Decision making during the best of times can be challenging for many of us. Change the environment a bit by introducing a tight credit market, skittish consumer behavior, and schizophrenic suppliers and decision making can literally put us in a deep freeze.
This is the first of a five part series to help executives break through the ice and begin making the tough decisions that need to be made.
Are you just sitting there these days? Isn’t that how we all feel. Waiting for things to get better. Credit is tight, unemployment is as high as it has been in thirty years and all of a sudden, consumers are saving; the perfect recipe for a long stormy business cycle. During this economic tsunami, employees are looking to the bow of the boat to see if their captain has seized the situation and is shouting out orders like Russell Crowe in “Master and Commander” or cowering below deck and frozen by the gravity of the situation like Humphrey Bogart in “The Caine Mutiny.”
During the burst of the dot.com bubble, a CEO friend of mine running a mid sized IT company said that every decision he made during that tough period was at least a quarter too late. His entrepreneurial enthusiasm, that base emotion so necessary to build a company was actually clouding his judgment. No matter what he did, it seemed like it was a day late and a dollar short. So the question is, did the lessons we learned in 2000 give us any insight to the best way to navigate our current recession?
Today, business leaders have almost no room for error. The effects of making a late decision or making no decision at all are penal. If you think you may need to cut your overhead next month, you probably should have done it last quarter. Most CEO’s are very good at making decisions, that’s not the problem. The challenge leaders face today is not their inability to make decisions, it’s their ability to make informed decisions quickly.
During the last decade, you could make a few mistakes along the way and still find yourself able to compete. You could hire the wrong sales VP, roll out a product that fell flat or overpaid for a new financial system. None of these decisions would have been fatal. You didn’t have to have what business authors Kim and Mauborgne call a “Blue Ocean Strategy.” Demand was high and you could work yourself out of many poor decisions. I don’t have to tell you that times have changed. You may only have one chance now to make the right decision; why leave it to chance?
You may have heard the adage, “you can have it all, you just can’t have it all at the same time.” This is the hard reality we live in now. After years of managing in a world of abundance, it is very difficult for leaders to make the switch and prioritize their decisions. Which area of the business requires the most focus? Where should you spend your limited resources and where is the best bang for your buck? How much risk is associated with each potential investment? Maybe I can’t invest in all these initiatives at the same time!
Executive decision making during troubled economic times have dramatic results. As Teddy Roosevelt reminds us, “the credit belongs to the man (or woman) who is actually in the arena.” Faced with increases in energy costs and lower demand for their products and services, businesses are operating on thin margins. Battling with cautious bankers over lines of credit and short-term debt is forcing leaders to operate on existing cash flow. It has never been more important to make the right decisions.
Over the next four blogs we’ll talk about specific techniques that can put you on the track to decisiveness!