That day in October ’73 was the day OPEC first turned off the oil spicket that led to gas lines in the US. Suddenly the need for fuel efficiency introduced the American public to the Japanese car and it was okay to buy one. The US auto kingpins never recovered.
The current credit crisis will be remembered as the X-Ray event that exploded in day-glow colors all of the auto maker’s warts. The credit crisis didn’t cause these problems but brought them to the surface. For years there was a 1000 pound gorilla in each of their board rooms whispering to senior management, “We can sell our way out of this with the next model year” Forty years of making “me too” models that took too long to be fuel efficient with the level of quality of their competitors never allowed them to catch up.
Retire the Gorilla
The NY Car Show is currently underway and is showing some exciting car models that could be offered as soon as the next model year. They need to get back to the innovation and creativity of the industry’s founder’s years before. Re-discovered innovation is the only intervention that will produce long lasting results and allow the US industry to survive. Unfortunately drastic re-structuring will have to accompany this transformation and all the stakeholders will lose more than they think they can stand in order for this to work
It’s straightforward - they must produce car models that buyers prefer over their competitors – now. The market will decide their long term future, not the government. Sure there are obstacles- labor contracts, pension costs, etc…, but innovation is the only way out.
Making Lemonade With Two Hands
Standing pat is dangerous to your health. No one can say with certainty how long this downturn will last. No one can say what the economy will look like when it recovers. We’ve been living between economic bubbles that eventually burst in the last decade. Are you ready for whatever lies ahead?
1) Create/Re-visit/Re-focus your business plan. Your customer has changed and you need to think just who they are today. They’re just like you- concerned about the future and unlikely to adhere to the same buying patterns, very serious about finding low cost options and past loyalty means far less today.
Focus on producing “value” in your product or service that meets the needs of your new customer. The plan has to focus on value and the plan has to answer the following: We know the new target customer and how the buying process changed. Who are the companies who are successful today in your space? How do we compare? What do we have to do quickly to re-adjust our value proposition? Re-align the strategy and goals with action steps for each short term goal with metrics that are reviewed frequently. Everyone in the company needs a goal(s) and action steps in support of the re-focused strategy.
This can be a long, painful discussion depending on your market, the number of people involved in the discussion, etc… It’s definitely worth the effort to have someone outside your company involved to input objectivity in the discussion. It’s vitally important to get down to the difficult questions that no one wants to ask for fear of stepping on somebody’s toes. There can be no sacred cows. Everything has to be on the table and up for revision.
2) Grab A Glass And Sit Down. The current economic instability is unlike anyone in the work force has seen before except for a small percentage who remember the 30’s. The severity of the situation has incited a survivalist reaction. Internet surfing is up among employees, longer lunches to meet with recruiters, etc… The evening news has shown that no company is immune and a Plan B should this not work out is wise. At a minimum the workforce is distracted and worried. Not a good combination for companies trying to perform at their peak getting through this cycle.
To defuse the situation and to get the staff to re-focus management needs to call a company wide meeting. Management should hold an open and frank discussion with the entire staff that puts all the information- good and bad- on the table. “Here is where we are? Here is how it has affected us? These are our prospects? Here is what we’re doing? Here is what we expect and these are signs we’re looking for?” Management can’t delegate this task and there should be a Q&A at the end of the meeting. No questions are off the table.
Lemonade As An Energy Drink
The next step in this process would be to assign staff members to work on specific projects that help the company meet it’s new adjusted goals- cost reduction, improved customer service, quality, new processes, product offerings, etc… This would be the ideal option that can really take hold and turn the entire organization around. It not only addresses the current morale but the culture of the company that would last longer than a business cycle.
There are 5 steps a company can take to implement this last approach and if you’re interested in knowing these steps just drop us an email at ecg@everestcg.com .
Careful, once you open the floodgates of real two way dialogue you won’t be able to put the genie back in the bottle. Once people feel they have a voice and its heard morale will soar, their commitment to the company and their job will strengthen.
The tendency in these times is to look outside for answers when the best answer may be to deal with the items you can impact.
Our book the Journey To Teams goes into more detail on how to create high performing teams and is available from our website www.everestcg.com or 703-433-2021.
