Tough times equal tough decisions for CEOs, but now is the time to be bold, not timid.
“I think the normal reaction is to want to go home and pull the covers over your head,” says Liz Padmore, partner in Accenture’s policy and corporate affairs practice. “Companies are saying, ‘Let’s delay investments and not make decisions, and fire the people we hired last year.’ These are, in our opinion, not the right strategies for companies that want to build long-term success.
“If you look back, as we did, at companies that really forged ahead through the last recession, the companies that were the true innovators, who created new business models, expanded capacity or reshaped industries were the ones that are still successful now. If you want to come out on the leading edge and not get sucked into the undertow, you really need to invest in your future and not just cut your costs.”
Padmore says companies need to look for ways to create demand in new markets.
“Produce products that are priced so the local market can buy them,” she says. “Look at ways to use smaller packaging to make them more affordable. Fit what you have to sell to the market.”
As an example, Padmore points to a bank in South Africa that created an automated system to handle low-income savings accounts. It now has 3 million customers.
“Customize what you do to meet the circumstances of the market,” says Padmore. “Create the potential for future and loyal customers.”
Southwest Airlines bought new market slots in California and Chicago at a time when other airlines are going out of business.
“It gave them a real lead in the market,” says Padmore. “They are buying up slots that others are leaving.”
In a down economy, there are bargains that can be turned into money-making ventures. Interest rates are low, and there may be opportunities that would unaffordable in a robust economy.
“If people are the key to your business, then invest in the people by hiring, recruiting and training the best people,” says Padmore. “Other companies will by trying to do the same thing, so you have to figure out how to retain employee loyalty so you end up in a good situation.” How to reach: www.accenture.com
Five imperative strategies
Accenture studied companies that emerged from the last recession and found five imperative strategies that got them there.
* Be bold. Get out there and be the leader. Others will follow, but you’ll be ahead.
* Build resilience through flexibility. Create a flexible and entrepreneurial environment anchored around the values of the company, and you’ll end up with a business that can innovate.
* Engage and connect. Work with strategic partners and other networks of businesses to solve problems. Work with suppliers to create better efficiencies.
* Be a leader of leaders. CEOs need to demonstrate they are bold and highly principled, yet have the confidence to know they can’t do it on their own. Leaders can’t do it by command-and-control but must foster leadership skills through the whole organization.
* Seek discipline but not control. Don’t be frightened into stifling initiatives. Don’t move into a feast-or-famine mentality, in which you go from spending large amounts of money on advertising one day to firing half your work force the next. Find a sensible approach and get a balance inside the business.
