How is it that companies that have been around for more than 100 years failed in this economic downturn while other, younger companies like Apple, Facebook, Walmart and The Huffington Post continued to grow? It is a similar picture for many lesser-known, mid-sized companies: some have failed and others have thrived, irrespective of their industry, size or location.
It is the best of times and the worst of times. Too many businesses are reacting in fear, pulling back and struggling. There are 10 key differences between a thriving company and a floundering one in this economy. Ask yourself, are you:
Sticking to your industry or crossing the boundaries?
The struggling businesses spend a lot of time trying to copy the “big guys” in their industry and wonder why this approach does not work for them. Successful businesses seem to ignore the big guys and focus on current and prospective customers. When probed further, it was found that many of these successful businesses are finding opportunities at the overlap of two or more industries. These businesses try to follow the example of companies like Cirque Du Soleil, who combined elements of both the circus and theatre industries in better venues than the average circus.
Is your company looking for opportunities at the boundaries of your industry?
Focusing on economists or customers?
Embattled businesses seem to be consumed by watching and reading about bad economic news and trying to understand the minds of economists. The successful businesses seldom have time to watch TV or read a newspaper. It does not mean they don’t hear the bad news; it is everywhere. They just don’t dwell on it. They are busy watching and reading about their customers and going to customer events, customer trade shows and customer seminars to better understand the mind of the customer.
When did you last did you go to a customer trade show or event rather than events for your industry?
Focusing on price or value?
We all know stories of airline passengers paying 10 times the price of other passengers. This approach works in many industries. Service can be escalated based on value and delivered to some clients who would pay 10 times as much for the added value. The struggling businesses are stuck in commodity-type situations with very little price flexibility. The successful businesses find ways to get price control and avoid competition because they are better at articulating their value and using different ways to price their services.
How much control do you have over your pricing?
Talking to industry leaders or to employees?
It is amazing how much time business leaders will devote to their industry events. They sit on committees and attend conferences for their own industries, spending more time talking to competitors and industry gurus than they do talking to employees who are in daily contact with customers. The successful businesses seldom send people to events in their industries. They spend more time reviewing employee surveys than industry surveys.
Have you recently asked employees about what customers are saying that could open the door to new products and services?
Preparing for the best of times or the worst of times?
The struggling businesses are clinging to their existing products and services and focusing on cutting costs in all areas to protect cash in the short term. These businesses assume things are only going to get worse. However, the successful businesses say they are seeing more volatility and they are having some of their best months and some of their worst months all in the same year. Thriving businesses are focused on finding things that will help them in the good months and the bad months. They are breathing life into more experiments with new product and service ideas than ever before. Analysis has shown that most of their revenues today come from products and services they did not offer a few years ago.
How much of your revenues and profits come from products and services you did not offer a few years ago?
Focusing on jobs or projects?
The most dynamic companies today have 80 percent of their employees spending more of their time on projects and only 20 percent doing routine work. It seems the struggling businesses are caught up in traditional management hierarchies where employees are viewed as having routine job descriptions. Management wants employees to do the routine work faster, rather than finding the next breakthrough opportunity. Successful businesses seem to recognize and manage projects carefully, as they find this is where they generate most of the new ideas and breakthroughs.
How much of your company is project-focused versus routine-focused?
Doing more or less?
We are so busy we tend to stick with existing methods because we don't have enough time to stop, reflect, research and implement better methods. The struggling businesses add new work to employees’ to-do lists. The successful businesses have regular exercises to find things to stop doing, so that employees can find free time to do new things.
When is the last time your company had an exercise to see what you could stop doing?
Standardizing or living at the edge of chaos?
The struggling businesses seem to love installing new, complicated (often computer-based) accounting, manufacturing or supply chain systems because that is what the big companies in the industry have done. They hope this will be the “silver bullet” to solve all their problems. These large, complicated systems work well in situations where all the variables are known. However, successful businesses tend to avoid these large, complicated systems because they felt they were not in control of all the variables that impacted their business. Complicated systems cannot function in complex environments where many variables are unknown. Successful companies use a wide range of smaller, flexible systems focused on tracking customers and trends rather than tracking employees and financial history.
Is your business complex or complicated?
Keeping your financials secret or sharing with employees?
Many successful businesses have learned that, in the tough times, sharing the news, good and bad, with all employees at all levels works. This empowers employees to act with confidence, as they know the whole story. The success rate with the turnaround increases dramatically with this one step. Successful businesses encourage their workforce to perform less like employees and more like entrepreneurial-minded strategic partners. They also take time to celebrate successes, both big and small.
How much do you share and celebrate with employees?
Working long hours or take more holidays?
Business owners and managers in struggling businesses seem to work longer hours in the vain hope that putting their head down and doing more of the same is the solution. The successful businesses focus on doing things differently. Successful business owners and managers work fewer hours and take more holidays; they have realized that when times get tough, it is usually because customers are buying less. They need an answer to why customers are buying less from them. The successful business owners and managers tell us they find their best thinking is done away from the office in situations that are less stressful.
When did you last work fewer hours in the week or take an extra holiday?
Do you have what it takes to thrive, and not just survive, in this “new normal” economy? Keep your business in mind and see how many of these 10 questions you have addressed lately. It may give you a clue as to how well you are turning these worst of times into the best of times.
Stuart Morley is the founder and master strategist with JUMP, a division of Morley & Associates Inc. Morley has worked with more than 300 mid market clients to facilitate companies transitioning for growth and profitability. Stuart is an author of Weather the Storm. A Survival Guide For Mid Market Organizations. For more information, email him at email@example.com, visit his website at brsjump.com or call (705) 646-7722.