Stephen H Baum Leadership

PERSONAL NOTE: immobilized and distracted for several months since March from an accident, I have returned to coaching business owners and CEOs  and resuming sharing the insights with those who aspire to be extraordinary leaders.

BACKGROUND

My clients are almost all doing well, ahead of last year. But there is a nagging worry that “macro” events could cause a significant downturn in business in the next 12 to 18 months. As in 2007 before the banking system crisis, we have started examining scenarios and what to do to protect each business.

This time, with the banking system relatively sound vs. last time, the worry is consumers getting frightened enough to make serious cuts in their purchases. In our consumer economy it is unusual, but it happens. And with daily news of wars everywhere, virulent terrorism, Europe’s economies still not stable and the likelihood of an end to cheap money, there is a climate of negativity. Last time, our CEOs with leading indicators (related to new employment) gave us a signal well in advance. This time there may not be such a signal. 

CEO MINDSET AND ACTION

Our Board, and I might add, my private clients are alike in their response:

“Continued profitability and cash flow are the keys to survival of downturns as in ’07 (it is the company equivalent to job security by being in the top quartile).”

This translates into these actions:

– Intense and well-staffed effort to generate data and analysis of (fully allocated) product profitability and customer profitability
– Creation of Top 20 list of areas where there is suspicion of waste and cost with little value to customers; engagement of fresh faces in the effort; weekly discussion and decisions to act
– Having the courage to develop revised offerings and pricings to selected customer categories 
with low margins and differentiated offerings to the new and growing population of customers who really do their homework*

– Continuing funding of product development with strict criteria about differentiation, impact and timing

– Pacing of technology investments with an eye on the cash

– Continued top-grading of the work force, believing that the best team on the field has an edge over the long haul

– Building up the cash reserve 

*Jim  Blasingame’s Book, “Age of the Cusomter” is an excellent source for understanding how to think about and adapt to this new population. There is an inherent conflict between traditional high touch prospects/customers and the digitally expert prospect who contacts you already knowing their acceptable ranges of offerings and prices.  His website is full of useful information:

Small Business Advocate

That’s just my view. What’s yours? If this post is valuable to you please share it. If it could be a lot better, please let me know.