MentorWords

Last week over cocktails, several colleagues (I among them) had an argument about whether or not the current recession was a necessary correction. In one corner was “J-,” who stressed vehemently his belief that our current economic experience is essential to a healthier country, world, and future. In the other corner was “E-,” who became angered at the idea that the current experience was correct or necessary – certainly not both. The rest of us did not hold such strong opinions as either J- or E-, so we participated peripherally and protected our drinks.

Since that evening I have returned to the argument again and again. I’m not particularly concerned whether the current economic environment is necessary or correct – it simply is. But the experience shines a light on the choices business owners face every day, during both good times and bad. Do we stick to what works, or do we try something new? Do we protect what we’ve achieved, or take a few risks?

These questions are increasingly analyzed, expounded on, and answered in the business press, which causes me to suspect that these questions are currently in vogue because we are faced with a down economy. The Chinese have a proverb that says wealth will not pass beyond the 3^rd generation. Family business scholars have opined that this saying is ultimately about risk-taking. The first generation in any business has little to lose and everything to gain. So business founders take more risks and reap more rewards. The second generation views risk as a means to losing what they have already gained, so they take less risks to protect their assets. I’m not sure why the 3^rd generation is the failure generation (mostly likely the silver spoon effect). The first two generations and their relationship with risk are what interest me.

Modern businesses experience these two “generations” as phases, because a business can evolve so far in so few years compared to when the ancient proverb originated. In the beginning phase of a business the owner is hungry, impassioned, willing to take risks and try new things. Once the business has experienced some success, the business practices standardize and risk is less appealing. There is finally much (or at least more) to lose. But ongoing success demands that we explore new ideas, challenge the traditional, take chances, fail, and try again.

A little reported fact about the huge wave of layoffs rolling across the country is that many companies are laying off workers because the current economic conditions provide the perfect screen – excuse – to eliminate their “C” players. After all, the argument goes, it has now become a seller’s market, making this the perfect time to upgrade a workforce.

Chrysler and GM are being forced to make drastic changes to their business models by the US government, changes that have been apparently necessary for decades are finally being wrought out of dire necessity and outside force.

But other than upgrading workforces or government mandated change, are business owners using the current economic crisis as a catalyst for a surge of corporate spring cleaning? Are you looking in the backs of desk drawers for those old business hot idea lists, sweeping under the corporate carpets to find the policy dust bunnies, moving the corporate furniture around to figure out what’s broken and either needs to be discarded or repaired, picking a new color palette for the corporate walls, building new additions, or tearing down useless outbuildings?

Emergencies push the anxiety buttons of business owners, which triggers fight or flight responses. But the human fight or flight response ignores one reaction I see demonstrated repeatedly as I drive through the country – both among the rabbit population and among business owners. The urge to freeze. To wait out the danger by blending in. To play dead.

Unfortunately, the rabbit response has an unusually deadly chaser. After the rabbit freezes – assuming it doesn’t have a heart attack from fear – it tends to freak out and run right into the path of the oncoming car. Business owners who froze at the beginning of the recession were showing the same deadly reaction a few months later when they started cutting everything out of their budgets – from quality staff to marketing – in an effort to quell their anxiety.

In the multiple choice landscape of fight, freeze, or flight, only one good solution for business owners exists. Fight. Fighting involves clear thinking, strategy, willingness to take risks, and the capacity to judge one’s abilities.

Now is the time to evaluate your business proposition. Is your business argument still sound? Will it remain sound when the economy shifts into high gear again? What can you do now to evolve your business proposition for future viability?

Are you marketing? Are you taking advantage of all the marketing avenues available to you, from newsprint to social media, from radio to word of mouth, from direct response to public relations? Were your marketing promotions developed in response to your strategy, or did you end up with a marketing promotion based on cheapest possible marketing mix?

Are you planning for future talent needs? Are you investing in your best employees’ education and training, giving them new opportunities to grow and making them feel appreciated? Are you making opportunistic hires as recently freed talent appears in the market? Do you even know what talent you’re going to need to take your company into the future?

How are your operations? They may be sufficient for current demand, but are you using current excess capacity as an opportunity to cut operating costs, or are you using it as an opportunity to build operational capacity for a better time? Do you even know what aspects of your operations must be improved to fulfill the promise of your future strategic goals?

What about your own skills? Are you prepared to take your company to the next level, or even to decide what the next level is? Are you working on upgrading your own knowledge, right now, as an investment in future success?

Ideally you are doing all these things on a regular basis, not just when the economy is in the crapper. But even if you haven’t been vigilant enough about upgrading, redesigning, and improving in the past, you can grab the opportunity to do so now. Because if you can put your business on track to emerge from the economic slow-down stronger than you were when you entered it, you win.

That night, while sipping my Scotch & water, I didn’t have a strong opinion regarding if this was either a correction or necessary. But I feel strongly about making sure that every experience I have produces something positive. Take control and extract your benefits from this melt-down. It may not be a necessary correction for everyone, but you could make it work for you.

© 2009. Andrea M. Hill