Grow your business right now; ignore everyone else ? part 1
Growing in a recession is often the LAST thing corporate managers are thinking about, yet it is the best time to take growth steps. The real secret is in recognizing how to apply Alpha thinking in order to attract the customer demand that still exists during a downturn.
Many managers forget that demand has not disappeared? in a recession. In fact, some businesses are UP this year (a fact that the news media seems to keep missing). Surprisingly, generating gains can actually be cheaper in this type of economy. But there are some secrets that help make growth a lot easier when things get tough.
Here are some Alpha principles that create growth when everyone else is hiding:
Leadership comes from the entire company, not just the top person
Top managers tend to forget the real source of growth ideas, when times get tough. In an effort to manage costs (a necessary activity), they often close off creative thinking among the ranks (a dangerous result). By over-managing processes and by making it clear to employees that the company is in a “holding” pattern, the possibility of creating growth is significantly reduced. It becomes a self-fulfilling prophesy of stagnation or decline.
The typical reaction among employees to recessionary management tactics is to become fearful about job security or even about the economy in general. This kind of stress reduces risk tolerance (even among persons who are not directly at risk), which directly affects the ability of a person to think creatively.
The greatest value of an employee is that he (or she) is not directly at risk of loss at the level the company might be, so he is more likely to be able to think creatively than top managers who are more closely linked to company losses. It is critical for top managers to use these creative assets fully and wisely.
Managers don’t have to accept all the creative thinking that comes up from the ranks, but it is unwise to close off that source of potential growth.
Fear is the real enemy ? it makes for really stupid decisions
In much the same way, the more fear that exists in an organization, the dumber the decisions it makes. Anyone who has gone through tough times at an organization that was fearful rather than confident has seen this at work.
We have all seen the very employees who had the experience to carry the organization through the tough times fired, because they had the largest salaries. Many of us have seen cost cutting that took away the very things the company needed to create strong profitability coming out of the recession. Anyone in any larger organization has experienced many examples of really stupid decisions being made all due to the fear among middle or upper managers.
It is healthy to recognize danger. It is unhealthy to allow fear to overcome recognition of opportunity to the point that the future of the company is undermined. Far too many publicly held companies are being run by managers who are fearful, because they believe their futures are at serious risk (and they usually are).
It takes an Alpha manager to be able to manage well in a climate of fear, because it takes great self-confidence to be able to continually spot the opportunities available in the midst of what others see as chaos and collapse. The Alpha manager maintains calm assertiveness (as Cesar Milan, “The Dog Whisperer,”? would say) that allows others around him to function more effectively and more creatively. The result is that movement is possible, where the fearful manager creates a fear of any movement. And we all know that a moving truck without brakes (which is what the economy is) almost always hits an unmoving pedestrian.
No matter how “down” things get, an Alpha does better
While few companies are “doing well”? right now, a few are doing much better than their competitors. Just look at the current Alphas, and you can see how resilient they are.
Apple is one of the newest Alphas to emerge. Their sales are finally down slightly, but not nearly as far down as their competitors. They continue to defy market logic, as they sell more product at significantly higher prices than their competitors.
Mercedes and BMW have both faired far better than even top dog Toyota (who is still not a true Alpha, but has the potential to become one soon). And it’s not only because the very wealthy are buying from them. Actually much of their strength has been at the low end of their lines, and from people who are trading up.
Wal-Mart continues to outstrip its discount competitors (many of whom regularly are priced lower). Although hated by unions, Wal-Mart delivers more of what customers want to buy in terms of Alpha ego-satisfaction than any of its competitors.
Even John Deere, which is one of the few Alphas right now in a growth sector, continues to grow at levels that dwarf its competitors.
Even the worst hit areas of the U.S. still have 90% of employable persons working. Yes, we are in a short period where the government’s actions are frightening more than half of the population to significantly slow their spending. That cannot last unless the government completely destroys our economy and puts everyone on the street, which did not even happen during the 1930s.
Following Alpha principles, any company can do better in a recession. I have proven in three previous recessions that Alphas most grow dramatically at the expense of their more fearful competitors, and with less cost to generate that growth. It just takes knowledge of the Alpha model and the confidence to stay focused upon that model to find the success most managers believe is impossible during tough economic times.