Unrewarded Heroic Efforts in Adverse Markets

Posted on July 23, 2009

In the adverse conditions that exist in today’s economy, CEOs must be realistic about achievable objectives, not over-spending or panicking in futile attempts to grow revenues or profits.  What’s your call:  do you change direction or continue to buck the headwinds?

A few weeks ago we were sailing west (on a real sailboat), approaching the Golden Gate Bridge. It was a beautiful day with moderate winds. The sails were full, our bow was pointed towards Hawaii, water was flowing briskly past our boat, but we weren’t making any progress.

It made me think of so many businesses today that are working hard, with lots of activity, but little or no progress towards key objectives like sales or profits. The question on many CEOs minds, while they lie awake at night is, “Are we doing the right things? Should we just keep doing what we’re doing and wait for better economic conditions, or do we need to change what we are doing?”

We weren’t making progress getting under the Golden Gate Bridge due to a heavy flooding current. So even though we were sailing through the water, the direction of the water was offsetting nearly all of our forward motion–it was like we were sailing upstream. Since we had already decided on our course (going under the bridge), my first thought went to not screwing up what we were doing right. The sails were full, and we were at least holding our own, and not getting swept in the wrong direction by the adverse tide. If I had been inattentive, or had one beer too many, or been distracted, dreaming about big diesel marine engines, I could have lost hundreds of feet of progress in seconds.

Now is a time for all of us in business to be sure that we continue to execute the fundamentals well, including the basics of customer satisfaction, salesmanship, project management, and leadership. Even though we may not see immediate, tangible gains from tending to these tasks, we know that they are best practices that produce results over time. Conditions are hard right now, but most best practices rarely change, even in deep downturns.

The next thing I did out there sailing on the Bay was to look around and assess my mid-term situation. I looked to see how far the bridge pillars were from my position and if I was drifting toward them. I observed where other boats were, relative to me, and if they were heading my way. I looked up and down the shipping lanes to see if an ocean freighter was coming my way, and one was! I had about ten minutes to clear the channel.

Business does not often grant us the instant gratification we seek, and especially not in this nasty downturn. Most of the time it takes a steady hand to navigate through slow times tolerating little or no progress while keeping the company ship-shape and ready for the aggressive winds of growth ahead. All ships have a maximum speed, called a hull speed. Once you’re moving at hull speed, there’s no amount of trimming and adjusting and tinkering you can do to go any faster. This is true of many businesses too. Sometimes we need to learn to be satisfied with a slower rate of progress.

Of course, boats come with a manual that tells you what the boat’s hull speed is. Companies don’t. If you’re running a mature business where you’ve developed and tested known best practices and there is little competitive turmoil, it may well be your best option to settle for steady growth, or even no growth and wait for better conditions before increasing your investment. If this is the case, you’ll focus your team on incremental adjustments, fine tuning practices, increasing efficiency, improving performance, if even a percent or two. That presumes you’re business in not drifting toward the rocks, sinking, running out of rations, or otherwise imperiled. As for me, I had a massive freighter headed my way.

I had good control over the 36 foot sailboat. The only direction I was having trouble going in was the direction I chose—going under the Gate. So I adjusted course a bit to go sideways, closer to the bridge’s pillar to allow the freighter to pass through under the middle of the bridge, where the channel is. As I made this course change, I started going both sideways and backwards back into the Bay, shoved by the current. It was a setback, but clearly better than being run over by a freighter.

Setbacks happen in all economies and they are always hateful. But sometimes you have to choose the least harmful setback that allows you to live to fight another day, and not get so frustrated, tense, stressed or wound-up about it. I’m not suggesting a mellow attitude toward your company, just that each of us as CEOs must stay energized and positive so we can relentlessly keep leading our company forward. I know, recessions can feel like marathons, rather than the sprint to victory we all signed up for.

Just watch out for the rocks! It’s one thing to have break-even cash flow for a while, but it’s another to be running low on cash, to have your bank call your loan, or worse. As you observe danger coming closer, lay plans to take action to save the ship, and the sooner you do that the better.

But beware of panic-based changes. I could have put up a larger sail. It might have made me able to go faster. But the time and disruption to change the sail would have set me back much more than I ever could have gained. I could have reduced the weight of the boat by jettisoning some of the passengers, but then who would have been able to adjust the sails for me?

Those sailors among you are thinking, “Rob, did you even check the current book that would have told you the two times of the day when the current would be so strong?” Admittedly, I did not, and could have avoided this entire challenge had I done so. So my planning was clearly flawed. So too, in business, we have to plan forward to give ourselves the easiest playing field on which to score a victory. Of course, downturns are not so easily predicted as the current, nor their effect on each of our industries and businesses. But I could have chosen to sail over to Sam’s Anchor Café for a beer, or the City, or any number of other lovely destinations that would have been less difficult. Be sure that you’ve considered your intended destination well and considered other less arduous alternatives.

We finally made it under the Gate, then turned tail and headed for port in Sausalito. It was a light challenge for a guy who’s been sailing for 34 years, and trivial compared to the challenge most CEOs are up against right now. So if you’re lying awake with insomnia trying to reconcile how hard your team is working yet not making any apparent progress, be reminded that you are sailing into an adverse current, and holding your own or making small gains may be the best you and your team can do.

Key Takeaways:

1. If your best practices have stopped working well, be wary of changing them – it may just be much harder to get a sale in today’s environment. If you are new or trying new things it might still be that your test is failing. You may lose more by changing best practices, because of time lost making the change.
   2. Make sure you are fine tuning all systems for the best possible results. Small improvements can be critical.
   3. Keep a sharp lookout for problems arising. Sometimes you do have to take drastic action to avoid a fatal collision.