Wisdom in a Crisis By David Saint-Onge Just a few short weeks ago we laid witness to a business crucifixion. Once the world’s largest insurer, American International Group, Inc. (AIG) paid $165 million in controversial executive bonuses. This action was met with a national outcry. In subsequent weeks AIG asked its employees to return the bonuses and Congress laid the groundwork for a punitive tax that would, in essence, wipe out any takehome pay after federal and state taxes.
Consider the adage, ‘the same line of thinking that got us into this mess will not be what gets us out’. What many businesses do in the next 12-18 months will likely be the difference between survival and closure. The December 2008 edition of the Harvard Business Review presented some unconventional ideas that may aid your business during this economic downturn. Using some of these as a backdrop, can your company afford the old stand-by strategies?
Under conventional logic, business executives and owners earn their high pay during challenging times. There is no arguing that wisdom in a crisis can be the calming effect needed to allay fears, restore confidence, and stem the negative tide. These are the times when the cream rises to the top.
Owner Know-it-all
Given the current economic downturn, wisdom was never more important as it is now. But even patriarchal wisdom can be flawed, especially if the business owner, despite years of experience, relies on his ‘gut instincts’ to weather the crisis. Let’s face it, regardless of the size, market share and capitalization of a firm, any business can fail.
Business owners take all matters to heart. Their innate nature is to solve every problem themselves. Consequently, it comes as no surprise when business owners take it upon themselves to not only direct the prescriptive remedy to a problem; they also want to carry out every task themselves. This is admirable, but this is wrong. Good businesses have good people. Business owners must respect the skill of their staffers and work with them to remedy the problem. Downturns are no time to tighten the screws. These are opportunities to inspire your staff to create innovative solutions.
can afford another staffer or not. Talent is hard to find, but in economic downturns, talent is a premium. Sure, many companies will jettison the followers and keep the stars, but in many instances good people get swept up in business owners attempts to reduce costs, at any price. There is opportunity to significantly increase your talent base, and you can do so at reasonable salary numbers. Consider hiring when nobody else is. Put Away the Chainsaw Far too many business owners react instinctively to economic downturns. The first thing they do; the easiest thing they do; is cut costs. There is a difference however, between operational costs and strategic initiatives. If you have an inefficiency problem, then fix it. But don’t cut a long-term strategic initiative designed to grow your company simply because you want to take the easy way out of fixing your economic woes. Say ‘No’ to Discounts
Simple business logic supports the notion that price and demand are linked at the hip. During economic downturns business owners give more credence to the ideology that In certain circumstances, it is Hire Good People says reducing price will inthe unconventional wisdom that is the game changer. Never stop fishing for talent, crease demand. Certainly in regardless of whether you some instances this holds
This article is re-printed from the May 2009 edition, as approved by the UP Business Today true, but business owners should only consider a price reduction as a last resort. Remember, eventually the market will turn and your effort to secure market share through price reductions could result in damage to your brand, questions about service and quality, or you may simply price yourself out of business. In non-recessionary times, wisdom is in the eye of the beholder. During economic downturns, especially now, wisdom can be blind. Actively seizing a downturn as an opportunity can make sense. For this to happen you cannot think conventionally, you must challenge yourself and your company. Unconventional wisdom can make the current problems go away, and it can soften the blow when the next economic downturn bursts through the front door. For re-prints or additional information, contact David S. Saint-Onge, President and Principal Strategist for Black Ink Assets, at 906.360.5076 or electronically at david.saintonge@blackinkassets.com.