Cliched but true – we are living in turbulent times (2012). Turbulence caused by the slowdown of the economy – global and Indian, sluggish capital markets – global and Indian, tense inflationary situation and falling Indian currency ! This impacts everyone – more so if you are working in the financial sector, but not any less to those who are involved with / working in any type of business – demand is less, input costs are high, employee expectations are high (in India) – all of this causing all businesses to undergo pressure on topline and bottomline…Pressure !!! On business owners, senior management, employees, vendors. How to solve this ? How to behave in these times ? What will we think of ourselves 5 years down the line as to how did we react in this situation ? Were we men ? or were we boys ? or worse ?…
For owners and managers, I can tell from personal experience, that when the going gets tough…new revenue streams (or cost reduction streams) emerge – provided we have the attitude to search for them. Nothing spurs creativity more than having our backs to the walls (am not advocating this approach proactively though). Push your leadership team with impossible revenue targets…but limit the revenues to be obtained from current streams (otherwise there will be irrational sales pressure and possible bad behavior). The team (if your hiring was good ) will return with ideas on new revenue streams, without extra-ordinary amounts of new investments. Typically, these will be some from the following :
• Selling existing products to a new set of customers (discovered during brain-storming)
• Cross-selling existing products to a bunch of existing customers, who we had forgotten or thought might not have the need for the other products
• Up-selling…keep on asking your existing customers on more needs
• Getting partner companies to share costs of events, other marketing activities
• Getting bigger suppliers to step up, re-negotiating contracts with them – extend exclusivity, higher sales of their products, in return
• Making use of existing systems and processes (platform) to invite sub-contractors to use that on variable basis, thereby unlocking value of your platform.
So, developing new revenue streams, new alliances (and hence revenue increase or opex decrease), new business models is the way to react in these times of economic crises. Reduction of existing costs is to my mind, 10-20% of the answer, especially in developing economies and nascent industries, where scope for alliances/strategies/re-modeling is ample.
Moving on to our behavior during times of crisis…How you behave in times of crisis and turbulence, will show if you are a leader…or a pretender. There will be oodles of stress on results coming from the Board, the owner (and from large clients). Each level starting from you has to absorb part of the stress, so that the frontline people do not get saddled with all the stress, and so that they keep on performing efficiently and effectively. We need their minds to be clear and focused on the task at hand. Strategies, tactics, alliances, business model re-modeling needs to be clearly with the top 2-3 layers of the company.
How should employees behave ? The younger parts of the talent pool, viz the frontline employees and middle management also cannot be having an attitude of a carefree child in such times. Protecting your job is obviously the top thing in your mind, but how you behave in this crisis will also shape your bosses’ opinion about you – current…and future !!! Jumping ship at the slightest sign of struggle (especially in jobs-rich markets like India) is a sign of weak corporate character and is looked down upon by serious recruiters (the one who will be hiring you after this particular job shift – the current one of course needs you badly, and may turn a blind eye towards this behavior). Strong-minded employees will take on more responsibilities, work harder, chip in with business-building ideas and explicitly express solidarity with senior management. Such behavior will be rewarded when better times come – one has to be reasonably patient.
(also, please see article on “Responsible Capitalism – taking care of…” for some thoughts on taking care of various stakeholders during such times of crises).