7 Lessons for Leading in Crisis

Denial Compounds Harm

Japanese Buddhists use the word Satori to mean a sudden realization of hidden truth. The experience is a familiar one – you discover a secret side to your best friend; a trusted business partner turns on you; your investments evaporate in a market bubble; a funeral reminds you of your own mortality and finite lifespan…
It is only after our Satori experience that we come to grips with reality and abandon comfortable illusions. This is the first of George’s lessons in crisis leadership, facing up to reality, no matter how distasteful it may be.

How often do you see denial compounding harm? Quite often. In business, we come to the game with a sense of optimism, optimism which allows us to strive for goals the fatalists think unattainable. But what happens when hope is misplaced and optimism overworked? We imagine the situation is better than it is and thereby make it worse.

George gives examples of CEOs who were unable to face up to difficult realities – denying problems to their boards and two-stepping in the media. Here’s the bottom line: You can’t beat reality. If there really is a problem, no matter how nasty, it has to be admitted and addressed. Surviving a business crisis always starts with transparency.

The second temptation, after denial, is to ‘go it alone’ and withdraw by focusing on aspects of the situation under personal control. This too is a mistake. George tells us in lesson two that handling crisis means recruiting help. Any predicament worth the title crisis is a problem that is going to take a team effort to resolve.

Bringing in a team will also help you avoid procrastination and denial in your own response to the problem.

Once you’re past the immediate emergency, it’s important to then turn to the deeper problem that allowed the situation to become a crisis in the first place. And that’s our second insight.

Find the Root Cause

Disaster happens, but it happens for a reason. If you rely on first impressions you will only be addressing surface issues. In fact, the crisis itself is just a symptom. The real cause is usually much deeper and solving the root problem requires an examination of corporate structure and culture.
Without committing to a deep analysis of the context, the lessons a crisis can teach are lost. Worse than this, avoiding fundamental change just allows another crisis to appear next month or next year. Superficial solutions address symptoms – they treat the fever instead of the infection.

Why is this so difficult? We want good news and a positive outlook for our department or our company. The natural tendency is to spin a ‘fix’ into hope for a brighter future.

George gives a wonderful example of how GM refused to look at fundamental problems they had in the automobile marketplace. They instituted a series of marketing Band-Aids instead of understanding that the deeper issue was product quality. No amount of flash and glitter was going to fool the car buying public into thinking reliability was better than it actually was.

The leader’s role is bringing the whole organization along – making them recognize root causes and helping them cope with the fearsome consequences of fundamental change. Crisis is not amenable to quick fixes or symptomatic treatments. While most of us ache to ‘get it all behind us’, facing up to the larger issues is the only way to truly heal the patient.

Understanding the big picture leads us to the next insight

Prepare for the Long Haul

A crisis can either hit with amazing speed and force, or, it may build up so slowly over time that it is hard to see when the tipping-point occurred.
Profits, customer satisfaction and stock price are the usual indicators of business health, but even these can be misleading. In the sensitive environment of a crisis weathered, any uptick can seem like the hoped for turning point. Unfortunately, the strategy of just waiting until things get better doesn’t work.

If a crisis points out a structural flaw, a complete overhaul of basic business assumptions may be in order. The marketplace changes and companies alerted by crisis have to change to operate in the new landscape. Paranoia runs rampant as traditional methods no longer seem to meet the challenges.

The long haul is the recovery period that companies need not only to regroup and rebuild after the current crisis, but to become crisis aware. The best chances for survival come from having ready cash available. “In a crisis, cash is king,” says George. He cites the example of Goldman Sachs, who announced (in August 2008) that they had liquid reserves of $100 billion. They then added to this with a $10 billion addition from Warren Buffett.

Following the cash is king mantra worked. Although one of the hardest hit companies in the financial sector, Goldman survived. They hung in for the long haul and reported $1.7 billion in profits in April 09.

With such power to transform business models, crisis can be used as a tool for necessary renovation – spring cleaning by way of flood. This brings us to the next insight.

Use Crisis to Cut Waste

Under crisis conditions, petty disagreements are set aside and the unthinkable becomes doable. Therefore, crisis can be a tool to make needed change. Our government tends to use this to our individual disadvantage. But we can use this same technique to our company’s advantage.
An extreme example would be re-organizational bankruptcy. Suddenly, under the looming threat of no job at all, union workers are willing to take pay cuts, employees become thankful for whatever benefits they can get and whole swaths of fat can be trimmed from a sluggish enterprise. When everyone recognizes crisis mode is in effect, deep changes aren’t just expected, they are often welcomed.

This is such a powerful tool, some organizations manufacture crisis to overcome entrenched corporate culture and toxic inertia. In 7 Lessons, we have the example of Jack Welch’s take over as CEO of General Electric. Welch saw a mature company stuck in an ‘old school’ bureaucracy. His method of getting GE lean and mean? Crisis by way of divestiture and wholesale firings. Unless a division could compete in their sector as number one or two, it was sold off. Through lay-offs and division-sales, Welch cut 100,000 jobs from the GE bureaucracy on the way to making GE a major global player.

Selling off parts of GE wasn’t strictly necessary – other CEOs would have taken a different path. But by creating a sense of urgency and impending crisis, Welch was able to light a fire under the remaining team members and reshape GE.

So crisis represents a real opportunity for change and growth…

Use Crisis to Grow Aggressively

Taking advantage of a crisis doesn’t have to mean aggressive cuts, it could also be an opportunity to “turn the battleship” and focus the team on a whole new mission.
Bill Gates saw the internet coming a bit too late… late enough that people within the company were sensing a crisis. Bill’s famous 1995 memo instructing all employees to consider the Internet in every decision they make helped turn the company around and prepared it for a new era of growth. Microsoft may be struggling in some ways still in the internet age, but imagine if Bill had not sent that memo.

Apple Computer experienced a similar turning point. When Steve Jobs returned to Apple, their core business was under attack and they were losing. The PC had made such inroads into the business community there simply wasn’t enough market share left. Apple’s crisis was an opportunity to introduce new product lines, the iPod and iPhone, essentially changing what it meant to be a computer manufacturer. By grasping the opportunity, Jobs broke through existing market fence lines and moved Apple into the music and telephony businesses.

So the idea of crisis as something to survive until things go back to normal is bogus. The best leaders focus on winning – on offense rather than defense. Under the proper leadership, a crisis can become a pivot point to a new phase of growth and profits.

Five Tips and Tactics for Thriving in a Tough Economy

economy Five Tips and Tactics for Thriving in a Tough Economy

 

What do people typically call the present status of the economy? A recession?  A downturn?  Whatever you call it, the rate of income growth across US businesses has slowed to a crawl, and that is scaring the pants off of a lot of people. Your own business may not be affected in any way, but the fact is that many people are worried about their future… very worried.

Bad news?  Obviously, in some ways, it really is! Those worried folks only spend less money these days and don’t buy anymore on impulse, making each and every transaction, making each sale a little bit harder.

But for those of us with the right approach, there’s hope. A sure hope and opportunity. You will ask, “Why?” The fact remains to be simple and true and that is while everyone else is capitalizing with less vigor and determination, you can do the exact opposite. As what Paul Lemberg puts it that while timid business owners are pulling in their horns and “conserving cash” you can outmarket them. As the unemployment rate creeps up, you can acquire their staff more easily.  And good businesses are for sale and can be bought on the cheap. How about that?

Here are a few martial arts business tips and tactics that will definitely help when things get rough.  These tips apply whenever your School needs a boost.  You can think of them as turnaround tactics.

1. Market Harder

Make sure to advertise your business harder!  Hey – either they will enroll in your school, or not.  And if they don’t, there are plenty of other clients and prospects, so who cares. But when students and prospects are feeling the pinch they become circumspect about how they spend their money, and it takes more persuasion to get them to enroll.  Research shows that it takes as many as seven – even ten – “touches” to get someone to take action.  And sales data shows that most people stop closing after the first try, and even professional folks usually quit after the third time.   Advertise harder.  Ask more often.  Use stronger arguments. Go back to your people repeatedly and make them see the need!

2. Narrow Your Focus and Broaden Your Lines

This may seem like a paradox – narrow and broaden at the same time.  It isn’t.  You’ve got to free yourself from all distractions.  Prune outlying ventures and offshoots that aren’t really part of your core business.  Narrow your focus and spend all your energy on strengthening the core materials and services that contribute most to your income.  Next, make it easier for your good students/clients to spend more money with you.  Figure out what related promo or services they want and need and make the strategy to offer it to them.

3. Spend More Money On Marketing

Most business owners “budget” for marketing, which only makes sense if you think of it as a cost.  Instead, if you see marketing as a income generator, you should be willing to be spend some defined fraction of that income to acquire yet more income!  That fraction should be a function of your average customers lifetime value.  If you follow tip 2 above, you will quickly increase your average lifetime value, and therefore be willing and able to spend more.  Test first. Make sure your programs work before you roll out big.  One more thing; in tough times, you may also want to think about increasing that fraction itself.  If you normally consider spending 10% of lifetime value to acquire a student, you may want to increase it to 12% or 15%.

4. Establish Your Referral Systems

Teach your Martial Arts Buisness to market itself. How do you do that? Well, it start’s with being REMARKABLE! What is your Buisness Story? This is a great place to start. Create your School’s story, why your passionate about teaching martial arts and how it came to be. Create a great looking sheet to give to prospects, Have a mural painted in your school of the story. This will train your students to TELL your buisness story to others. Also, use social media (video works best) to feature students. You will find when you put up a “student of the week” video on your blog or fan page that your students will be sending them to your page to check it out. Buddy Days, Contests and all other referral tactics only CONSITENTLY produce results when you have made every part of your martial arts business UNIQUE! Think of the last time you had a GREAT experience dining, you wanted to TELL everyone you know to go there. When you run Tactics such as a buddy day WITHOUT being REMARKABLE your students have no impetus to bring your referrals. SPECIAL NOTE We have a great new Video Training on our REFERRAL FLOOD SYSTEM, watch your inbox for detals.

5. Clarify Your Value Proposition

Remember: even if there really is a ‘recession,’ people are always going to spend money.  Perhaps not as easily or as much, but we all still have needs and wants, and we are going to try to satisfy those.  That means that while people aren’t rushing to pull out their wallets for every offer that comes along, they will still spend on things perceived as valuable.  What does that mean?  Before you may have gotten away with a lot of fast talk.  Now you have to prove it to them.  Spell it out; show them exactly how they will benefit – in financial terms like how martial arts can prevent them from hospitalization bills and other aspects of their lives.  Use case studies, testimonials, examples, demonstrations.

BONUS TIP – Sweeten Your Offer

Get OUTRAGEOUS! create a offer that your prospects can’t refuse and then sweeten it more. Check out your compettitors offers and make yours 10x better. I suggest using FREE trial offers with a touch of “Velvet Rope -Take away” in the process. Offer them a 2 week Trail and at the end of the 2 weeks we will BOTH see if it;s a good fit. Offer them a bonus gift right after the 2 weeks are up and give them little bonuses throughout the 2 week trail. This will make you UNIQUE and don’t forget to INVITE them into your membership or GRADUATE them into your club at the end of the 2 weeks. Once they have been ACCEPTED it makes it easy to ask them for the names of 3 friends, nieghboors or co workers. I like to do this on the 4 week Check Up call!

  

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