Survival mode is not new. In fact, it’s the very kind of thinking that contributed greatly to us being in a recession in the first place. We just have a better excuse for it now that we can point to a reason for being myopic. There’s no question that in this economy businesses need to manage the bottom line, cut costs, rationalize their talent and make hard decisions. But there’s nothing about that list that businesses shouldn’t be doing on a daily basis. What’s dangerous about survival mode is the focus on the immediate future rather than the efforts to build a lasting sustainable business.
Let me give you a real world example of two companies that dealt with the recession in very different ways. Both are service providers in the same industry and both experienced a severe drop in revenue as the economic crisis began. The first company immediately began to reach out to their customers and confirm that the customers would abide by their contracted agreements. When there was a sense that the customers may need to shift their earlier purchase decisions pressure was applied to keep the services on the books with no changes. The CEO applied just as much pressure to the sales teams to “do whatever it takes” to hold customers to their agreements. In the first few months, it had the desired effect and bolstered the slipping revenues for the company.
The second company in the exact same situation took a different approach. The CEO had everyone call their customers and tell them that clearly the marketplace was changing and that maybe the customers needs were changing as well in this new economic climate. They asked each of their clients to sit down with them and re-evaluate their needs. The company expressed their willingness to make any adjustments that were right for the customers business now, even if they were different than when they signed the service agreement. At first, they had many customers reduce their services, but they didn’t panic. Through those candid conversations with their clients they discovered some new ways to help them deal with the economic challenges and the clients often learned of services that they weren’t aware of because they had never used them before. While the company took an initial revenue hit, they broadened the client’s view of their capabilities and built priceless good will by reaching out to renegotiate the current contracts. Their revenues are up 15% over last year. The first company is down double digits and struggling to keep the doors open.
Every leader needs to make tough calls and rationalize costs in this extremely challenging market situation but those who use the recession as an excuse to think only about tomorrow’s revenue will emerge from the recession far weaker, if they emerge at all. It will take creative and thoughtful leadership to bring a business through this turmoil ready to grow. Business leaders staring only at next month are rarely creative or thoughtful. Those leaders have panicked and the organization will panic with them. Tough choices – make them. Cuts that help you run more efficiently and leaner – make them too. The moment you stop focusing on the future as a leader though, you lose the ability to reach it.
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