Dear Dr. Jana,
We were told that the unemployment rate could reach 10%, with the JobKeeper and the SME Loan Guarantee plans designed to help us rebound. However, today I heard that it may take Australia a decade to recover, that many people could lose their homes, and that a lot of small companies won’t survive. What do I say to my employees when they ask me if we’re going to make it — when I’m wondering that myself?
You are not alone. Lots of employees and company leaders are wondering “Are we going to make it?” And many CEOs are lying awake at night wondering “What do I say?”
On May 28, I’ll be discussing some of the issues facing those leading into an uncertain future with Professor David Lloyd, Vice Chancellor and President of University of South Australia and Professor Jay Weatherill, former Premier of South Australia at a free webinar which I encourage you to join.
However, it sounds like you may need some help right now. Having worked with hundreds of CEOs through the Centre — in good times and in bad, we have observed specific things that successful company leaders do, ways they think, and how they “show up” when facing uncertain times, such as now. I write more about this in my article below.
What do you need to do?
Think of your company as a car. You need to have a car that’s built for purpose (e.g., a race car, an SUV, a family sedan, or a Ute). You need to keep your car in good shape, have petrol in the tank, ensure the spark plugs are firing properly, the tires properly inflated, and have warning lights that flash when systems are not working. If you want to survive and rebound, your company’s organisation must also be built for purpose, maintained properly, and operating as efficiently as possible, with dashboards and warning lights – and a good leader.
Good leaders do not need to know all the answers, but they need to know what questions to ask. Here are four key ones:
- Are we selling what customers want? If customers don’t buy enough of what you offer, you will not have enough petrol (revenue) in the tank! So, look hard at who’s buying what from you vs. what isn’t selling, then decide whether you need to discontinue what’s not selling, or whether your people need better sales strategies and skills.
- Who is our ideal customer? How many customers does it take to generate 80% of your revenue? Why are they buying from you? Analyse which customers contribute most to revenue, profit, are strategically important, and are great to work with — then go look for more of them! A small number of customers can be good news or bad news, depending on the industry, but servicing lots of small customers who buy very little could end up costing you money. Identify the customers who enable you to be profitable.
- Are the people we have the right ones? Every CEO I have talked to these past two months has “weeded the garden” of misfits, non-performers and malcontents — something they admit they should have done long ago. The people they have let go are usually not “bad people”, they were just not a right fit for the organisation, required a lot of attention, or just didn’t perform as required. The most difficult discussions are with great people who match your values and are high performers but are doing jobs you no longer need. However, if there is no job for them, you need to let them go.
- Are we managing our financial resources prudently? Every CEO I know has spent hours analysing their financials, i.e., reviewing every category, every sum, as well as the items that make up that sum, and is asking three questions:
- Is this the right thing to be doing, especially now?
- If yes, how can we do more of this for the same amount of money we are spending?
- If yes, can we do it for less money?
These CEOs are forecasting cash flow, looking at their P&L every week, delaying optional expenditures, managing accounts receivable and payable, building up their balance sheet, and talking with their banker. In short, they are making sure they have the funds to sustain their business — and are able to move quickly when new opportunities appear.
How do you need to think?
Systems thinking is critically important. The ability to navigate through chaos is directly related to knowing what data to analyse and recognising patterns in the data. This helps you understand how certain outcomes will impact your company, and then acting and making changes quickly.
Chess is a very important game to learn to play because it teaches you to think from at least two perspectives: yours and an opponent’s. It also requires you to be thinking ahead about what move(s) your opponent is going to make, after you make your move. Given the highly disrupted and interconnected world we live in today, we need to learn to play three-dimensional chess!
But while you are thinking short-term about what the company must “do”, you need to be thinking long-term about what the company needs to become.
In the short-term, starting to market on Facebook, giving product guarantees, incentivizing your sales team, negotiating with your landlord, getting a bank loan are all things you need to do to stay alive, to survive. But you also need to think bigger and longer-term, for example, will your strategy and vision be easier to achieve if you spin off one of our divisions into a new company? Should you expand by buying a company, or should you look seriously at that offer to buy your company? Will providing more sovereign capability by expanding your manufacturing operation open up new markets in Australia? Those are big questions that require you to use a different part of your brain and will take time to think through, so you need to ensure long-term thinking doesn’t get completely subsumed in the here and now.
How do you need to “show up“?
Finally, how should you, as the leader, behave or “show up”. Remember that everyone is watching you, all the time, and taking their cues from you. If you are critical or disrespectful of them, they will not give you their best performance and will mirror your behavior to others. If you go into the “spiral of destitution and death” every time someone brings you bad news, they will stop bringing bad news and that could be catastrophic for the company. People want leaders who are “steady at the tiller”, and able to guide the organisation through wild and stormy seas. This is why the ability to “Manage Me” is so incredibly important for company leaders.
Think of the people in your company as an asset. They have committed to working with you and each other to serve your customers, to help you build something awesome — and they want their leader to “show up” as mission-driven, thoughtful, strategic, compassionate, consistent, respectful, and truthful.
So, what do you tell them? Tell them the truth, engage them in developing survival plans, and thank them frequently for all they do to help your company survive. Pledge your best efforts to lead them and the company through this crisis and ask the right questions to make sure people are doing the right things. Use systems thinking, and show up, every day, living your company’s values.
There are no guarantees; there never were. But the odds of surviving and thriving are significantly increased if you do, think and show up as a leader who understands how to navigate through uncertainty.
Ask Dr. Jana your questions on company survival and growth. Submit your questions via email to Dr. Jana and she’ll answer in her ‘Ask Dr. Jana’ column.
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