During my daily meetings and discussions with carriers and shippers, the conversation invariably returns to the state of the economy and how to weather the storm. Everyone is asking the same questions. How long will the recession last? How much worse will it get? What should I do to survive and lead my company through these very difficult times?
The media have also jumped on the bandwagon. A number of articles and books are beginning to appear on this topic. “Managing through a Crisis” was last week’s cover story in Business Week. The highly regarded consultant, Ram Charan, has recently weighed in with “Leadership in the Era of Economic Uncertainty.’ One book that addresses this topic particularly well is “Judgement” by Noel M. Tichy and Warren G. Bennis, a 2007 best seller that contains a good section on crisis management.
In the next few blogs I would like to offer some thoughts on this topic for consideration. I have lived through a number of recessions and crises in my working career. I have had an opportunity to observe what has worked and what has not. Here are a few thoughts.
In their book, Tichy and Bennis outline three approaches that a leader can take in a crisis. These are identified as:
1. The “Ostrich”
2. The “Bull in The China Shop”
3. The “Fox”
The “Ostrich” is in denial. He believes that the recession or crisis will pass and that if he and his company “hunker down,” they will survive. He adopts a “business as usual” approach, hoping that the strategies of the past will suffice in the present and future. By taking this posture, these companies often act too late and their efforts are often ineffective.
The “Bull in the China Shop” panics. He takes drastic action without fully thinking through the consequences of his initiatives. This may include “firing” the wrong customers or terminating the wrong employees or closing the wrong terminals. Frequently these decisions come back to haunt the company. How often have you seen a trucking company de-market an account (e.g. large rate increase, stop serving the customer) and then have second thoughts about what they have done?
The “Fox” “keeps his cool” and thinks through the situation. Based on a well thought out and deliberate plan, the leader takes calculated steps to cut non-essential costs and add profitable business. The fox also recruits quality employees and customers from a rival and/or possibly makes a strategic acquisition, strengthening the company in the short and long term.
Companies that are successful in surviving and prospering during a crisis employ a number of strategies.
They engage their Boards, Mentors and Customers
The service requirements of trucking companies often change in a crisis from what is expected in more “normal” times because the needs of their customers change. Good companies listen carefully and stay close to their customers. They adjust their business strategies and operating processes to meet the changing needs of their customers.
They also listen to their boards and mentors. They consider what has or has not worked in the past. They utilize the wisdom of their boards and mentors to test out new business strategies.
They engage their Employees and Create a Fact-Based Plan
Successful companies take a fact based look at their resources and capacities, their people and the state of their finances and craft a solid plan. The plan is developed by the leadership team and executed by the leadership team with the support of the entire team.
They Act Decisively
Cost cutting is done in a well planned decisive way. Rather than handing out a set of pink slips every Friday afternoon, the cuts are identified and done quickly and methodically. This reduces the “water cooler” discussions and allows the company to move forward confidently with its business.
They Communicate
Through town hall meetings, lunch room meetings and one on one discussions, their employees are kept informed. Moreover, they are actively engaged to be part of the solution. This is extremely critical since this is an unsettling time. Some reassurance from the company leaders can go a long way towards maintaining morale and productivity.
They Capitalize on Opportunities
During a crisis, some companies stumble. Some key employees and customers get “nervous” and become vulnerable to competitive overtures. This is the time for bold action that enhances your company’s bottom line and future growth. Some of these opportunities may never surface again.
It’s not about the economy; it’s About You and the Leadership you provide
These are the most difficult times many of us have faced in our working careers. “Keeping your cool” and executing a well designed plan can help you lead your company through the turbulent times.