by George E Casey Jr., Chief Executive Officer, Stockbridge Associates, LLC
General Patton said he hated paying for the same real estate twice. You should feel the same about paying for the same business lessons again in the future.
Right now, things seem pretty ugly from a business and economy standpoint. That’s what bothers me. Three months ago, they looked great, but now the world looks like it will never get back to normal.
It is when things are going well that you should actually be thinking about what to do when they start to turn.
The next best thing is that when they do start to turn, you are forced to focus and quickly.
By looking at lessons from the past, both from your own experience and from the experiences of others, a good leader can think about what to do if the operating environment changes unexpectedly
Here are some of my lessons learned from the past that might help in the future.
- Find reality and deal with it fast. Have a source of good and dependable numbers and act on them. Spend time walking around and talking with everyone in your company. Talk directly to your customers. From all of this, develop a viewpoint of the reality that is facing your business. Then, act quickly on that information. Those who acted quickly tended to do better than those who just waited and wished for a return to normal.
- You can’t cut too deep too quick. It is the hardest thing a leader has to do, but restructuring people and costs to deal with the reality at hand allows you to survive as an organization and have the opportunity to bring back valued team members as the market comes back.
- Whether it is with employees, investors, lenders, customers, vendors, or friends. Communicate truthfully and honestly. In tough times people most value reality and what it means to them both short term and long term.
- Cash is King. Businesses need cash just like humans need oxygen. If you are not managing cash and projecting cash regularly in good times and bad, you can get in danger quickly. Forget the GAAP stuff. If you run out of cash, you die. A 13 week rolling cashflow, updated and re-extended every 6 weeks is the must-have tool here.
- No Sell, No Eat. Revenues from sales give you cash. When it gets tough, you have to focus the organization on selling and bringing cash into the business. There are always sales to be made, even in the worst of times. Having weak (or no) salespeople and de-motivating them is just plain stupid and ignorant.
- Don’t be afraid to change the organization. Organizations tend to do the things they are organized to do. What needs to be done in troubled times and is critical to do is different than in good times. To think that the old organization can just shift to the new tasks without change flies in the face of Einstein’s observation that the definition of insanity is doing the same thing over and over and expecting to get a different result. You need different results, so you need fundamental change to make it happen.
- Multiple perspectives are better than one. As the leader, you do not have all of the answers. Seeking out and considering the experiences of others and using those perspectives to come to better decisions is a key to navigating a downturn. Building the network of trusted people to provide a variety of perspectives takes a long time. Start when times are good.
- The only thing you can truly control each day is your attitude. The attitude that you use to approach each day and its challenges and rewards is entirely within your control. The positive people seem to have better organizations around them, and that edge can be the difference in both good and bad times.
General Patton said he hated paying for the same real estate twice. You should feel the same about paying for the same business lessons again in the future.
It is a smart thing to do.
George E Casey Jr, Chief Executive Officer, Stockbridge Associates, LLC, https://myvistage.force.com/sites/s/chairs?username=george.casey