Reflections - Never waste a good crisis

Never waste a good crisis

To catapult to the top

Dreams experienced in ‘deep sleep’ can be educative if we reflect on it. If the same theme repeats itself it is a bullhorn to act.  

There are primarily two kinds of dreams: one, that startles you awake; and the other from which you don’t want to awake too soon. In either case it is our subconscious playing out our aspirations and our fears which when heeded and interpreted correctly can be transformative.

Some years back there was one such dream having frequent reruns in my ‘deep sleep’. It related to not meeting monthly and quarterly business targets. I am sure many are afflicted with this kind of a dream. In my dream I have been falling short, gravely, and growing increasingly fearful of the call from the boss to explain myself.

The dream was a flashback to the recession of 2008-2011 triggered by the sub-prime housing crisis in the US and the global financial meltdown that followed with the collapse of Lehman Brothers on September 15, 2008 – a date imprinted in my memory.

We are in some form of recession with Covid-19 indefinite lockdown – governmental or self-imposed – which will have a bearing on meeting the weekly, monthly and quarterly target in our respective businesses.

How should we arm ourselves to face the potential, imminent and real recessionary effect on the economy and on our business?

1.   Crisis mindset: Winston Churchill has been quoted as saying, “Never waste a good crisis”. We need to internalize the spirit of this statement and act differently from the business-as-usual approach. Our attitude should be, ‘Here is a great opportunity to think deeper, harder, smarter to create opportunities for the business, and for whatever scaled down opportunities that exist, have strategies in place to get a disproportionate share.

2.   Being honest: With ourselves and everyone else who forms some intersect with our business to identify what really are the critical issues that need to be addressed urgently. This means being deliberate about what areas of our business we will let die so that the ones to be kept alive get all the support. Generating a consensus around the decision would be the test of management’s leadership chops.  

3.   Being humble: The recessionary environment would call for humility in the top management to be able to say ‘I don’t know’. To reach out to those who may have the answers. It could be the peer group in the industry or cross-industry to understand how they are responding to the ‘crisis’. It could be inviting suggestions, without creating a panic, from the stakeholders how the business needs to run differently. The customer-facing staff or the team on the ground can provide insights into customer anxiety and customer demands of the business or potential defaults in payments to the company.  

4.   Being wise: Identify the signs and nature of the slow down. Which segments are most affected relative to the others? How are customers reallocating their spends and their budgets? On what budget items are they continuing to spend, on which they have cut back, and which items have been eliminated from their shopping list? If it is a large company, the sample set for this research could well be the staff of the company, though a customer segment would provide superior insights.

5.   Nose to the grindstone: Instead of the team spending time in the office strategizing, better to save on overheads and get them out in the field with a clear mandate to learn what is happening, provide an interpretation, and suggest strategies and tactics to create new opportunities for the business or better value add to existing opportunities; each one must play the role of a business head and an entrepreneur if he or she needs to retain his or her job.  

6.   Feeling challenged by the team: In an economically weak environment the management will be challenged by their employees to show the light and the way forward. If the management response is not convincing the brighter lot would start looking out to their industry peers who seem to be getting it right and hot-footing it there further weakening the company’s response. If the way forward proposed by management is clear than we can expect ‘reverse brain drain’ further strengthening the company to respond to the crisis.

7.   Working smart: Having role models to imitate is a good starting point for strategizing. For instance, role playing what would Aditya Puri, MD, HDFC Bank, do in these circumstances? To deliver EBIT of 25% y-o-y for 25 years there had to be:

                                         i.    A definitive management style (no magic)

                                       ii.    Deeply held business truths

                                      iii.    Tested processes and practices that deliver

                                      iv.    Time in the field with the team

                                       v.    Setting strategy together but responsibility with individual

                                      vi.    Holding the team feet to the fire to deliver on the numbers

                                    vii.    Close monitoring of what’s working what’s not

                                   viii.    Avoiding analysis-paralysis and consensual decision making

                                      ix.    Providing clear direction and decisions

                                       x.    Treating time as an irreplaceable asset of business

                                      xi.    Gumption to say no to what industry was doing and saying yes to what appeared to be a calculated winner for HDFC Bank based on its innate strength and vision for the business.

Any good crisis should bring out the best from those who like challenging themselves, to catapult to senior positions in the business, which in good times they would have had to wait their turn.