Seeing Opportunity in a Challenging Economy
With all the news about the sub-prime mortgage crisis, recession, energy prices and rising unemployment, it would be easy to start feeling pessimistic about your own business prospects and start creating a bunker mentality. One advantage of reaching my late forties is that I can now claim to have seen more than one business cycle. Grey hair is worth something, and in this case, it’s perspective.
So what’s the message for leaders?
Keep a cool head! Recognize that we’ve been here before and each time we have come through better than we entered.
Use any slowdown to reinforce the fundamental values, competencies and strengths of your business model.
Get closer to your customers: when times are hard, you find out who your friends are. Now’s the time to be a friend!
Cull the herd, getting rid of any employees who are not going to be your better players when things turn around.
Do some opportunistic hiring. Some of your weaker competitors will lose their more talented people when things slow down.
Generate your own future. The future is the conversation you have with yourself now. You get to decide whether it will be a rehash of what some commentator says or a self created act of your own.
Hard times are the times for leaders to differentiate themselves. Here are a few things to remember and to tell your younger colleagues when you are tempted to freak out at the latest economic report.
1. In every economic downturn there are winners and losers. The losers need help minimizing their losses. The winners need help consolidating their gains. In the recession of the early 1990′s, Intel took the opportunity of slower growth to make investments in preparation for the recovery. When things turned around, they had an even greater advantage.
2. The news is usually worse than the facts. News media sell bad news, not good news. It may take some critical analysis, but frequently one can find as many facts in support of a favorable outlook as an unfavorable one. For example, while jobs data last month indicated a drop in employment of about 80,000 jobs, Robert Half Associates is reporting that IT organizations are concerned that they cannot hire enough people to fill the growing need for talent.
3. There’s always a recovery. On October 19, 1987, I was working in the investment business. On “Black Monday“, the Dow dropped 500 points. Today if the Dow drops 500 points, it’s a 4% drop. On that monday, it was 22% drop. However by the end of 1988, the market had fully recovered and ten years later the Dow was valued six times higher than the bottom it hit on October 20, 1987.
4. Trends take time to emerge. Even as we see gas prices hit new highs in the US, and Chevy is advertising it’s fuel cell concept car on NPR, there are plenty of cross-currents that may keep our current consumption patterns in place for some time. For instance, in the midst of our energy crisis, there have been recent discoveries of oil reserves in Eastern Montana and Saskatchewan. Early estimates indicate that there could be as much oil in these areas as in all of the middle east. If this turns out to be the case, it would eventually have a dramatic downward impact on oil prices and our radically alter our foreign policy. Alternative energy sources, such as biofuels, wind, nuclear, all have pluses and minuses. It will take time for the winners and losers to shake out in this mix.
For some good economic news, you might want to click over to goodeconomicnews.com