The world has changed on us. Again. Eighteen months ago we were wrestling with the problems of growth and the challenges of effectively using incredible new technologies. But before we knew it, market excesses drove collapse, as excesses inevitably do. The market dove, technology businesses spun into recession, and companies retrenched. The economy seemed to hang on a precipice.
It was in this environment that the terrorist horror of Sept. 11 took place. And the world changed yet again. Now were facing a bear market, a seemingly inevitable recession and the prospect of war.
President Bush has asked us to go back to work, to demonstrate that the American economy is still the greatest in the world. But, as we do, its important for us all to recognize that success in this new world demands that we adjust our management approaches to the difficult environment we now face. Here are three suggestions:
Reality check. Too many companies have difficulty viewing the business environment as it is, objectively and analytically. In an extreme case, my team and I spent six weeks convincing the management team of a manufacturing concern that they fell in the bottom quartile of their industry on most relevant measures. (They thought they were in the top quartile!) This disconnect with reality is common, if not always as blatant. But now, faced with a business environment that has changed in unpredictable ways, managers must give up this luxury. Its time to re-examine your business, resurvey your customers, reassess your competitors.
Get strategic. Strategy has taken a bad rap lately, criticized as too rigid, too slow, too old-fashioned. But strategy is nothing more than a discipline for making powerful decisions. Strategy is most critical in a difficult business environment, when resources have to be focused and the penalties for bad decisions are much higher. Executives who consider strategy a luxury are making a serious mistake. Crises create opportunities, and strategic thinking can help companies focus their energies, taking share and customers from their less strategic competitors.
Technology is still important. Wise executives will maintain a levelheaded approach to technology investments, despite the swings in sentiment. As Dell is showing now, technology can be a critical tool for reducing costs, particularly if it is deployed as a component of a powerful, strategic business model. Carefully considered, strategic, return-oriented investments are critical and may determine the difference between the winners and the losers in these difficult times.