Steering in a downturn
amit January 25th, 2009
I know we are all doing a bit of soul searching and thinking about how to come strong through, what could very likely be, a challenging 2009. I have a few thoughts to share from the perspective of running a business.
A good business is a combination of the right idea (basis of value creation), the right people (means of value creation) under the right circumstances (they dictate the value created). Circumstances have changed and so we must re-evaluate our strategy and expectations. However, just as a good plan can be bad under the wrong circumstances, similarly an otherwise good idea can be bad for the wrong set of people. [Note: For large businesses culture is a proxy for people. It is the same thing, just a collective representation.]
So though we need to keep an eye out on how the world would shape in the coming years. More importantly we need to look inwards to the strengths of our business, to the strengths of our team. The question should be “What can we do best?” and “How can we profit from it?” There are two main reasons why I think it’s important to look inwards.
There is no visibility out there. Even in normal times it is hard to predict what would happen in the future. It’s next to impossible now. I am not saying it’s not important; it’s necessary to look out in future to make sure you place yourselves in the best position to benefit from it. What I am saying is that right now it just can’t be done. The government is changing the rules every day, the corporations are re-assessing their strategy and making changes, business models are changing, and the political environment is unstable. There is no telling what things would look like when the dust settles.
I think our energy is best spent on looking at how we do things and how we can improve. This is an opportunity to forget the outside world, at least for a few months, hunker down and work on ourselves. Moreover, this notion that a “tailor” can suddenly be a “cook” because there happens to be a great demand for culinary skills is misguided. Let me reiterate a good business is the right idea, with the right people, under the right circumstances. Some believe we will see profitable green cars from Detroit – sure, we can all have our dreams.
Harsher the downturn more likely it will be for experimenters to perish. Innovating and risk taking is crucial for financial success. The time for that however is during an upswing when mistakes are relatively cheap. This is the time not to just look inwards but to focus on strengths. We need to assess what our competitive advantages are and act on them with renewed vigor. It is time to spend our energy on technology we already posses, push the brands that already have a name in the marketplace, push the partnerships with people we already know.
Winds of creative destruction are blowing. Only the healthy should survive. It is time we make sure we are one of them; the landscape will be cleaner and healthier for all of us in the future.
