By: Michael McQueen
Downturns and hard times are often perceived as a curse in business.
When market share dwindles, sales dry up and nothing seems to be going your way, leaders often long for the former glory days of growth and prosperity. However, in the same way that nature has seasons, industries have cycles that serve an important purpose. The key to surviving, thriving and achieving enduring relevance in the long-term is to work with rather than war against seasons and cycles – especially the adverse ones.
Speaking to this point, economist Harry S. Dent suggests that the late 2000s great recession was far more than the consequence of poor management by corporate lenders or government regulators; it was an inevitable ‘season’ that companies and world economies needed to go through.
Economic winters, according to Dent, force companies to pay down debt, adopt new technologies and strive for greater efficiencies – after all, even poorly run companies can experience enormous success when times are good.[1] In the words of Warren Buffett, ‘It’s only when the tide goes out that you realize who’s been swimming naked’.[2]
As the adage goes, a crisis is a terrible thing to waste. Former Intel CEO Andy Grove puts it this way: “Bad companies are destroyed by crisis. Good companies survive them. Great companies are improved by them.”[3]
Crisis and hardship present individuals and organisations alike with the opportunity to reassess systems, reorient direction and reorder priorities. Often it is in these times that the deadwood of an organisation is pruned away, so that when the economic springtime comes it is ready to grow.
Some of the business world’s biggest success stories have emerged out of deep economic winters, and much of their regrowth can be credited to the power of pruning.
For an entity to remain healthy, growing and relevant, enduring organizations typically take their pruning shears to three key areas:
1. The Baggage of Bureaucracy
The larger an organization becomes and the longer it exists, the more bureaucratic and inefficient it often becomes. Like the ill-fated Titanic, bureaucracies often alter their course far too slowly when threats and changes emerge.
In a scathing assessment of the how bureaucracy led software giant Microsoft off-track in the 2000s, one U.S. commentator put it this way: “What began as a lean machine led by young visionaries of unparalleled talent mutated into something bloated and laden, with an internal culture that unintentionally rewarded managers who strangled ideas that might threaten the established order of things.”[4]
While Microsoft had once laughed at how bogged down competitors like IBM had become, over time Microsoft itself became the thing it despised: bureaucratic. As Microsoft had expanded during the early 2000s, so did its bureaucracy. More managers led to more meetings; more meetings meant more memos; and all this red tape came at the cost of innovation and agility. According to one former Microsoft engineer at the time, things moved at a snail’s pace to the point where software was essentially being designed by committee.[5]
The excess weight of bureaucracy will achieve nothing other than slowing your progress.
2. Excess Products and Initiatives
Steve Jobs recognized the importance of pruning underperforming products and non-strategic initiatives. Nearly 20 years ago now, when Mark Parker assumed the role of CEO at Nike and sought advice from Jobs, the Apple guru was candid. “Nike makes some of the best products in the world, but you also make a lot of crap,” he said. “Just get rid of the crappy stuff and focus on the good stuff.” Although the advice may have been blunter than Parker had anticipated, he conceded later that Jobs was absolutely correct. “We had to edit,” as Parker described it.[6]
Jobs offered similar advice to Larry Page upon his return to the helm at Google. Jobs warned Page that Google was making products that were adequate, but not great, and that he needed to cull some of them.[7] Page took Steve Jobs’ advice to heart – within seven months of his return, Google had killed off 25 projects.[8]
Too many goals will divide a company’s attention. Better to run wholeheartedly in one direction, than waste time deciding which way to go.
3. Misaligned Individuals
Remaining relevant will always require having the right people in the right roles at the right time – but it’s equally important to remove those who are the wrong person, in the wrong position, at the wrong time.
Former AOL CEO Tim Armstrong indicated this was a key factor in the departure of a number of senior executives from the company in early 2012. While some described it as a talent drain, Armstrong defended his strategy saying that all he was doing was “removing people from the company who are not performing.”[9]
Although non-performance is a clear reason for removing someone from a position, sometimes it is simply a matter of misalignment between the direction of the individual and the organisation.
Executives in certain positions may have grown complacent and closed-minded and as a result have become something of a hand-brake on new initiatives or innovation. In these instances, unless a willingness to change and grow can be fostered in those existing team members, there may be few options left than to prune away the old guard to make way for fresh blood.
With this in mind, wisdom is crucial in the process of pruning. One cut too many, and you can kill the tree. As any gardener knows, good judgment, common sense and a long-term view are the key elements of pruning that facilitates growth and flourishing.
It is human nature to gravitate toward the predictable, the safe and the familiar. Sometimes it takes the forceful jolt of a winter season to wake us up to the ways we have inadvertently slipped into a rut. In turbulent and disruptive times, no sacred cow is worth saving. Whether in the form of dysfunctional processes, outdated mindsets, or outmoded strategies and initiatives, vestiges of the past that may have served you well yesterday will likely prove to be a shackle tomorrow.
[1] Kash, R & Calhoun, D. 2010, How Companies Win, HarperCollins, New York, p. 223
[2] Rigby, R. 2011, Business Thinkers who Changed the World, Kogan Page, London, p. 23
[3] Carroll, P & Mui, C. 2008, Billion Dollar Lessons, Penguin, New York, pp. xviii-xix
[4] Eichenwald, K. 2012, ‘Microsoft’s lost decade’, Vanity Fair, August
[5] Ibid.
[6] Gallo, C. 2011, ‘Steve Jobs: get rid of all the crappy stuff’, Forbes, 16 May
[7] Rosenthall, J. 2012, ‘Steve Jobs’ advice to Larry Page’, Digg, 22 October
[8] LeClaire, J. 2011, ‘Larry Page-Run Google shutters 7 more projects’, NewsFactor, 23 November
[9] Adams, R. 2012, ‘AOL’s CEO defends strategy’, The Wall Street Journal, 13 March
Article supplied with thanks to Michael McQueen.
About the Author: Michael is a trends forecaster, business strategist and award-winning conference speaker.
Feature image: Photo by Jose Mizrahi on Unsplash
