Match the Urge to Purge with a Zest to Invest
Posted on Practically Radical: December 23, 2008 2:32 PM
It's become the mantra of the moment: "A crisis is a terrible thing to waste." Leaders everywhere are struggling to make sense of the worldwide economic crisis, to learn lessons that will guide them and their companies going forward. My worry is that too many leaders are learning the wrong lessons—they are becoming conservative and risk-averse, they are searching for every opportunity to scale back and do less, they are cutting first and asking questions later.
It's a natural response—and a huge mistake. Yes, a crisis has a way of concentrating the mind. Economic crises tend to focus the minds of business leaders on inputs: labor costs, capital spending, marketing budgets. My one plea to leaders in 2009 is that they not lose focus on the most critical output of their organization—the strength of its bonds to customers.
As the business environment gets tougher, meaner, more unforgiving, customers are going to get even more selective about whom they do business with. And what's more important, in a world of shrinking demand, smaller margins, and scarce resources, than the depth and quality of your connections with customers? Now more than ever, companies and their leaders have to figure out how to stand out from the crowd, how to stand for something special, how to offer a positive alternative to the status quo. Customers want to do business with companies that share their values—and customers look to how organizations behave in dark times as a test of their values and character.
Am I suggesting that leaders rule out layoffs, investment reductions, or budget cuts? Of course not. But I am proposing one simple discipline: to balance out the urge to purge with a zest to invest. Make it mandatory that every time a brand or department or business unit moves to scale back and reduce costs, it also moves to stand out and strengthen relationships. Every tangible cost cut must be matched by a tangible burst of creativity that makes a meaningful statement to customers about what the company stands for.
The good news: The best ideas cost little or no money, so it's possible to satisfy budget demands without disappointing customers. Not easy, but possible. Small gestures of kindness, good cheer, surprise and delight, can send huge signals—especially in perilous economic times.
For years now, as I have addressed executive audiences around the word, I have urged leaders to ask themselves one simple question: If your company went out of business tomorrow, who would really miss you and why? I first heard this question from advertising genius Roy Spence, who says he got it from strategy guru Jim Collins. Whatever the original source, the question is as profound as it is simple—and worth taking seriously as you evaluate how to navigate through this economic crisis.
Why might a company be missed? Because it's providing a product or service so unique that it can't be provided nearly as well by any other company. Because it's forged a uniquely emotional connection with customers that other companies can't replicate. Precious few companies meet any of these criteria—which may be why so many companies feel like they're on the verge of going out of business, even in good times.
Today, with times as bad as they've been in decades, this simple question becomes more urgent than ever. So eliminate waste, slash budgets, reduce headcount if you must. But balance every financial cut with an investment of creativity aimed at customers.
Remember, in an age of excess supply and shrinking demand, if your customers can live without you, eventually they will.