and highly skilled employees - you have no way to keep your customers delighted. It must be the goal of the entire management team to foster the best possible working environment in your organization so that you can attract, keep and grow top talent. I am not talking about paying people more, hosting pizza parties every day or installing rock climbing walls - I am talking about making your organization a truly great place to work. Here is a solid law of business: Happy Employees = Happy Customers and Happy Customers = Business Success. Now I know this sounds simplistic, but I can overwhelm you with hundreds of research studies and mountains of data that clearly show a direct link between employee satisfaction and increased profitability. If you devote a lot of time and attention to getting the best possible people you can on your team - then work very, very hard to keep them happy, motivated and excited - they will make it a successful enterprise. Hammer them constantly, pressure them, threaten them, stress them… and all of the good ones will eventually leave - and ONLY the ones who cannot get a job someplace else will stay!!!

6. Disciplined Execution: all of the great ideas in the world are useless… if you do not effectively implement them. The goal is to build a highly agile organization, with a performance-oriented culture, that is focused on only a handful of Key Result Areas. Kill all bureaucracy! Refuse to tolerate mediocrity in any form. Be ruthless in eliminating any waste of time, money or effort. Cancel any meeting that does not deliver significant value - so that your talented people instead spend that time on doing important work, motivating employees and building strong relationship with customers. The two most valuable things you have are how you use the “Time and Attention” of your top people, so everyone on your management team needs to develop a total disdain for wasting even a single minute of time on non value-added activities.

The key strategies then summarized at below:-

1.A sharply focused, clearly communicated and well-understood strategy for growth.
2.Flawless operational execution that consistently delivers the value proposition.
3.A performance-oriented culture that does not tolerate mediocrity.
4.A fast, flexible, flat organization that reduces bureaucracy and simplifies work.
5.Talent = find and keep the best people.
6.Key leaders show commitment and enthusiasm for the business.
7.Embrace strategic innovation.
8.Master the power of partnerships - with customers, vendors, strategic alliances and employees.

To all my business owner friends out there. It is time to kick some ass and work on it.

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