Countless corporate giants have crashed and burned like Sears Roebuck & Co., U.S. Steel, Eastman Kodak and Pan Am, to name a few.
But some big companies have “turned it around” – gone from stagnation to innovation. Most of them have used a 4-step strategy to turn around and I am detailing it out for you.
Step One: Start accounting the next recession in your P&Ls
The best businesses are those that are prepared to face the upheavals of the future. The foremost factor which many founders, CEOs and managers fail to project in their P&Ls is provisioning for the next recession / slowdown.
Generally, projections are made considering the last downturn as the last one – Once you understand the industry trends well, the P&L should be devised keeping in mind the future market trends.
Step Two – Define your purpose
Businesses are created to make money, let us all understand that first.
Once we are clear on that, it is important to define your product purpose which you will be working toward in the minds of your consumers.
For instance, the founder of one of the Coke used to say that “one day my cola brand will replace tap water”. Which essentially means he envisioned replacing water with this cola brand.
The purpose has to be larger than life and something which will drive you, your employees and all stake holders to work towards that goal. Purpose is the true essence of a company.
Step Three: People
You are only as good as your people and here are a few tips for hiring managers which I always exercise:
i. Hire for character more than skills.
ii. Give a chance to passionate freshers, because passion has the ability to overcome challenges which are often considered to be insurmountable by experienced people.
ii. Compensate your team members generously. Evaluate compensations as per the value which the candidate will bring to the table, and not on the basis of their current salary structure.
iv. Never treat rock-star performers and average performers alike.
Above all, have a fair KPI system in place for a professional evaluation of all your team members.
Step Four: It is NEVER about top-lines, Bottom lines are the real meat of business.
I am a firm believer in cultivating a culture of hardcore savings in the company – saving money is important, but even more important is cultivating the culture of saving in every aspect of the business.
i. Focus on savings from the very start. Ensure all resources are utilized to their fullest possible potential.
ii. Always look at bottom lines. Top lines are never the indication of the real health of your bank account.
iii. Focus on future bookings and long-term contracts.
I was fortunate to work with companies where I was part of the core team – building brands from scratch or revamping existing brands. Working in such an environment takes your learning curve to an unbelievable level and helps to test your true mettle.
I hope the 4-step strategy that I have detailed above will give you food for thought. For any further inputs or suggestions, feel free to reach out to me.