When the economy contracts and "business as usual" is disrupted, we become very tentative, and the temptation is to withdraw. Hunkering down is no way to win a battle. Now is the time to gain ground on the competition and reposition your organization for the upturn. During 25 years of consulting with companies in many industries to improve business performance, we have observed that when management retreats under duress, they often intensify their problems. Boldness and well planned action are a winning combination when the going gets tough. Following are essential strategies we recommend to win in tough economic times:

Start with Peter Drucker's Three Principles for Leadership

• Focus on the Mission - re-verify that all activities, funding, and processes are focused on the mission and within the boundaries of the mission.
• Redefine Significant Results - make process simplification and waste reduction part of the significant results.
• Continue Rigorous Assessment - objectively measure all areas for alignment with the mission and contribution to business goals.

Evaluate Business Development/Sales Strategies

New business development and sales strategies may not be adequate to counter the receding economic tide. Now is the time to re-evaluate your company's competitive position and truly envision the future. Step back and consider new growth markets, examine competitive vulnerabilities and re-energize your sales team. Are there market segments that can be explored and exploited, successful but more poorly positioned competitors to be acquired, new products or services to explore? Are there short term revenues to be gained or longer term opportunities that need nurturing in preparation for the upturn? Shaping business development strategies and building new capabilities can help neutralize the impact of a declining market and better position the company for a variety of new scenarios.

Increase Revenue with Internal Savings

Track down persistent, high dollar waste producing redundancy, returns, quality defects, late deliveries, etc. Take time to identify and eliminate root causes of poor delegation, wasted action, rework, redundancy, quality defects, and poorly timed deliveries. According to Juran Institute research, most companies lose an average of 20% of total revenues from waste or poor performance. Eliminating internal waste drives dollars straight to the bottom line, unlike increased sales which only delivers a portion to the bottom line. In other words, while $7M in increased sales potentially adds $1M in net profits, $7M in internal savings equals $7M in profit! Home Depot is a recent example of the dramatic impact of internal savings. Through their internal savings program named "Home Depot Lite," they reported a 22% increase in 2001 3rd quarter net profit even though sales dropped 7%! The dramatic bottom line impact was achieved through internal cost saving techniques aimed at improving processes, individual performance and technology.

Optimize Human Capital: "Sharpen the Saw!"

• Innovate, Innovate, Innovate - Collectively and persistently use the innovation process to produce cost savings ideas. Solicit ideas particularly from contributors who do the job on which you are focusing. Invite your suppliers and customers to innovation sessions. Remember, best idea wins!
• Develop, Develop, Develop - Catch up on technical and soft-skills training. Don't miss opportunities to build employee competencies. Pay particular attention to your cross training and coaching efforts.
• Maintain, Maintain, Maintain - Review all of your equipment preventive maintenance needs; for example, in manufacturing settings leverage "deep maintenance" such as motor rebuilds as training sessions. Build your employee skills while you take care of the equipment.
• Retain, Retain, Retain - This 90's mantra remains in vogue for ongoing success in the new century, even through economic slowdowns. Use creative redeployment, job sharing, contract and gain sharing techniques coupled with developmental strategies to retain talent for the upturn. A key ingredient is a detailed and well communicated plan for keeping and developing your talent.

Focus on Your Teams

Each of the above strategies proactively engages your team to increase morale. Pursue team-oriented sessions resulting in reduced conflict and more focused efforts. Employ Deming's "Drive Out Fear" and "Break Down Barriers" Techniques to keep the lines of communication open. Employees are empowered through teams and vision to implement business development and internal savings strategies; resistance to change is minimized through high levels of commitment. Finally, remember that stronger team accountability yields maximum results.

If you feel besieged, now is the time to take the offensive. There are dollars to be saved and made by strategically repositioning your organization for short-term survival and long-term growth. Don't mistake a downturn as a time for defeat or retreat - it's a time for battles to be won!

By Sheryl Dawson
CEO
CPI Houston