Here’s a rule of thumb: During good times people think it is their strategy that’s good, and in bad times, people think it’s the market.
During a downturn, many executives are much more likely to think a redirect is necessary. In a similar fashion, during times of great growth, we assume that what we’re doing is causing the desired results so staying the course makes sense. Neither point of view is really true. They reflect our perception of what we believe to be true.
It’s impossible to determine right or wrong without context. For example, during a strong economic period, a strategy could simply be keeping up with factors of market growth and not really causing a stand-out result. Without calibrating the results of any particular company against market growth, this would be impossible to see. In the same way, figuring out what to do in a downturn requires assessment and appropriate adaptation.
Strategies are all about outcomes. What matters in these times is what leaders do. And, very importantly, what they don’t do.
We’ve been working with a bunch of clients to do strategy audits to help companies look at whether they are on track to achieve their desired goals. (This will be the first of several articles on surviving the downturn thru good business strategy decisions–stay tuned.) I’ll share some of our methodology here because I’m convinced these tools help execs make decisions that cause them to emerge as long-haul winners.
Strategy #1 for a Downturn: MurderBoarding™
Most companies beyond early stage have no limit to the number of ideas they can pursue. During a downturn, that idea list becomes a liability. E-staff needs to look at which amongst their many product development, innovation, market-building activities should be eliminated. I’ve heard and seen many a CEO doing a “fair across the board layoff.” While that may be politically correct, it is also a form of suicide. An executive pursuing that course of action is, in effect, saying, “Pain must be shared.” That’s wrong. Dead wrong. The correct, powerful action to take is pruning off a few things so that the rest of the organization can thrive and grow even stronger. Make cuts early, targeted, and make them significant. One of the fastest ways to achieve anemic performance is through ineffective or delayed decisions. Recognize that layoffs distract and demoralize the remaining staff. Be aware that companies injure themselves when they don’t get key “turnaround decisions” the first time and instead perform serial transformations.
We’ve been bringing teams (C-Suite / Boards + the CEO) together to look at the trade-offs–decisions across all areas of their business. Most companies have done the obvious: making sure there is a market by talking to analysts, customers and looking at the competitive landscape. Which is not to say those are to be taken for granted. But such considerations are the “basics” of great teams; there’s an advanced level. Once the ideas have passed the threshold of “market ready,” how does a great team select what to pursue? Is it a matter of choosing a few? Or do you try to do many?
We’ve seen that discussion devolve into an Extreme Fight Championship about what thing is loved more than other things.
There is a rational process to be applied that will help us avoid that kind of energy wasting knock-down-drag-out in the office. Better than that, it lets live what needs to live. And it kills extraneous things that drain the company of its lifeblood. It prevents the loss of resources through a lack of focus.
We at Rubicon call this process MurderBoarding. The opposite of white boarding, in MurderBoarding we select from among the many to choose the best. The desire is to cull and eliminate. Tech companies that suffer from a lack of ideas usually die early deaths. Our problem is more likely to be a wealth of riches. Many times errors occur, resources are wasted, based on having too much choice–not too little. MurderBoarding is a process that helps narrow opportunities so that decisions can be made about what criteria should drive the process surrounding a given issue. This methodology invites us to narrow our focus to what is critical, what is crucial.
Six factors are given weight in the MurderBoarding process:
- Marketplace Dynamics. What happens if we do / don’t do it? How does it change the competitive topography? What internal alterations occur? In what ways will the market / our customers perceive us differently?
- Core competency. Will we be working from strength or is this a “build a whole new division” move? Is the strength sustainable? Are we building action that will provide a positive benefit over the long haul? How will our supply chain, technologies, marketing, finance and HR be affected?
- Management expectations. Will the team get behind the idea and/or what will it take to gain their buy-in? Will their support be organic or will the E-staff have to manufacture it? Many times this hearkens back to what the founders or E-staff most desire for the firm. Getting to these factors can require a little sleuthing and psychotherapy but it’s critical to know the cultural and historical factors.
- Roadmap fit. Does it fit with what we’re doing? With what we’ve done? With what we plan to do? Is this move so elemental that it’s natural to us?
- Financials. Few companies put rigor into the valuation of different ideas, weighing them effectively against one another. Think of sales as a proxy–determine not just what the team wants to sell, but also what they’ll accept a quota for.
- Ability to execute. Ultimately, this is what you’ll measure. Tangible, real-world results that provide bottom-line benefits. Yes, we’re talking about net income.
MurderBoarding is the opportunity to let some things really flourish by trimming off the excess that distracts the company and your staff from focusing. By killing those time draining, resource draining things, the company gets pruned so it can come back better, stronger for it. And perhaps it’s less about “killing those ideas” than putting them into purgatory so you can resurrect them when the time is right.
The last observation is this. We sometimes start to panic when we see a downturn knowing we’re going to have to make tough choices. Our heart races knowing we need to shift gears. Rather than panic, see this as a great process for reinvention. I love downturns. I see them as an opportunity to use a sense of urgency to improve strategy, align leadership and evolve the discipline of metrics. Focusing is a way to do something deeper and better, as opposed to doing many things in a shallow way. It requires courage and strength. Use this downturn for the blessing that it is. Use it to remember what really matters to you, to your organization, to your shareholders and your customers. Trim away things that might be good but not great. And then thrive when the next cycle allows for growth.