This is an unprecedented time, and most companies are rowing upstream against the corrective economic currents. But it’s not the first time that we’ve been confronted by a significant, broad-based correction and the accompanying uncertainty.
Indeed, many of us can recall the gas lines, 12 percent inflation and 9 percent unemployment of the 1970’s; interest rates nearing 20 percent in the 1980’s; and, more recently, the bursting of the Internet bubble and “irrational exuberance.”
The important point to remember is that notable and sustainable business success stories – Apple Computer, ExxonMobil, Cisco, Amazon, Target and Google – emerged from each of these challenging periods.
The Paradox of Thrift
There will be equally great success stories – from companies large to small and from old to new – that emerge from the current correction. This fact notwithstanding, it’s unclear which success stories will result from the present economic adjustment. But each and every business today is experiencing the “paradox of thrift.” Consumers have become – and appropriately so – value-driven, as evidenced by the way they have been reducing their reliance on credit and focusing more on saving in order to escape financial disequilibrium.
The objective for businesses in this state of disequilibrium is to recognize and take advantage of the rapidly changing attitudes and behavior on the part of consumers, companies and public-sector entities. As in the past, there were will be companies that fail, some that survive and a number that thrive. In my experience, the companies that sustain and excel in times of both challenge and prosperity are those that have disciplined strategic decision-making processes – and this is one of the greatest competitive advantages a company can have.
I believe there are five strategic decision-making principles that can help businesses embrace future upside possibilities.
1. Unifying Leadership Team: In my experience, true leadership results in inspired, positive action. Too often, leadership is mistaken for a title or role. A leader or a team is not an individual or a meeting of a senior group of people. Instead, from my vantage point, leadership is the coming together of select, capable and motivated individuals whose model behaviors serve as a catalyst for getting the right things done.
Ultimately, the strength of your organization, and the success of strategic decision-making in maximizing the value of your company, will be a direct result of the strength and unity of your leadership team; and that team must model inspiration, confidence, competence, truth, accountability and transparency.
The foundation of a successful leadership team is the trust it engenders in debate, accountability and transparency. Trust is the foundation for success in any human endeavor. Trust in this context is the inherent belief that a company’s leadership and management can have open, unfettered and, at times, vehement debate on all issues as they attempt to define and achieve the goals and objectives of the company.
Trust breeds accountability. Accountability is based on the confidence that when a decision is made everyone will join forces to pursue an initiative to the fullest. Trust and accountability must have as their partner transparency of fact, intuition and motivation. The lack of transparency often results in organizational uncertainty.
One certainty, however, is that leadership teams will be heavily scrutinized in this economic correction, and they may need to be replaced or reconstituted to achieve business objectives and goals.
2. Decision Parameters: A good business decision is one that meets and supports the decision parameters of the company. The decision parameters – regardless of whether the company is in a high-growth or transformative period – are a direct output of the mission, vision, core values and goals and objectives of the company.
However – and this is critically important – given the dynamics of this economic correction, company leadership must accept that the facts, constructs and assumptions upon which its current strategy and tactics have been based may no longer be relevant, valid or helpful in terms of driving business objectives and results. Leadership will need to regularly test the viability and the rationale of its strategy.
Senior management should also review progress based upon leading versus lagging indicators so that programs can be continuously analyzed at the strategic and tactical levels. To gauge the progress of initiatives and programs, four key questions must be raised: What is working? What is not working? What is missing? What is the potential?
3. Accepting Real-Time Reality: When it comes to making and assessing decisions, it’s also essential that company leaders truly accept and embrace the real-time realities that are shaping today’s economic and financial landscape. That means evaluating new, rapid and constantly changing facts and assumptions as well as marketplace dynamics. It’s equally important to recognize and accept as a given that this fluidity probably won’t end anytime soon; it’s the new norm. To assume otherwise is not risk warranted. Third party and historical trend data will – at best – be suspect.
Engagement by leadership is simply critical here. Why? Because the most important and credible information must be acquired by first-hand and direct interaction with the marketplace. This is much more than management by walking around; this is a CEO and leadership team rolling up their sleeves and doing the hands on work out in the field. A large part of the heavy lifting involves visiting end users, customers, suppliers, sub-suppliers to see – and feel – what they’re experiencing and what they need as the economic correction takes hold. The absence of first-hand direct information provides far less accuracy when making and assessing decisions.
In addition, it’s important to recognize that good information is never complete or timely; this is definitely the case in today’s economy, so executive leadership also needs to rely on gut and instinct.
4. Empowerment – Bi-directional Communication and Clarity: Employees from top to bottom, from the Board of Directors and CEO to executive management, to middle and line management, to sales and customer service representatives, make the decisions in companies – actively or via avoidance. They do this every day, and this impacts competitive advantage in major way. To bolster confidence in the decisions that are being made, a company is therefore required to build bureaucratic systems for micro-management or develop a culture of empowerment.
Empowerment, in large part, relies upon the discipline of clear and consistent bi-directional communication. That means speaking and writing with a common vocabulary. The information that ascends is first-hand data that’s required to make and assess corporate decisions; the information that flows across the organization, on the other hand, adds certainty as companies try to determine what business they’re in, what differentiates them, what success looks like, what they need to achieve and when, who is responsible for what, the nature of everybody’s role, and what the expectations are.
To achieve maximize competitive advantage from strategic decision-making, companies need to empower employees at all levels of an organization in an effort to attain the highest levels of efficiency in terms of time, talent and treasure.
5. Competence and Passion: Talent in an organization must be competent. Having the right people in the rowboat, and getting the right things done at the right time is a never-ending but incredibly necessary process as we combat the economic turmoil.
But how do you get your talent to have the passion and determination to win every day? In part, I believe people want to be seen as individuals, and they also want to be recognized for their unique contribution and performance. That’s why it’s especially important right now to take the time to learn people’s strengths and weaknesses, what makes them tick, and what motivates them to truly deliver.
If leadership is rewarded for business success, it must reciprocate by offering its people a similar sense of ownership in the company as well as reward. As the overall company succeeds, all participants must benefit.
Getting the Best Boats on the Water
We’ve talked a lot about strategic decision-making that encourages people to row hard and fast together. The swirling white waters of this economic correction are powerful, however, and it’s also imperative that company leaders make the right calls that provide their organizations with the very best boats, oars and rowers in place at all times. That way, the business options will never be reduced to a desperate sink-or-swim choice – no matter what happens in the marketplace.