Management Consultant and Mensa Leader
- Ainslie, you’ve written a lot recently about recession-tuning your business; aren’t most businesses doing this already?
Certainly businesses of every size are cutting back heavily in response to the contracted economy but I’m suggesting that most companies are missing out by focusing solely on reducing expenses. Recession Tuning a business isn’t slashing expenses, freezing hiring and ravaging your marketing budget; in fact these actions can doom your company unless you add a positive balancing element to each.
- One observation you suggest really took us by surprise; you make the blanket statement that a hiring freeze is always bad management. How can this make sense? You can’t keep hiring new employees when revenues are shrinking and you’re already laying off people, or can you?
Not only can you hire new people but the more evolved companies see it as an important part of strengthening the company while downsizing. When a company announces a blanket hiring freeze, my opinion of their management plummets. It reveals they don’t see the opportunity to pick up big profits from strategically hiring one or more star players who are caught up in mass layoffs at competing companies.
The evolved company always creates a position for an executive, manager, or salesperson that arrives with market share, key institutional knowledge, or expertise that quickly adds to the firm’s bottom line. Going one step further, I advise my clients who are building truly evolved companies to proactively search for these people while the competition lives in strategic denial.
- Along those same lines you write about what you call Cutting the fat while Feeding the muscle. What do you mean by this?
Business leaders everywhere are ruthlessly cutting expenses as a business survival strategy but I believe that this is only half the job and that they’re missing great opportunities to increase profits. Certainly it’s smart to cut expenses when sales are down but evolved companies simultaneously invest a meaningful amount in the highest profit areas of their business.
When I’m advising a truly evolved company, a foundational element of my counsel is to make one or more strong strategic bets on their highest margin and most profitable products or services. The return is immense because their competitors are focused only on lowering expenses in response to the downturn.
- Does this idea of strategic investments in hiring and high margin products carry over to other parts of a company in the Recession Tuning process?
Absolutely yes. Specifically I think strategic investments in marketing are really timely now. When economic times are good it’s expensive to capture new customers, clients or opportunities. Your marketing dollars are competing with your competitors’ similar spending; herein lies the opportunity in today’s market.
One of the first things I look at when working with a client to recession tune their business is marketing. We analyze exactly where competitors are cutting back on their marketing. There is always some low hanging fruit here to be captured with a modest focused increase in marketing investment and efforts. Business leaders can take over high-profit markets at a small fraction of the cost required in a more competitive economic environment.
- All of this seems so logical; why aren’t most businesses following what you call the Evolved Path and recession tuning their companies?
Quite simply it’s fear. The world economy is really shaky right now and even the most powerful of business leaders can find their judgment clouded by fear generated from plummeting revenues and unhappy shareholders. Fear stops them from taking actions they know intuitively are correct.
Often my biggest contribution to client companies is to free the leadership from this success-draining fear and getting them back to thinking strategically. This is exactly what brought them to the top of their company and the top of their markets in the first place. For me it’s a beautiful thing to watch a business owner making great decisions to recession tune their business. Those are the companies to invest in, work for, partner with and sell to.