Whilst sitting in the bath, I noticed two pieces of reading material we have side by side on the window sill are, '1,000 Places To See Before You Die' and Richard Wilson's 'Can't Be Arsed'. Essentially Wilson's book is a parody of the theme of the one next to it and is a torrid but funny series of reasons why not to do exciting things or see certain places before you expire. It struck me as odd that such a negative series of thoughts could be turned to profit.
It reminds me of the situation we are in right now in some ways. We are in the heart of a recession and every way we turn there is negative information, news, thoughts and people - it's enough to drive us to despair and sometimes it certainly makes me feel down. Strangely, it as at such times I get more creative, am able to channel more energy into things and get better results. Maybe that's what Richard Wilson (not of 'One foot in the grave' fame) used to be successful with his book - I don't know.
Thinking about the subject further, one of our most useful inventions uses the principle of creating negative energy - I am talking of the refrigerator. Sometimes negatives can be powerful sources for positive thoughts and energy - call it desperation, call it 'when all else fails', it doesn't matter, I like to think of it as inspiration.
Inspired By Negatives
If you want to hear one of the most inspiring talks, then sift through the Harvard Review online and find JK Rowling's address to the Graduation Ceremony last year. She talks to some of the most gifted and un-desperate people on earth to tell them how she found inspiration in her darkest hours. When she was virtually penniless, a single mum, and having lost her job she was as big a failure as she could be. What she talks of was how, at that lowest ebb, she was able to throw off all the inconsequential things in her life that had no bearing on her position and focus only on what was important - her child, her home and a big, big idea.
From this lowest point, Harry Potter was crafted, having already had the idea some time earlier, and it became the focus of all her energy, turning negative energy into an incredible, powerful positive.
I have also read some articles from a chap called Richard Fenton whose mantra is 'Go For No!' in sales and he advocates that you should up your failure rate in sales. His perverse logic is that you need to fail regularly to be successful in sales. I can understand the gist of what he means as the more you fail, the more your desire to succeed should compensate - but that is not common to all people in sales or business. Sometimes failure drags them down.
At this point, the recession looks very negative. Wishful thinking people who have not heeded warnings have literally Hit The Wall and gone from having a successful business one minute to abject failure the next - simply because they had not failed enough in the past to sense it careering up into their faces. When it strikes, they simply abdicate all responsibility to cost cutters and pretend that it is the only way forward - in fact, they have already ruined their business by that point.
So the point of my article today is how negatives can be turned into positives - and how to take the recession by the horns and turn it to your advantage making it something from which to survive and, indeed, to thrive.
Hitting The Wall
When companies Hit The Wall, as I call it, they actually find that, in a very short cycle, just about all of their key business indicators have turned negative on them. I used the example of Norwich Union/Aviva lately who consumed a £multi-million budget to advertise that they were changing their name - yet, with some of the adverts still running, they have reported heavy losses, seen 33% wiped off their share value and shedded 1,900 jobs. They ran straight into a recession while spending more money on advertising in a single period than a good share of the combined sum of the salaries of the staff they have just made redundant.
That's what I mean - it is the idea that one minute the garden is rosy, sales are buoyant, the forecast looks good and you believe that you have a recession-proof business as everyone needs things like insurance. Suddenly, you are in the depths of despair and the only way out is to hand the business across to professional numbers-people and hack the heart out of the business.
For small and medium sized (SMEs) businesses, this can be far more damaging. Too many SME firms have either a one-track business or have too many eggs in too few baskets. When the recession arrives it can be like an absolute bomb going off, literally wrecking the business overnight. I know a recruitment firm that in one quarter went from record sales to 50% drop and had to shed 50% of its workforce. They are not alone, even the mighty Dragon's Den hero, James Caan, has a latest venture which is suffering while Michael Page has seen its worth drop dramatically from the point at which it turned down a bid from a would-be suitor.
Recessions pay no respect to egos or reputations - they can ruin anyone.
Turning Negatives Into Positives
The most common issues faced by firms right now is dwindling order books and low or negative cashflows. The answer in most cases is to dramatically cut costs and try to eek out longer terms with suppliers while voraciously collecting cash. These are the answers from the numbers-people and they make sense. However, it would help if sales went up and cashflow became more positive - but that's the point of a recession, they go the opposite way.
Too often in the recession, the above action is the limit of the thinking. Batten down the hatches until the market gets more buoyant. The sales-driven executives have handed the reins to the finance guys and that's that. When the negatives get too much, too many executives are happy to 'walk away' from their pulpit of success, hand over the power to finance and snipe from their background position about the company's long term prospects.
It's a pity they don't mobilise that negative energy into a powerful force for the positive - if nothing else, the negative attitude will rub off on staff and things tend to spiral from that point.
Here's a thought. If cash is tight and sales are low - how can you find more sales that bring in cash quicker? The first step is to ensure you know enough about your current sales to make an intelligent decision. The decision needs to be about the product or service you want to sell, what its value proposition to the customer is, who would be interested and how you are going to get that message to enough people in a short time to make it successful.
The heart of the decision is to make an attractive incentive for cash payment for the proposition, but the most crucial part is the value proposition - it has to resonate with the customers you choose. Messaging is vitally important here and everyone in the organisation must be word-perfect on the message and spot on in execution.
Very often, the answers to tough questions can lie right in front of you - only the negative thoughts stop you from seeing them. If you have a product or service that is valuable, then make sure the value is realisable fast and compelling - then make sure you know who would be interested, why and make sure you get in front of as many of them as possible, with as many of their objections thought of as you can, and as fast as you can.
A recession will kill those companies who stand still - mobilise your thoughts and people with cohesive messages and actions to turn negatives into positives.
Blue Ocean Thinking
It is always a surprise to hear that many successful companies started during a recession. Dave Hewlett and Bill Packard (HP) started their business in a garage in 1939 building a device used by the Disney Corp. on the film Fantasia - it was not what you would call ideal conditions for a start up. Cisco claims to have started in a recession, as did Facebook. The key to success in a recession is to find a part of the market where there is less turbulence from competitors or is simply an unaddressed need.
In the teeth of this recession, car sales in the US and the UK have dropped dramatically and there is a real risk that many car makers will either not survive or not exist in the same way as before. While sales plummeted 30% in the UK over last year in the peak selling month of March, in Germany they rose by 40% and in France by 10%. In these countries, in conjunction with the Government, a scrappage incentive was offered direct to consumers and backed by a vigorous sales and marketing campaign by the vendors and their dealer networks. The results were spectacular while in the UK we are still considering what to do.
The fact is, there are an awful lot of old cars out there, the dealer network has switched to secondhand selling and the car makers are in too much trouble to see what to do. By the time we do something, it will be too late.
What has happened is that while most car models have dropped in sales, small cars have bucked the trend by selling up 80% on last year - the Ford Fiesta leading the sales charge for the fourth successive month. Here is the plan for the future right in front of people's faces - swap production skills and tooling into making more smaller cars with ultra high fuel economy or new eco fuels and cut mid and high end cars to a minimum and charge a huge premium for them. It is the ideal time for better, more environmentally sound, vehicles to be made and a chance to shape the industry for the future. By using the scrappage incentives in a targeted way, swap out the oldest cars for the new small ones now.
It calls for a concerted line of thought and actions - we have the chance to build a new, better car industry from the ashes of the old, and the opportunity is right here and now.
Blue Ocean Thinking is all about re-invention and in a recession there is no time like the present. The recruitment industry has been cruising for a bruising for some time. In the sustained boom, it grew fat on high fees, low value for money and has spawned a new, valueless level of service on the internet. Recruiters have been very hard hit as companies have cut back on headcount and not replaced those who leave voluntarily. For my example firm, with too few large customers, the effect has been crippling. Correspondingly, large companies have devalued the recruitment process, outsourced it to foreign shores and introduced reverse auctions for placement - how on earth can companies get good people in a recession by using such a valueless selection process? Now is the time to re-invent the whole industry.
I have long held the belief that recruiters should share the pain for poor recruitment. I believe there should be performance related incentives for recruiters so that fees are lower up front and are earned over time according to the success of the recruit and their clients, and I am not talking stock options here. Instead of having salespeople in the recruiters, have professionals who have recruited and managed the kinds of people they are trying to recruit for clients. It will bring back the value in the industry, reduce the costs due to bad recruitment, create more value for recruiting clients and, long term, more profit for recruiters.
The firm that breaks the mould today and offers this kind of model will take the high ground - I know, I have already worked it with clients like Theorem Inc of the USA, and we are both better off for it.
Channeling The Negative Energy
JK Rowling created the most successful series of books in modern times which have also produced a string of fabulous films and merchandising - so becoming incredibly wealthy in a matter of just 10 years. The whole concept was built out of failure and despair. Sometimes you have to fail to realise what its like to really succeed and certainly success tastes that much more sweeter after a failure.
Rowling's message is simple - when you are at the lowest point, you can shed all of the things which are not important and focus only on the things that mean most. It means you can channel all your energy on the things that will bring you most success - by having that single-mindedness you can increase your creativity and make something far more powerful than you could ever do if all you have is success. For many firms, the recession will mean a re-focus on something new or an innovative change to their norm.
If there is one message out of all of this, it is to prioritise. Sit down, think what is important and, quite literally, forget all that is unimportant so that all energy, investment and skills can be applied only to what is important. Don't do an Aviva - now is not the time to blow a lot of money on nice-to-haves. Make sure every penny brings a return.
Make the recession work for you.
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