Monday, September 21

Managing Upturns: Reactionary Expectations


"Those who succeed will be ones that focused on fundamental issues as the financial crisis and the recession intensified. If competitors are cutting back advertising or cutting their sales force, now is the time to increase or maintain them." — Yoram (Jerry) Wind, a professor of marketing at Wharton University of Pennsylvania

Two weeks ago, I met with an executive who had decided a little bit of publicity could go a long way for her struggling business. A well-placed feature release, she concluded, would make all the difference.

Could it really?

In evaluating the business there seemed to be more nostalgia than newsworthy forward motion. So while a feature release on the company's past position and links to history might have made an interesting story to someone, it seemed far enough off from the company's business objectives that we made a different recommendation for approximately the same investment, but with an ongoing communication program.

While she thought the program was perfect, she passed. Perhaps when the economy shows more signs of an economic upturn, she said. We'll wait until we see increases in revenue. Right now, she said, our expectations are low.

“The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark.” — Michelangelo

While some companies are already noting that the best six-month run on Wall Street might be revealing an increase in consumer confidence, there are an equal number of companies and organizations that have tied their success to outside forces, especially the economy. A recent article featured by Knowledge@Wharton seems to suggest that even with an economic upturn, low expectations are the way to go.

It's a message that seems to resonate with employees. Watson Wyatt released a study today that reveals cost-cutting actions that employers have been making to deal with the economic crisis have contributed to a sharp decline in the morale and commitment of their workers, especially top performers. And, according to some key findings, everyone's expectations are already low:

• While organizations have been making major changes, employee engagement has dropped 9 percent since last year for all employees and close to 25 percent for top-performing employees.

• Top-performing employees are 20 percent less likely to agree that they understand the link between their own goals and the company’s goals than in 2008.

• Forty-one percent of employees indicate that changes have had an adverse impact on quality and customer service, while only 17 percent of employers believe this is the case.

“There is no scarcity of opportunity to make a living at what you love; there's only scarcity of resolve to make it happen.” — Wayne Dyer

There are two ways to view economic indicators and the environments in which businesses operate. The first is to view a company as reliant on the economic climate. The second is to discover opportunities within those environments.

The former group of companies are operating on the pretense that they need to protect what they have. The latter group of companies appreciates that they never had anything except what they innovated and earned.

The former group saw revenues decline, as their strategists predicted. The latter saw revenues increase, despite the recession.

What's the difference? Operating from a viewpoint of scarcity usually creates more of the same, with longer term consequences. Or, in other words, the executive I met with two weeks ago will not likely see an increase in revenue any time in the near future. The best she can hope for is that her competitors feel the same way.

Sure, it would have been easier to rehash her company's history in a feature release with no outcomes (or none that aligned with her business objectives) and then send an invoice for the effort. But sometimes accepting the wrong work for the sake of accepting it seems to me to be a different kind of scarcity that sends the wrong message to our team. After all, we're in the business of helping companies grow. We're not in the business of helping them decline. How about you?

2 comments:

Barry on 9/22/09, 8:59 AM said...

I wonder, psychologically, how much all of this fatalism is fed by fear. It seems to me that much of the nation and indeed the world right now are gripped by fear of movement in any direction. I am not talking about caution but paralyzing fear.

Is optimism on holiday or hiding out? Are we at a moment when many are questioning core beliefs?

I remain full of optimism but honestly find it less welcome than I used to. Or, maybe I am too afraid, nowadays, to really let this little light of mine shine.

Thanks, Rich, for a thought provoking read.

Rich on 9/22/09, 4:22 PM said...

Barry,

In sum, all of it is fed by fear. Our culture is so wrapped up in security that many of them struggle to move even one step forward.

I once told my son that bees were not be afraid of ... while our brain might tell us to be afraid of being stung, we do not feel fear once we were stung.

So why be afraid of the anticipation of what hasn't happened when, in fact, if it did happen, we wouldn't be afraid?

Make sense? It's written with haste. :)

I will admit it is more challenging when we are surrounded by fearful people. The best you can do in those cases is diminish exposure and find more outlets where people set their fears aside for a moment.

Glad you enjoyed it.

All my best,
Rich

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