Creating success during an economic downturn

By Rick Johnson -- Industrial Distribution, 4/3/2008 9:14:00 AM

Today we are engulfed in the debate on whether we are facing a true recession. Fifty percent of the so-called expert economists say we are and 50 percent say it’s just a downturn and we will come out of it in 2009. Regardless, let’s consider a couple facts rarely remembered in times like these:

Most companies’ market-share growth happens going into a recession or coming out of a recession, not at the top or the bottom of an economic cycle.

Those who react to cycle changes first will gain share over those who don’t. Those who understand best practices and have invested in their employees through development and training will maintain competitive advantage and grow market share by taking it from the competition.

The media has a tendency to sensationalize. I remember a couple of months ago when CNN and other major news networks actually followed the movement of stocks on the New York Stock Exchange on a minute by minute basis. Give me a break. Are they that thirsty for news that we have to watch them watch paint dry? Isn’t reporting the opening and closing of the stock exchange enough?

Tough leadership
I do recognize that even the brightest, strongest and most successful leaders within the industry are challenged during these tough times. Even those of us with scar tissue and experience from past recessions find that leadership becomes much more difficult in a declining economy. It requires a self-analysis, going back to the basics.

Instead of simply learning to do what we have always done a little better, we need to become aware of and practice understanding that involves reexamining everything we do–including taking a serious look at our sales effectiveness practices. This often means letting go of our existing bias and applying a little tough love as a leader.

Let’s face it. Prior to 2007 we had a run of over five years of tremendously favorable economic times. It did not take a genius to be successful.

But to be successful during tough times, you must make emotional connections with your management team. Encourage them to open up and share dialogue. Leverage their leadership ability by advancing their personal agendas. Good leaders are not intimidated by the success of others. They encourage others to succeed and help them fulfill their wants and needs.

Re-examine your sales effectiveness process and structure. Remember, profit covers many sins. Support those salespeople on your team that have what it takes. Weed the garden of those that have been riding the wave or are members of the lucky territory club. Make sure sales management understands their roles precisely. Encourage coaching, mentoring and most importantly, accountability.

Roller coaster?
You may feel like you are just starting down the first big hill of a roller coaster ride. You may envision the next couple of years as a time filled with uncertainty and ambiguity. But we need to set those thoughts aside and guard against creating a self-fulfilling prophecy of doom and gloom. It is time to demonstrate the kind of leadership that can deal with these turbulent times.

People who get results are high-impact leaders. They are consistent, explicit and concise and command a presence when they walk into a room. They have the leadership insight to create success even in the toughest times. When they move on, others want to go with them. They have a following. Their openness and honesty create a legacy which people admire and look up to. They gain commitment and foster trust.

Managing during turbulent times and fostering growth in an economic cycle such as the one we face today depends on a balance of this type of leadership. No one person can make a company successful; it takes a lot of people. But one person with a command of leadership can transfer enough influence among the management group to deal with a declining economy and create success in spite of it.

Differentiate
Successful leaders are constantly building advantages into their organizations at a much greater rate while they are eliminating disadvantages. The belief is that you not only have to be better than your competition but you must differentiate yourself. This means taking advantage of opportunity presented by the economic downturn itself. It demands creativity and innovation.

However, this creativity and innovation must be built into the economic contingency plan. It must be distinctive and yet it must be manageable and predictable. This could involve anything from new technologies, to market segmentation, to development of new channels to taking advantage of the competition's weaknesses.

It is all about improvement and finding newer and better ways of doing things. It involves cross-activity integration of processes and people. Activities must be linked across the entire value chain.

Recruit those “A” salespeople who wouldn’t listen to you when times were good, but who now may be receptive if their company has initiated layoffs. Don’t hire the salespeople that have been laid off, go for the stars. Understanding these concepts is critical to leadership success.

Rick Johnson is the founder of CEO Strategist LLC. Contact him at rick@ceostrategist.com or visit www.ceostrategist.com.