When reading this title, I imagine the first question that comes to mind is, “Is this really the recovery?”
Economists may say it is, but business leaders can only answer with a resounding, “Kinda.”
Even in a “kinda” recovery, or especially in one, it’s critical to outmaneuver your competitors. The situation is very dynamic:
• Customers are looking for any advantage in the shifting marketplace, making them more open to doing business with new organizations;
• Even with an oversupply of workers looking for jobs, the competition for great talent is white-hot;
• The spigot for credit remains tight, dampening the ability to take advantage of opportunities for growth.
With so much in flux, here are six keys to outperforming your competition in this market.
1. Be an Agile Leader
Adaptability is and will remain the critical leadership competency in 2012 and beyond.
The reason for this is that we have moved from an era of constant change to an era of persistent ambiguity. The economy is improving–then it isn’t. Joblessness is up–no, it’s down.
In 2011, China became the world’s second-largest economy, and in 2012 Japan became a net importer. The entire globe’s economic leader board is shifting, which is creating pressure on old alliances, whether they are across an ocean or across the street.
This era of ambiguity requires leaders to more comprehensively make sense of their environment and adapt powerfully with a skill that is at a premium: to guide without controlling.
For many leaders of small to medium businesses, this is the exact opposite of what I’ve observed as a natural instinct, to hold control more tightly in the face of uncertainty. Just like in flying a kite, there’s a critical balance between holding enough tension to keep it soaring and holding it so tightly that an unanticipated gust of wind snaps the string, and the kite is lost.
Adaptability is only as effective as the leader’s tolerance for not snapping to a decision too quickly.
2. Execute a Crystal-Clear Strategy
A division of a large multinational corporation recently asked me to help them to develop their annual strategy. When we began, I asked the leadership team what their revenue targets were for the year to come. The response was, “We want to maximize our potential.”
“Great,” I told them, “Everybody wants to maximize their potential, but could you give me a ballpark figure? Are we talking about $1 billion? $2 billion?”
“Yes,” they replied. “Somewhere between $1 billion and $2 billion would be great.” At the outset of the process, they were so overwhelmed by uncertainty that they were making guesses instead of deciding on real goals.
The cost of not having real goals, the cost of saying, “We want to maximize our potential” and leaving it at that, is very high. Lack of clarity translates into fuzzy priorities, while employees spend their time putting out fires or engaged in busy, even repeat, work. Lost productivity, lost growth opportunities, and lost revenue are extremely dangerous when resources are so tight that there’s barely any room for error.
Even if a company has a strategy, poor implementation leads to the same result. The strategy isn’t working, and potential is going unrealized.
Strategy can be difficult to nail down. Even when you have an idea of where you would like your company to be five years down the road, it’s not always clear how to get there. As a result, when times are tough, strategy and its execution get dangerously short shrift.
Develop a strategy and execute it to accelerate growth, maximize the utility of limited resources, and increase profitability. A built-in accountability process keeps the focus of the leadership team on key priorities and keeps new initiatives to only those that are truly needed to enhance the organization’s capacity for growth. This enables people to keep their wits about them when things get rough (because things always do).
3. Leverage New Capital Sources
Many of my small- to medium-sized clients are really struggling with the credit crunch. Cash flow restrictions are choking off growth possibilities while fearful lenders have made access to credit nearly impossible to get. At least from their usual lenders.
The downturn in the U.S. has coincided with the growth of private equity funds in China. Chinese investors can represent a viable avenue to funding that bring much needed cash resources.
For many years, a large percentage of American companies have been concerned, and in many cases damaged, by the rise of China. Investment from China creates an unique opportunity for American companies to create win-win relationships with key Chinese entities.
Additionally, and possibly even more important, it will give you a deep relationship with a committed partner who has a stake in your growth. This creates a unique opportunity to build relationships by utilizing their vast networks inside of China and radically improve your company’s chances to successfully grow in the world’s second largest economy.
4. Hire Aggressively
The biggest concern I share with my clients during this recovery is that they will be too slow to hire. Through the downturn, layoffs whittled employee ranks until only the best, brightest, and most indispensible contributors were left. Business leaders relied on these people heavily, and together, they achieved unprecedented productivity and survived the worst economic downturn of our generation.
But there’s real danger in the recovery.
During the recession, employees had to do the job of three people. Now that things are picking up, they’re being asked to do even more, exacerbating any existing dissatisfaction. Business leaders are running the risk that employees will take the growing opportunity to leave for greener pastures. When they do, it will drain both the talent and the knowledge needed to ride out the recovery.
Of course, there’s also enormous potential in the recovery.
The first major wave of new hires has not been from the ranks of the unemployed. The dissatisfied high achievers have been first. Right now, there is still a huge pool of incredibly talented employees who are looking to move. The business leaders who will most successfully ride the recovery will be the ones who hire early and aggressively.
5. Boldly Develop Your People
Growing a company requires more than just sound strategy and excellent products. Above all else, it takes good people. My most successful clients make the most of their talent through innovative hiring strategies, onboard coaching, skill development in key leaders, and thorough succession planning.
Hiring is a major investment for any company. Finding the right people takes time, so it’s vital not to squander that investment once it’s made.
Here are the four things that business leaders must do to grow their most important asset–their people.
First, hang on to the best you’ve got. Keep a steady eye on your job assignments, workplace, and company culture. Find areas that can be improved, and make it happen. The better your organization runs, the happier your employees will be.
Second, hire the best people out there and onboard them properly. Effective onboarding takes more than an orientation, an organizational chart, and a map to an assigned desk. Onboarding senior leaders can help them avoid early missteps that can spell disaster, while they evolve into more relevant and compelling leaders for a new team.
Third, develop leaders early. Increase your return on development expenditures by helping new hires build their skills from day one. The earlier you do it, the longer you benefit from the results.
Fourth, do regular succession planning. As you build the bench, always keep an eye out for top talent that will take your organization to the next level.
6. Go Global–Even at Home
It’s obvious that economic growth is taking place around the globe. It’s also so easy to source and sell globally that it’s no longer the domain of giant corporations. In order to do global right, it’s critical to develop the skills and mindset of the entire organization.
The result is a company philosophy toward cultural profit, instead of experiencing global business as a threat or a necessary evil. Cultural profit is not only the ability to attract customers in new markets and produce products in low-wage countries. Cultural profit maximizes contributions and coalitions from every person throughout the organization, which accelerates innovation and market dominance.
Of course, this applies at home as well. Let me illustrate with a story.
I was having trouble finding what I was looking for on recent visit to Target, so I asked a woman stocking the shelves for help. She also couldn’t find the elusive item, so she asked a number of her colleagues for their assistance.
It’s a normal scene in customer service, except for one difference. She was only speaking English with me–all conversations with her fellow Target employees were in Spanish.
When the topic of cultural agility comes up, most people assume it is only needed to work across national borders. Intranational cultural differences are seen as the domain of “diversity,” where managers are trained to include everyone’s viewpoints to make a stronger team.
This experience at my local Target highlighted the significant cultural borders that managers and business leaders must skillfully navigate in order to lead high-performing teams, and they are the same cultural agility skills necessary for businesses, whether the team is spread around the world or around the store.
When all is said and done, outperforming your competition in the recovery really boils down to four actions.
• Get clear. Develop a crystal-clear strategy and direction that’s integrated into the organization.
• Get moving. Implement the strategy every day at every level of the organization.
• Get better. Lead an organization faced with extreme ambiguity with agility. Accelerate your organizations’ trajectory by hiring and developing the best people.
• Get expansive. Embrace opportunities that may have been overlooked in the past.
This may not be the recovery we hoped for, but it is, nonetheless, rife with opportunity. Will your competition make the most of it? Will you?