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Archives for October 2009

Drawing Results

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Thanks to everyone who entered the drawing! I’ve drawn the winners and will be emailing them today.

Thanks again, and thanks for reading!

The Essence of Time Management in One Paragraph

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Stephen Covey pulls together the essence of time management into four sentences:

The essence of time management is to set priorities and then to organize and execute around them. Setting priorities requires us to think carefully and clearly about values, about ultimate concerns. These then have to be translated into long- and short- term goals and plans translated once more into schedules or time slots. Then, unless something more important — not something more urgent — comes along, we must discipline ourselves to do as we planned. (From Principle Centered Leadership, p 138.)

Managing in a Downturn: Don't Overreact

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Post 4 in the series: Managing in a Downturn.

We’ve seen that recessions are opportunities for those who refuse to obsess on the constraints of the external environment (post 2) and that one corollary of this is that you shouldn’t retreat (post 3).

Another corollary is that you shouldn’t overreact. Baveja, Ellis, and Rigby’s article continues:

Companies that fared poorly during the last recession exhibited a common response: they overreacted, then “stayed the course” even when rougher seas lay ahead.

The lesson? If your strategy isn’t showing results, reevaluate it. don’t expect it to start paying dividends just because the economy is recovering. Winning firms react to trouble early, scrapping ideas that aren’t working and turbocharging those that are. Firms that hunker down can miss opportunities and create even bigger problems down the road.

So don’t overreact, but if you do, make sure to course correct in a timely manner.

Perhaps the primary and most important example of over-reacting is excessive cost-cutting. That will be the subject of the next post.

Posts in This Series

  1. Managing in a Downturn: An Introduction
  2. Managing in a Downturn: The Good News
  3. Managing in a Downturn: Don’t Retreat
  4. Managing in a Downturn: Don’t Overreact
  5. Managing in a Downturn: Be Careful of Cost-Cutting Campaigns
  6. Managing in a Downturn: Keep Making Meaning
  7. Managing in a Downturn: It’s Time to Hire

9 Productivity Practices in one Paragraph

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This is an excellent, dense summary of some key productivity practices from Stephen Covey’s Principle Centered Leadership. I count 9 practices here:

Highly effective people carry their agenda with them. Their schedule is their servant, not their master. They organize weekly, adapt daily. However, they are not capricious in changing their plan. They exercise discipline and concentration and do not submit to moods and circumstances. They schedule blocks of prime time for important planning, projects, and creative work. They work on less important and less demanding activities when their fatigue level is higher. They avoid handling paper [and email!] more than once and avoid touching paperwork [and email!] unless they plan on taking action on it.

Managing in a Downturn: Don't Retreat

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Post 3 in the series: Managing in a Downturn

We saw in the previous post that recessions are actually intense crucibles of opportunity. But you will be unable to capitalize on this opportunity unless you retain the faith that you will prevail despite the brutal facts (the Stockdale Paradox) and take ownership of your situation instead of focusing on the systemic problems.

A critical corollary of these realities is: Don’t retreat.

It can be tempting to think that recessions should be treated like hurricanes. You don’t go outdoors. You go indoors and retreat. Or, if it’s bad enough, leave town altogether.

But if you do this in a recession — if you treat it like a hurricane and hunker down — your strategy will backfire.

The Harvard Business Review article that I quoted previously goes on to say:

Many managers tolerate subpar results during a recession, believing that their firms will accelerate past competitors once the economy recovers. This rarely happens [emphasis added]. More than two-thirds of the companies that made major gains in our study period did so during a recession, not before or after [emphasis added again].

The authors give Dell as an example of a company that took intelligent action in light of the recession:

In 2001, Dell Computer grew unit sales by 11% even as industry sales declined 12%. Realizing that price elasticity sometimes increase during a recession, Dell used sensible price cuts to gain more than six points in U.S. market share and, in the toughest period of all — the fourth quarter of 2001 — to capture more than 90% of the profits in its industry.

Such opportunities always exist for strong companies, but the impact of exercising them is much higher during a recession, when many competitors are either distracted or hibernating.

In other words, one of the reasons that recessions present such an opportunity is precisely because most of your competitors are hunkering down or losing focus. Don’t fall into that trap, and you can advance. (Even if you are a non-profit, where your competition is not always another non-profit, but perhaps something less tangible — apathy, for example? — or time and attention and dollars spent on other things generally.)

Another reason you don’t want to hibernate in a recession is that “gains or losses made during a recession tend to endure.” As the article points out:

Of the firms that made major gains in revenue or profitability during the last recession, more than 70% sustained those gains through the next boom cycle. The corollary was also true: fewer than 30% of those that lost ground were able to regain their positions.

So if you advance during a recession, you are likely to hold that ground. But if you lose ground, you are unlikely to recover it.

In sum: Don’t retreat.

And here’s a post I wrote last January that says a bit more on thus: Recessions are Not for Hunkering Down.

Posts in This Series

  1. Managing in a Downturn: An Introduction
  2. Managing in a Downturn: The Good News
  3. Managing in a Downturn: Don’t Retreat
  4. Managing in a Downturn: Don’t Overreact
  5. Managing in a Downturn: Be Careful of Cost-Cutting Campaigns
  6. Managing in a Downturn: Keep Making Meaning
  7. Managing in a Downturn: It’s Time to Hire

The Type of Culture that Encourages Entrepreneurial Activities

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Tom Peters gives a good example from 3M of what a culture that encourages entrepreneurial activity looks like:

A good staring point as any is [3M’s] value system, in particular its “eleventh commandment.” It is: “Thou shalt not kill a new product idea.”

The company may slow it down. Or it may not commit a venture team. But it doesn’t shoot its pioneers.

As one 3M observer notes, the eleventh commandment is at odds with most activities in large corporations. Moreover, he adds, “If you want to stop a project aimed at developing a new product, the burden of proof is on the one who wants to stop the project, not the one who proposes the project. When you switch the burden from proving that the idea is good to the burden of proving that the idea is not good, you do an awful lot for changing the environment within the company with respect to the sponsorship of entrepreneurial people (In Search of Excellence, pp 227-228).

Managing in a Downturn: The Good News

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Post 2 in the series: Managing in a Downturn

Here’s the good news about recessions:

Recessions are famous for breaking companies. But what few people realize is that recessions are in fact more likely to make a company’s reputation.

A recent study by Bain & Company found that twice as many companies made the leap from laggards to leaders during the last recession as during surrounding periods of economic calm.[1]

So recessions are an opportunity. This doesn’t make them any easier, of course. And part of the opportunity lies precisely in the fact that they “shuffle the deck more than boom times do.” Thus, the study also indicated that more than a fifth of all leadership companies–those in the top 25% of their industry–fell to the bottom 25%.

So there is a big risk of falling in a recession. But it is through this that they provide the opportunity to advance and improve. The article continues:

These findings show that recessions are not so much “slowdowns” as they are intense crucibles of opportunity. Why is this so? Good times can cushion the hard truths of company performance, whereas tough times reveal true strengths and weaknesses.

Then, too, the number of strategic opportunities to make deals or to take advantage of weaker players increases during a recession. Many companies either hunker down or stray outside their core business in a desperate bid for growth, creating openings for companies willing to pursue thoughtful and balanced recession strategies. Judging from the experiences of the best performers of the last recession, the key is to stay focused.

So good times can cushion things, but hard times can reveal true strengths and weaknesses.

This means that a challenging economic environment is not ultimately about the factors beyond your control, but is actually about what is in your control — the nature of your company.

Thus, whatever has happened in your organization, the only way to advance through a recession (or turn things around if you’ve gone backwards) and seize the opportunity is to resist the temptation to blame external factors.

That can be hard to do, because conditions in a recession (and this one especially) are very tough.

But I am reminded of the point that Jim Collins makes at the end of Good to Great and the Social Sectors. He mentions that many people in the social sectors can “obsess on systemic constraints.” But, he points out in response, “every institution has a unique set of irrational and difficult constraints, yet some make the leap while others facing the same environmental challenges do not.”

In the for-profit world, for example, the company that generated the greatest return to investors on a dollar-for-dollar basis of all publicly traded companies from 1972 to 2002 was in the airline industry. It was Southwest Airlines.

“You cannot imagine a worse industry than airlines over this 30-year period,” notes Collins. The industry endured “fuel shocks, deregulation, brutal competition, labor strife, 9/11, huge fixed costs, bankruptcy after bankruptcy after bankruptcy.” Yet Southwest Airlines came out number one of all companies in all industries.

The point is: you cannot blame circumstances, as hard as they are. Great companies are able to succeed despite a challenging environment. One reason is that they live out “the Stockdale Paradox.” The Stockdale Paradox means that “you must retain the faith that you can prevail to greatness in the end, while retaining the discipline to confront the brutal facts of your current reality.”

This applies at all times and it applies in this current recession. Do not blame circumstances, as hard as they are. Own the difficulties and take responsibility to do what you can to “create a pocket of greatness, despite the brutal facts of your environment.”

For, as Collins points out at the end of the monograph, the most important point in all of his research for Good to Great was this:

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.

Notes

1. “Taking Advantage in a Downturn,” by Sarabjit Singh Bevaja, Steve Ellis, and Darrell Rigby in Executing Strategy for Business Results, published by Harvard Business School Press.

Posts in This Series

  1. Managing in a Downturn: An Introduction
  2. Managing in a Downturn: The Good News
  3. Managing in a Downturn: Don’t Retreat
  4. Managing in a Downturn: Don’t Overreact
  5. Managing in a Downturn: Be Careful of Cost-Cutting Campaigns
  6. Managing in a Downturn: Keep Making Meaning
  7. Managing in a Downturn: It’s Time to Hire