How is it that companies that have been around for more than 100 years failed in this economic downturn while other, younger companies like Apple, Facebook, Wal-Mart and The Huffington Post continue to grow? It is a similar picture for many lesser-known, mid-sized companies: some have failed and others have thrived, irrespective of their industry, size or location.
It is the best of times and the worst of times. Too many businesses are reacting in fear, pulling back and struggling. There are 10 key differences between a thriving company and a floundering one. Ask yourself, are you:
1. Sticking to your niche or crossing boundaries?
Struggling businesses spend a lot of time trying to copy the “big guys” and wondering why this approach doesn’t work for them. Successful businesses ignore the big guys and focus on current and prospective customers. Many are finding opportunities at the overlap of two or more niches. They follow the example of companies like Cirque du Soleil, which combined elements of both the circus and theater industries in better venues than the average circus.
Is your company looking for opportunities at the boundaries of the industry?
2. Focusing on economists or customers?
Embattled businesses are often consumed by watching and reading about bad economic news, trying to understand the mind of economists. The successful businesses seldom have time to watch TV or read a newspaper. It does not mean they don’t hear the bad news; it’s everywhere. They just don’t dwell on it. They are busy watching their customers and going to industry events, trade shows and seminars to better understand the mindset of their customers.
When did you last did you go to a customer trade show or event rather than just events for your own part of the industry?
3. Focusing on price or value?
We all know stories of airline passengers paying 10 times the price of other passengers. This approach works in many industries. Service can be escalated based on value and delivered to some clients who would pay 10 times as much for added value. The struggling businesses are stuck in commodity-type situations with little price flexibility. Successful businesses find ways to achieve price controls and avoid competition because they are better at articulating their value and creatively pricing their services.
How much control do you have over your pricing?
4. Talking to industry leaders or to employees?
It is amazing how much time business leaders will devote to their own industry events. They sit on committees and attend conferences for their own industries, and spend more time talking to competitors, consultants and industry gurus than they do talking to front-line employees who are in daily contact with customers. The successful businesses seldom send people only to events in their own industry. They spend more time reviewing employee surveys than industry surveys.
Have you recently asked your employees about what customers are saying that could open the door to new products and services?
5. Preparing for best of times or the worst of times?
Struggling businesses cling to existing products and services and focus on cutting costs in all areas to protect cash in the short term. These businesses assume things are only going to get worse. However, successful businesses say they are seeing more volatility and having some of their best months and worst months in the same year.
Thriving businesses are focused on finding things that will help them in the good months and the bad months. They are breathing life into more experiments with new product and service ideas than ever before. Analysis has shown that most of their revenues today come from products and services they did not offer a few years ago.
How much of your revenues and profits come products and services you did not offer a few years ago?
6. Focusing on jobs or projects?
The most dynamic companies today have 80% of their employees spending more time on projects and only 20% doing routine work. Struggling businesses are caught up in traditional management hierarchies where employees are viewed through routine job descriptions. Management wants employees to do the routine work faster, rather than finding the next breakthrough opportunity. Successful businesses recognize and manage projects carefully—where they generate most of their new ideas and breakthroughs.
How much of your company is project-focused versus routine-focused?
7. Doing more or less?
We are so busy we tend to stick with existing methods because we don't have enough time to stop, reflect, research and implement something better. Struggling businesses add new work to employees’ to-do lists. Successful businesses have regular exercises to find things to stop doing, so that employees can find more time to do new—and more productive—things.
When was the last time your company had an exercise to see what you could stop doing?
8. Standardizing or living at the edge of chaos?
Struggling businesses love installing new, complicated (often computer-based) accounting, manufacturing or supply chain systems because they think that’s what the big companies are doing. They hope this will be the “silver bullet” to solve their problems. These large, complicated systems work well in situations where all the variables are known.
However, successful businesses tend to avoid those systems because they are not in control of all the variables that impact their business. Overly complicated systems don’t function well in complex environments where many of the variables are not known. Successful companies use a wide range of smaller, flexible systems that track customers and trends rather than tracking employees and financial history.
Are your business systems too complicated?
9. Keeping your financials secret or sharing them with employees?
Many successful businesses have learned that it works, even in the tough times, to share the news, good and bad, with all employees at all levels. This empowers employees to act with confidence because they know the whole story. The success rate with the turnaround increases dramatically with this one step. Successful businesses encourage their workforce to perform less like employees and more like entrepreneurial-minded, strategic partners. They also take time to celebrate successes, both big and small.
How much do you share and celebrate with employees?
10. Working long hours or taking more holidays?
Business owners and managers in struggling businesses seem to work longer hours in the vain hope that putting their head down and doing more of the same is the solution. The successful businesses focus on doing things differently. Successful business owners and managers work fewer hours and take more holidays. They have realized that when times get tough, it is usually because customers are buying less. They need an answer to why customers are buying less from them. Successful business owners and managers tell us they do their best thinking away from the office in situations that are less stressful.
When was the last time you worked fewer hours in the week or took an extra holiday?
Do you have what it takes to thrive, and not just survive, in this “new normal” economy?
Keep your business in mind, and see how many of these 10 questions you have addressed lately. It may give you a clue as to how well you are turning these worst of times into the best of times.