Last summer, I was an advisor on a church youth service trip to eastern Tennessee. After we completed our service work, we spent an afternoon white-water rafting in western North Carolina. Truth be told, the water wasn't all that white – the river was very low, a victim of the 2008 drought. Our group had five rafts, each with a guide. The guide of my raft was the most experienced – and the guide for my daughter's raft, a fine-looking young buck, was the greenest of the river guides.
Reading the River Well
My guide was able to read the river extremely well, and could precisely tell his five rafters when and how to paddle – "Left side – three strong strokes forward – NOW!" – to stay in the deeper water and steer clear of the submerged rocks. The result? My group stayed in our raft the entire time and had a good, fairly easy trip down the river – on the other hand, my daughter's group got out of their raft at least six times to lift the raft off the rocks, ending up working harder to get down the river.
When the river is high, water covers the rocks – and you don't have to be as good to succeed as a guide. When the river is low, successfully reading the river and navigating rocks requires more skill and experience. Does this experience remind you of today's economy?
Strong Revenues Hide Weaknesses and Threats
In business, when times were good, strong revenues – the water – covered many internal weaknesses of, and external threats to, the business. Even though these weaknesses and threats – the rocks – were covered in better times, they always existed and could affect the business. Like the experienced river guide, smart managers knew about and prepared for these threats and weaknesses. Lackluster managers – like the inexperienced river guide – did not. Now, when the river is low, all managers are having to work harder – but the smart managers are the ones who have done the hard preparation work and will likely navigate things more smoothly and more easily.
What is the key characteristic of these smart managers? I believe it boils down to this – they are the ones who have the ability to execute their strategy. In their book The Execution Premium, Robert S. Kaplan and David P. Norton reported results from a 2006 survey they conducted. Of the organizations having a formal process to drive execution of their strategy, 70% described their performance as either "achieving breakthrough results" or "performing better than our peers." By contrast, organizations lacking this process to drive execution of their strategy achieved breakthrough or above-average results only 27% of the time. Indeed, 16% of this latter group characterized their performance as "not sustainable" – compared to only 3% of the first group. Viewed another way, 1 in 6 companies in this latter group appear to be at risk of folding.
Initial Hard Work Pays Off
Yes, times are now tough, especially in construction-related and finance-related industries. Nonetheless, companies who previously did the hard work of "focus" and "alignment" – the key techniques to translate strategy into results – improved their ability to execute, and are in a much better position to survive this downturn and ultimately surpass their weaker competitors.
Let's say you're a manager who did the work to focus your strategy and align your people, process, and technology with the strategy to produce results. More than likely, you are now doing well, relative to your peers. Congratulations! You're in an enviable position, and less likely to change what you've been doing, because it's been working – and will likely continue to work.
How to Get Back in the Game
What if you're not in this position? Well, now would be an excellent time to study your peers and determine who is doing better than you – and then do the legwork to find out why. And don't scoff should you learn a smaller company in a niche market is doing better than you – this shows they have worked hard to focus on their strategy and customer value proposition, and then to align their people, processes, and technology to deliver these.
Indeed, as consultant and author Peter Bregman noted in a recent blog, small companies will actually win in this economy. Why? People don't trust companies – they only trust other people. And in big companies, it's hard enough to find a person you can trust – and it becomes even harder when that company, driven by the relentless pressure to deliver quarterly results, sheds another group of employees.
What are some action points at this time? Look at your peers and see how they are doing. Revisit the two traditional methods of growing shareholder value – revenue growth and productivity improvements – and consider adding a third method: risk management. While you certainly have to respond to the current economy, look to manage your business for the long-term – make smart investments in projects supporting your strategic goals to preserve and grow your shareholder value, and set yourself up for future success.
If you're a manager, you have a choice. Manage your business like the rookie river guide – do not look ahead, fail to notice the water, respond only when things go wrong, and send your crew out to lift the raft off the rocks. Or, manage your business like the seasoned river guide – look ahead, read the river, give timely and precise directions to your crew, and keep your raft off the rocks. An obvious choice, yes. And one which makes all the difference in the ride – for you and your crew.
Todd L. Herman