Managing through the crisis

Well, let's assume you have managed through the downtum so far. If you have, congratulations-many have not. Great job! So far, so good! I know for myself, with about 40 years of business experience. 35 ol which have been in executive positions, I have never experienced or seen what we have gone through the past year or so-and hopefully, never will again. I know many in the industry would say the same.

The problem with this type of environment is that it can encourage crazy business decisions. Panic sets in and you start to do business in a way that cannot make you successful short or long term. Giving away the shop now is something you get locked into even when the market turns. So I have learned over a long period that stupid short-term decisions have consequences far beyond what you do today.

That being said, we here at The Merchant start to sense a small industry heartbeat. The question is if we are at bottom and if there is a small up-tick (which in my opinion is all it will be for a while), then how do we manage going forward?

We heard all last year about change from our political friends and during the silly season, the term "flip-flopper" was constantly being thrown about. But I am of the opinion that our business models have changed or, if not, should change. If that means doing a business somersault, that is okay. Changing the way we do business, flip-flopping on what we have said in the past is not a moral crime. Indeed, having the bravery to stand up in front of the troops and say, "We have made a mistake and now need to correct it," is perfectly in order. If conditions change or a position becomes outdated, then you as a leader must have the courage, without emotion, to change course.

That being said, change for the sake of change or flip-flopping from day to day on new positions isn't okay. I once worked for someone who would throw the whole company into confusion by changing his position five times in a week, based on who he last spoke to. Not good! Telling one thing to employees and another to investors and the press is also wrong. But, when your perspective changes due to changing circumstances and unanticipated conditions, it is appropriate to change course-fast!

I have always believed that in times of turmoil there are still many opportunities. It is a mind-set. But the truly successful companies not only spot the opportunities, they also know how to act fast to take advantage of them, act aggressively, and are unafraid to make change if need be. You may have had to cut costs to survivc, but you cannot cut forever. Smart managers eke out new opportunities and invest now for the future at the same time. Recessions create winners and losers just like a boom. Just as in riding waves, getting on and off the board at the right time is a skill that only the best can achieve.

Decisions that were rock solid two years ago may have no relevance today. Many of the companies that went through thc boom by taking on large debt by heavy expansion are the ones in deep trouble today as credit has dried up. But the good news is that this past month consumer confidence has shown its first small upward spike in a long while. Together with the comeback of the stock market, evidence is mounting that the worst is behind us.

Those who will succeed going forward are those who have adapted or will adapt to the evolving market. As the number of companies in the industry grows smaller and less-nimble rivals grow weaker, now is the time to take steps to solicit new customers, improve service while others cut theirs, and buy revenue and market share from troubled companies. Strategies in the recent past at many companies included cutting non profitable programs or products, focusing on core profitable products where they hold a unique market position, and looking under every rock to find new opportunity.

Lastly, it has been no surprise to me to see many of the largest companies in trouble. They normally cannot just turn on a dime. The good news is that coming out of the bust many small and mediumsize companies will discover giant opportunities not possible in yesterday's environment, as by nature they can react faster and more efficiently. I do not know if I am right, but it is time to start thinking of the new end game now!