This is the final installment in a four-part series of postings by Strategy Professors Will Mitchell and Richard Burton. Mitchell and Burton outline four principles for leading your business as an opportunity driven strategist in tough times, rather than falling into purely defensive positions that are destined to be overwhelmed by economic pressures.

PRINCIPLE 4. MOTIVATE YOUR PEOPLE

We have already told you that part of principle 2 is to “invest in your people”. So, why are we coming back to people? Well, we were reminded about the importance of motivation by a recent talk to the graduating Global Executive MBA class at Duke University by Ferdinando Beccalli-Falco, the CEO of GE International. Mr. Becalli-Falco’s core point was that you will not survive tough times without the commitment of your people.

In our experience, when times are good, the second thing that comes out of our mouths, after “we are customer focused,” is usually “our people are our most valuable resource.” But most of us do not really practice the people mantra. We take advantage of the rising tide to succeed as businesses despite under-performing in how we motivate and build on our employees’ insights. We do not have that luxury when times are tough.

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This is the third installment in a four-part series of postings by Duke Strategy Professors Will Mitchell and Richard Burton. Mitchell and Burton outline four principles for leading your business as an opportunity driven strategist in tough times, rather than falling into purely defensive positions that are destined to be overwhelmed by economic pressures.

PRINCIPLE 3. STAY OUTWARDLY FOCUSED

When times are tough, the temptation is to hunker down and focus inwardly, trying to cut costs and protect our traditional core. But tough times create advantages – firms that find ways to reach out for those advantages while protecting cash and reinforcing current advantages will both flourish in the tough economic times and create platforms for growth when times get better.

Now, we can hear you saying that it is easy for us to say “stay outwardly focused”, but is this really realistic when you have to protect cash and reinforce our current advantages. Nonetheless, firms that keep one eye beyond their walls in tough economic times will find powerful opportunities.

We stress three points about staying outwardly focused: Sources of opportunities parallel your needs for investment, outward focus reinforces principle 2, and outward focus creates opportunities for selective expansion even in tough times.

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This is the second installment in a four-part series of postings by Duke Strategy Professors Will Mitchell and Richard Burton. Mitchell and Burton outline four principles for leading your business as an opportunity driven strategist in tough times, rather than falling into purely defensive positions that are destined to be overwhelmed by economic pressures.

PRINCIPLE 2. REINFORCE YOUR EXISTING ABILITY TO CREATE VALUE

You would not exist as a business if you were not offering some form of value to the market – whether manufactured goods, human services, or other valuable activities. Be absolutely clear about the sources of advantage that allow you to create value that your competitors do not match – know where you have cost advantages, where you have advantages based on differentiation, whether in fundamental quality or in delivery speed and reliability, and where you have advantages based on your ability to innovate. Then make sure that you protect and reinforce those advantages in value creation.

Principle 2 has three parts: Integrity, investment, and adaptability.

1. Integrity. Retain your integrity as a business – know your core principles and stay true to them. It is easy to fall into the temptation to cut corners when times are tough. We can all think of opportunities that will help us generate a bit more cash if we did something illegal, unethical, or simply out of keeping with our core principles. But bad practices that we use to survive typically turn around and bite us when the economy improves, either because the illegalities catch up or because the people we squeezed will remember. Moreover, cutting corners often contributes to failure in tough times rather than helping us survive, because those few who have money to buy our goods and services will look for alternatives if they recognize the lack of integrity.

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This week we will feature a four-part posting from Duke Strategy Professors Will Mitchell and Richard Burton. Mitchell and Burton outline four principles for leading your business as an opportunity driven strategist in tough times, rather than falling into purely defensive positions that are destined to be overwhelmed by economic pressures.

PRINCIPLE 1. PROTECT YOUR CASH FLOW

Tough times mean that credit is tight. The money you generate from your operations will be the money you can count on for the foreseeable future, no matter how profitable you may be. While investors might love your business in principle, they often will have little cash to give you in practice. Cash flow planning takes some of uncertainty out of tough times and puts you more in charge of your own destiny.

Seek both savings and revenue. Protecting your cash flow begins with cost reductions. Tight control on hiring is an obvious need. Travel is also an easy place to begin, whether this means cutting unnecessary travel or traveling coach (trust us, your legs will wake back up from their crowded coach seat positions once you walk around for a few minutes). Experiment with new “virtual” ways of staying in touch with suppliers, customers, and partners. But protecting revenue is equally important. Protect your best customers and look for new markets, in order to find new revenue rather than simply seek to control costs.

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