I’ve read so much rubbish about the recession over the last few months – so here’s my first Cooke’s law: Read everything, believe nothing, and make up your own mind. You should do this in normal times, more so in the abnormal times we are going through.
But despite this here is my take on where we stand. We are in a global recession that is especially damaging for the developed economies of the west. The crisis is going to last for another three years. Interest rates will remain low, banks will be tight on credit, governments will bluster, your markets will be more and more difficult, your people more frightened and the risk of your clients failing will increase, especially here in the West. The pick up, when it comes will be slower and more patchy than expected. This is no time for the faint hearted – if in doubt sell up and get out.
How can a little article like this help? First it’s going to act as a wake up call, there’s not the space to do more. So in addition, my finance colleague, John Toppin and I are putting the core of our planned book on “Managing for Real” on our web. Articles there are designed to take you through the challenges you are facing. Finally we are here for you, so pick up the phone (001-772-492-1550), we will make consultancy advice as available and accessible as we can.
Today I want to show you how to remain sane and keep your grip on the priorities amidst all the confusion.
Stand back and look at your firm. It can seem a miasma of competing demands, daily crises, and people problems. It may help to see it as something else – just 6 component managerial blocks, deal with these and you will be fine. The graphic below depicts them.
Every morning when you open up the shop ask yourself are we managing our clients, cash, people, systems, risk and quality? Do I have a capable, fully briefed person dedicated to see through each of these managerial blocks? Do I know what they are doing? do I help them and support them fully? Have I delegated their roles clearly?(See the Dear Harry letter on Delegation on this web site).
Then, look ahead 3 years – and ask whether you can survive. Think through your best scenarios for the immediate future, add some worse case options. Have you and your key managers taken this thinking and applied it to each of the 6 areas? Now is the time to use your forward planner (ring me for an example), play it through in your head regularly and keep checking it for reality with your team.
What would I expect to hear you discussing?
There are only six areas of management attention that matter – focus on them.
- Clients: immediate action to retain existing, extend via referrals and expand in established markets where you are already credible. Ensure you are close to all your clients.
- Cash: action to initiate a cash flow watch, zero based budgeting, and rolling forward review. A regular challenge to all expenditures.
- People: proposals to prune hard and early in line with the forward load; establish a total pay freeze, introduce performance related pay. Back these largely negative actions with people development programmes and greatly increased internal communications. Prepare detailed thoughts on how you are going to practice tough love.
- Systems: a focus on the imperatives, fit for purpose, essential and simple. A clear understanding that usability is everything.
- Risk: prepared plans for the worst, watching clients closely, and ensuring detailed paper trails exist. There will be complaints and claims – make sure you will be ready.
- Quality: you know this to be utterly critical, set actions in hand to monitor and reinforce quality – this will be the corner stone of your re-emergence in 2013. Quality matters.