Archives: June 2008

26 Rules for Recessions

I spoke last Friday to the Pacific Coast Builders Conference—those left standing remain at the heart of a Perfect Storm. One solution to passing my 90 minutes would have been a prayer meeting. Passing on that due to lack of leadership qualifications, I decided, at the urging of the conference chairman, to talk about “excellence in tough times.” I began with a list of assertions, which I reproduce here. The ones which were totally limited in scope (remarks about Barry Bonds, Sandy Koufax, Port Hueneme CA, et al.) have been excised. Though some of what follows is still narrow in focus, most of the “assertions” have reasonably widespread applicability. I have only lightly annotated my simple statements:

**That which goes up also comes down.
**That which goes waaaaaay up also comes waaaaaay down. (“It was in the Beginning and now and ever shall be. Amen.”—maybe I could have led a prayer meeting after all.)
**IQs rise as markets go up. (Isn’t it amazing how smart we all were 18 months ago?)
**Why have we done this s%^# over & over & over?
**Why will we do this s%^# again & again & again?
**The “madness of crowds” is the most profound statement of truth ever.

[Sooooooo many "smart" people get conned over and over and over. This is the second time in a single decade—dotcom crunch time was 2000 more or less. Near the end of the dotcom era, I admit that I tossed a few bucks at the market. I'm not all that interested in stocks—real estate is my indulgence. But my irrational side said, "Sure, it's overpriced, but you can't sit the whole damn thing out." So I invested, and a year later got about 2 cents back on the dollar. Timing is, of course, everything—but that's not enough to explain our chasing markets whose valuation is nutty-squared to the naked eye. The dotcom cycle was even more absurd, if lower in impact—companies valued at fives of billions of dollars, without a penny of revenue in sight. It is plain madness, the provenance of shrinks, not economists.] [And, alas, forewarned is definitely not forearmed.]

**Bigger is almost never better.
**Big mergers are stupid.
**Big mergers spring naturally from big egos.

[At times of market uncertainty, the biggies, even the so-called "good" biggies, bulk up to defend themselves. We've seen it in financial services, consumer goods, pharmaceuticals, steel—you name it. The strategies invariably lead to the loss—rapid loss—of even hundreds of billions of dollars in market cap. And yet we do "it" again and again, and the perps are often our most "heroic" execs.] [And, alas, forewarned is definitely not forearmed.]

**It doesn’t get any better than this—the likes of U.S. Grant, Abraham Lincoln, and John C. Fremont were born for moments such as this. There is no such thing as a good-great leader who has not confronted, been battered by, and stumbled through-overcome a catastrophe. The Upside for the resilient and gutsy and creative is as high as the downside is low for those who attempt to hide in the closet until the fur stops flying.

[Find me a single example of someone who made the history books who hadn't had the crap kicked out of him-her—typically time and time again. Adversity is the soil of great accomplishment—period. Which doesn't make getting kicked around any more fun at the time. I'm at a bit of a loss here for pragmatic ideas—assuming you are not the boss of bosses, perhaps a good bet is to form some sort of offensive support group—The Resilience Rambos? The idea is to dwell on the opportunities that doubtless lie amidst the wreckage.]

**Take advantage of others’ timidity; tighten the belt with a mighty tug, but in a key area or two, double the strategic project budget rather than halve it.

[When the dotcom implosion occurred, most IT budgets were slashed and slashed again—but Sysco's CEO saw a once in a lifetime opportunity in others' timidity, and pulled in the reins very hard in general to free up money to act hyper-aggressively on IT. Some others in this wee wise wedge have taken advantage of slower times to juice up the training budget, hence increasing the quality of the workforce.]

**Women rule. And make (almost) all the residential real estate decisions.

[Tom on his high horse again—women make the purchase decisions, yet my audience was mostly male. Stupid. In talking with folks afterwards two themes emerged: First, women are less ensnared by competition for competition's sake; their drive for excellence is as high as any man's or higher, they are just less inclined to try and prove themselves by outbidding "the other guy" for an already overvalued asset. And second, women simply are better listeners—which makes them particularly more effective in the homebuilding world, where the customer's decision is one of the most important in her life. Listening is also a miracle strategy when times are tough—e.g., the Great Listener is far more likely to get the loan extension!!]

**Decency must not be sacrificed in tough times.
**Decency is more important than ever in tough times.

[Insanely, great numbers of businesspersons, panicked by rotten market conditions I suppose, resort to shortcuts and churlish behavior to last out the day. In fact, bad times are the best times to behave well—for pragmatic as well as philosophical reasons. At the very least, if you go under, your personal reputation will be in tact—which is the ultimate cornerstone for a comeback.]

**Painful decisions must be made—make them as gracefully as possible; doing so is the best investment in the long term possible. Your reputation will be shaped by the long memory of how you behaved when the fan was covered with yogurt.
**Tough decisions mostly affect other people’s families. You must still make the tough decisions, but the minute they cease to be agonizing, resign—you’re not worth saving.
**Character rules in adverse times.
**Now is when investment in relationships pays off—and now is when you pay the full price of not having invested in relationships when times were good and you didn’t “need to be nice” to others.
**Keep good people—if it kills you.

[Don't mess with your franchise players. Nurture them as never before.]

**Practice transparency to a fault.

[People in the know—from receptionist to EVP—are far more likely to be positively engaged and supportive during a nasty downturn. "In the know" means "the works," not just a few breadcrumbs of sanitized info.]

**If your world is in relatively good order do not be tempted to use this “opportunity” to “consolidate” by acquiring questionable assets at firesale prices—you are not good enough to turn cow pies into gold; only your ego thinks you are, and your ego is, as usual, wrong.

[For example: We'll see, but the Bank of America seems to believe that it can sprinkle some sort of pixie dust on the remaining Countrywide staff, and create a real estate powerhouse down the road. I, instead, see a washout and 6,000-foot drop at road's end.]

**Smaller but really good is a better place to be.

[As always, in my remarks I referred to Germany's "Mittelstand," its middle-sized, focused stars that propel Germany to the top spot in global exports. I am the unabashed fan of the smaller or middle-sized focused enterprise. The Mittelstand Spirit and commitment to Excellence are also the best defense against hard times!]

**Work out more and harder in bad times—get high or less low on chemical cocktails generated by killer workouts.

[Bad times are killers, literally, especially if you respond with strings of 20-hour days. Among other things, your judgment goes to hell in a handbasket—and your inevitably irritable disposition is an inspiration to no one, starting with your 9-year-old.]

**You will be remembered in the long haul for the quality of your work, not the quantity of your work—the quantity part is just your defective ego talking—no one evaluates Picasso based on the number of paintings he churned out.
**Take advantage of tough times to realize that in the long haul you will be remembered for your humanity not your net worth—think Tim Russert.
**You, too, God willing, will be 65 some day—and when you look back it’s never the easy times that pop up in the viewfinders; it’s the valiant struggles and adversities suffered and occasionally overcome that fill the highlights tape.

**If not Excellence, what? If not Excellence now, when?

[Pursuing Excellence in all we do is the ultimate turn-on, and the ultimate source of resilience in difficult times, in particular. And, as I see it, there is literally no way to lose. All that "stuff" about "the journey is the reward" turns out to be 100.00% right.]

The HFMA Event: More

Tom spoke to the Healthcare Finance Managers Association on June 26. In his speech he touted their magazine Leadership, and he insisted that we point you to its website. It provides stories about “compelling and inexpensive efforts” from all over the U.S. to address such pressing issues as patient safety. Tom added that “it proves this stuff can be done—and a million bucks of funding, or a twentieth of that, is not required to get on with it.”

As a result of this engagement, Tom also got a chance to meet Michael Millenson in person for the first time. For years Tom has been quoting Millenson’s book, Demanding Medical Excellence, and he credits it with fueling his interest in healthcare. I found this quote from the book in a Master presentation dated 20 June 2001: “A healthcare delivery system characterized by idiosyncratic and often ill-informed judgments must be restructured according to evidence-based medical practice.” You can read more of Millenson ‘s commentary at his website, HealthQualityAdvisors.com.

PCBC2008

I spoke yesterday to PCBC2008, the Pacific Coast Builders Conference (residential contractors), on the meaning of excellence in tough times. My title: EXCELLENCE. THE BASICS. NOW MORE THAN EVER. I shared the platform with, among others, Carly Fiorina, Malcolm Gladwell, and Gary Hamel. While I deny owning rose-colored glasses, I do believe that nasty times provide exceptional opportunities for those who grasp the nettle vigorously. Thus, among other things, I said, and meant:

“It doesn’t get any better than this—U.S. Grant, Abraham Lincoln, and John C. Fremont were born for moments like this. There is no such thing as a good-great leader who has not confronted, been battered by, and stumbled through-overcome a catastrophe. The Upside for the gutsy and creative is as high as the downside is low for those who attempt to hide in the closet until the fur stops flying.”

[For the slides, you can use this link: Pacific Coast Builders Conference.]

Event: HFMA

In Las Vegas today, Tom is speaking to the Healthcare Financial Management Association. I’m sure Tom has a great deal to say to them. We’d love to hear about the event in the comments, or if you’d like to get the slides, you can use this link:
HFMA, Las Vegas, NV

The Downturn Is a Rounding Error

The U.S. economy is in bad shape. If, by chance, you haven’t heard about this yet, just turn on cable TV news for 30 seconds.

What does this mean to your business? It could be terrible, but it doesn’t have to be.

How can I say that?

For the last few months, I have been asking workshop audiences the following questions:

1. What percent of your customers are giving you all the business they reasonably could?

2. What percent of your referral sources are giving you all the referrals they reasonably could?

The answers to these questions have stunned me, because they have been so low. I knew they would be quite a bit lower than 100%, but I’ve found that most executives estimate that only somewhere between 0 and 25% of customers are giving them all the business they could. The numbers are even lower for referral sources.

So, let’s say that the economic downturn has softened the market for your products or services by 10—20%. Yes, that’s a lot. But it pales in comparison to the 75% of the business you are missing if your current customers are only giving you 25% of their potential business.

Here’s the cold, hard (but potential-laden) truth: For most companies, the untapped latent profit in their existing customer relationships is much greater than the magnitude of our current economic problems.

The downturn is real. But so is the amount of business you are missing from your current customer relationships. How do you develop this potential with your existing customers?

Customers who believe they are in “We” relationships with you will give you a larger share of their business. They are willing to pay more, and they are less likely to leave you for a competitor. On the other hand, customers who are in “Us & Them” relationships with you are more likely to spread the business around among your competitors, and will also be more likely to bolt to the competition for a lower price. If you create “We” relationships with your customers, one relationship-building encounter at a time, you will go a long way towards making up for—and maybe even surpassing—the effects of the soft economy.

The "Stuff" Is the Fluff, The Flower Is the Power

Vase filled with flowers

I see there’s a lotta talk about Posts with flowers pics! Fact is, The Great Peony Post was just an innocent (I thought) riff about missing home, pretty flowers, and Mid-summer’s.

But if you wanna fight …

I stand foursquare (“fivesquare,” if there were such squares) on … The Side of the Flower.

Remember my Post a while back about “mapping your competitive position,” in which I said, in effect, forget the intellectual mapping exercise—go visit a customer instead? Well, I feel the same way about Peonies.

Forget the “clever” rants on “mergers, yes or no” or some such weighty strategic matter, and get on with the business—The Real Business—of, say, recognizing someone who went the extra quarter step for a colleague, vendor, customer. Recognize him-her-them, I suggest-demand-command, with Flowers! Do it … NOW!!!!

Invest in a new, well reviewed management book (or an old one, by me)? Or invest in Power Peonies to enhance or cement a relationship? Game, set, match, Center Court Wimbledon to those Relationship-building Peonies!

(Above, from our garden—Susan’s garden!—for Midsummer’s.)

100 Ways to Succeed #127:

Send Flowers! Today! X10!

Send 10—TEN!!—people flowers. Today. As “Thank yous” for good things “small”—or even large—done in the last two weeks.

See How Simple What You Cannot Do Is: The 240% Factor!

Woody Allen’s “Eighty percent of success is showing up” was the topic of a recent Post. One great comment (Rob) added a nice twist: “And I reckon a large part of the remaining 20% is Refusing to Go Away Again.”

Coincidentally, I came across the following the next day while listening to Ernest Hemingway‘s Garden of Eden:

” … Finishing is what you have to do. If you don’t finish, nothing is worth a damn.

” … Write the hardest story there is to write that you know. Start it tomorrow. The hell with tomorrow. Go and start it now.

“He sat down and wrote the first paragraph of the new story that he had always put off writing. … The very beginning was written and all he had to do was go on. That’s all, he said. See how simple what you cannot do is?”

Message-Lesson/s: The first 80% of success is showing up! The second 80% is sticking around and refusing to leave! The final 80% is finishing! See how simple what you cannot do is?

(NB: Sounds like a biography of U.S. Grant—and doubtless many-most others who succeeded against very long odds.)

The World Is a Liar!

In case you missed this:

“In a way, the world is a great liar. It shows you it worships and admires money, but at the end of the day it doesn’t. It says it adores fame and celebrity, but it doesn’t, not really. The world admires, and wants to hold on to, and not lose, goodness. It admires virtue. At the end it gives its greatest tributes to generosity, honesty, courage, mercy, talents well used, talents that, brought into the world, make it better. That’s what it really admires. That’s what we talk about in eulogies, because that’s what’s important. We don’t say, ‘The thing about Joe was he was rich.’ We say, if we can, ‘The thing about Joe was he took good care of people.’”—Peggy Noonan, “A Life’s Lesson,” on the astounding response to the passing of Tim Russert, the Wall Street Journal, June 21-22, 2008

(Truth is, and Noonan acknowledges this, I thought the Russert-mania was a little over the top. As in, “Stop the press, decent human discovered inside the Beltway.” Nonetheless, Ms Noonan’s assertions about what matters, and what doesn’t, with which I agree 100.000%, are well worth repeating … again & again & again.)

100 Ways to Succeed #128:

And You [Me]?

I wish you a long life, but if tragedy were to have struck you yesterday, what do you think “they” would say at your memorial service? This maudlin question is not to be dwelt on “24/7,” but it is worth considering on an irregularly regular basis.