A Lesson From the Recession

Reversing the slippery slope towards dull mediocrity: By Larry Galler

The new company bubbled with enthusiasm. The founders were ambitious, energetic, and hopeful. They gave every customer friendly service, followed up after the sale, responded promptly when there was a rare problem, and did everything in a high quality, high value manner. Their opening energy helped the business quickly get above the break-even point and started making a modest profit because of the founders constant personal involvement.

But, as the business matured, that burst of energy at the opening dissipated and, unfortunately, couldn't be sustained. While the modest profit continued, the intense concentration and energy the owners had invested in the business began to wane and, little by little, the business started down the slippery slope towards mediocrity. It seemed as if they were just going through the motions, expending the least possible amount of energy to satisfy customers, never able to inspire themselves to thrill their customers or motivate their staff to a higher purpose.

They hung on, growing if the economy was good or their service was needed. They stayed on that plateau for a few years, complaining about the state of their business, their staff, and just about everything except their own attitude and personal lack of enthusiasm.

One day the founders went out to lunch together. They commiserated about the state of affairs, became nostalgic for the early days when, every morning, they almost ran from the parking lot to the front door filled with creative energy. One of them mumbled, "Maybe we have to do something to reinvigorate ourselves and our business or we'll ultimately fail."

They realized that once their initial goal of reaching sustainable sales volume had been reached, they never created new goals, didn't have any other challenges to inspire themselves. So, on a napkin, they wrote out three goals, attainable with effort: a sales goal, an administrative goal, and a maintenance goal and a reward they could win if they reached them. That was the start of renewed concentration, energy, and growth towards reversing the slide into mediocrity and probably into failure. Today their trajectory, for the first time since they reached break-even, is climbing towards prosperity.

Send a comment or question to Larry: Larry@larrygaller.com

Musings

According to the Family Business Institute, the Bureau of Labor Statistics says about 4 million out of 24 million closely held businesses have shut their doors during recession. That's about 17% of all small businesses who are now OUT OF BUSINESS!

Some of this, of course, is due to natural attrition - even in the best of times some businesses fail for various reason. But this is different. Drive through the downtown section and strip centers of most towns and you will see a higher than average number of "for rent" signs in windows of dark stores. Look at warehouse parks and office building and you will see more signs that indicate failed businesses in spaces that were formerly bustling businesses. The recession has had dire effect on many small businesses.

Some of these businesses are in industries that have really been hammered and even the best managed companies in those industries have truly suffered. Some other businesses had bad timing issues, expanding and taking on debt at the peak of the expansion wave and, when things tightened up, were buried under that debt.

But I'd be willing to wager that the bulk of the failed businesses were ones that were marginal or badly managed before the recession - little to no planning, few financial controls, internal strife, indifferent customer service, and a reactive instead of a proactive method of doing business.

While the business news seems to be brightening hopefully, we still have a long way to go before we get back to "business as usual." But, as the economy recovers, the surviving businesses, instead of giving themselves congratulatory "high-fives" should be looking proactively to the future and discovering ways to become better at all the tasks that separate the mediocre businesses from the good ones and the good ones from the great businesses and put into action steps to make themselves better, more competitive, and more sustainable so your business does not become a statistic when the economy tanks again.

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Imagine baseball without the home plate! By Larry Galler:

Yes, I know that is a silly, maybe even a stupid, concept! Yet it often occurs to me that many businesses are working every day in the same manner as a baseball team playing without home plate.

Without home plate the batter wouldn't know where to stand, the pitcher wouldn't know where to throw, baserunners wouldn't know how to score, and the game wouldn't make any sense. Without a goal line on a football field the game would be total chaos. Without a finish line bicycle racers would end up all over Europe instead of riding down the streets of Paris at the end of the Tour d' France.

It is the focus on the goal that makes sports so alluring, competition so thrilling. Business is just like that... almost. The difference is that business goals are not physical realities like a basketball hoop or the edge of a swimming pool. Business goals are far more abstract, often negotiated or even arbitrary, based upon the ambitions of owners, executives, and managers and those are the effective business goals. They are plenty of ineffective business goals that need to be addressed also.

I'm surprised that many business are working without clearly defined, well articulated goals. They have difficulty leading their staff forward into the future because the staff doesn't know were the future lies, how to work towards it, and what will happen when they get there or even if there is a there there. So they all come to work in the morning and, robotlike, go through the motions of trying to do business, satisfy the customers, and satisfy the boss without having firm criteria for satisfaction.

Every member of a sports team, from a Little Leaguer to a Major Leaguer knows what it takes for the team to win the championship and what he or she is expected to accomplish every game in order to win. Does the staff in your business know what is expected? Do they know how the company is keeping score? Without clear goals they are working without reason. Give them something to focus on. Start winning.

Sweating It Out

Sweat it out in the gym: World Champion Downhill skier Lindsey Vonn has the amazing physical talents necessary to compete at the highest levels of her sport, but all those she competes against also have those talents. She has the support of coaches, trainers, nutritionists, and equipment specialists but so do all the other athletes at the top level of sport. In the off-season Lindsey works out in the gym an amazing seven hours a day working on strength, flexibility, and focus. In a sport where races are won or lost by thousands of a second it is the mental toughness on top of the physical attributes and support that makes champions. Those who are willing to sweat it out in preparation are the toughest competitors. Those with the same talents and support but are not willing to put in extraordinary effort make up the rest of the field and those with a passion for the sport but don't have the talent sit on the sidelines and cheer. It's the same in every sport and the same in business.
In the business world champions are the ones that put in the effort to create business plans, strategic plans, marketing plans and then revise their plans as conditions evolve, they put in the effort to conduct performance reviews, set challenging expectations, then motivate and coach their staff to meet and exceed those expectations, they put in the effort to gaze into the future and create expansive visions then articulate that vision to pull their company forward towards reaching it.
I could go further down this thought process but these are unusual, perhaps unique, economic times. Companies are threatened in many unusual ways because of the financial situation. I guarantee you that those businesspeople who are willing to "sweat it out in the gym" will be so much better positioned to survive and thrive than those who attend to "business as usual" and neglect the planning, the motivation, the inspiration, the visioning. Those that, in more normal times, are satisfied to be "also-rans" may end up sitting on the sidelines watching. It's a choice. My choice is to get in the gym.
Send a comment or question to Larry: Larry@larrygaller.com

MUSINGS
"King of the Mountain" - Control versus Experiment
Remember playing the kid's game, "King of the Mountain?" It's still being played by adults in the business world, though it is given a different name.
Direct Marketing (often referred to as "Junk Mail") is a metric driven media. In other words, either it produces results or it doesn't. Often the results of a successful mailing can be expected to remain fairly constant over a very long time - there are some classic mailings that have produced constant results for decades.
But good Direct Marketers don't just sit back and enjoy their successes. They are constantly experimenting. They use the word "control" to define the consistent, results producing advertisement and, whenever they mail the "control," they send a very small amount of an experimental mailing at the same time to see if they can beat the "control." Most of the time, the "control" wins so they continue using it.
Occasionally though, the experiment produces greater results so they expand the test on the next mailing to see if that one experiment was a fluke or does, in fact, outpull the long-used winner. If the experiment consistently performs better it becomes the new "control" and the game of "King of the Mountain" continues with new experiments as the rival.
This "King of the Mountain" technique of measuring results between "the way we've always done it" versus the "new idea" works well in marketing but it is also effective in many different areas such as manufacturing through-put, office procedures, incoming and outgoing telephone sales, even in NASCAR pit stops (if holding the wrench in the right hand is faster than the left hand).
Try playing "King of the Mountain" at your place. Measure the results. When you find a technique that consistently beats the old control, expand the experiment and if it continuously wins, make it the new "King."