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Hot Topic by Peter S. Cunningham Over the last few years, I have gained a unique perspective on the traits that determine success or failure in both good and bad economic times. As counsel to a wide variety of organizations, from start-up to multi-national, I have had an opportunity to witness, from the inside, some tremendous market flops and awe-inspiring victories. Up until recently, the U.S. has experienced an unprecedented period of economic growth. It was difficult for any organization not to grow. Corporations had budgets that needed to be spent. Today, in the midst of a recession and a world full of uncertainty, the game is the same, only the playing field has changed. The harsh reality is that the economy goes up and down, and no one can give you a definitive answer as to when it will rise again, or why. But, that's ok. As a businessperson, the trick is to identify and take advantage of the opportunities that open up during these periods of dramatic change in the commercial landscape. In Chinese, the symbols for "opportunity" and for "crisis" are identical. Likewise, in business, opportunities often masquerade as challenges. These opportunities arise as a byproduct of change. As organizations adjust to fit the changing business and economic environment, corporate priorities and initiatives are realigned. It is at this point that the opportunity for growth via new products, services, markets, acquisitions, etc. presents itself, often with little competitive opposition. Depending on the leadership's perspective, you will often see one of the following three growth strategies employed by an organization facing slowed market demand. THE OSTRICH The Ostrich's growth strategy is quite simple: there is none. Essentially, the organization buries its head in the sand and focuses on "self preservation" by cutting costs, hoping they will weather the storm and that Wall Street will be kind due to their earnestness. It is the most prudent course to take when a lack of financial resources and other internal challenges hinder its ability to go on the offensive. Unfortunately, many organizations cut too deeply and penetrate into the bone of their core competencies and biggest assets---people. I have a client whose major competitor falls firmly into this category. After a significant cost-cutting initiative, the quality of service has diminished. Top talent has left the company and the stock price has fallen 82 percent in the last six months. As a result, the company has become helpless, while my client actively raids its top talent and customers. By the end of 2002, my client estimates that it will double its market share. THE ACADEMIC The Academic suffers from the dreaded "paralysis through analysis" syndrome. They create endless task forces, committees, and initiatives to study the problem and make recommendations. The problem occurs when too much time and money is spent on studying the problem and not enough on simply executing. According to one client, "In a crisis situation, I'd take a 'C' strategy with 'A' execution any day of the week over an 'A' strategy with no execution." THE INNOVATOR The Innovator is the realist. The organization recognizes the simple fact that the business environment has changed and it will never be the same again. It embraces the challenge and finds a new way to create competitive advantage. These are the companies that will emerge from this down-turn as victors. They are the companies increasing sales and marketing, while their competition is pulling back. They're aggressively expanding into new markets or buying their paralyzed competition with pennies on the dollar. Their actions are thought-out, decisive, and immediate, at a time when the competition is often standing still. In business, as in life, it's the decisions we make in bad times that have the greatest impact on whether we succeed or fail.
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