Is The Economy Moving Out Of Recession – And How Should You Prepare For It?

The leading indicators are getting better, the lagging indicators are still getting worse, but (some) at a slower rate. The key question today (16/07/2009) is around sustainability. How big an effect on the positive indicators comes from world Governments’ huge fiscal and economic stimulus packages and how much from real consumer/producer demand?
One thing is certain, when one sees contradictory evidence it means things have stopped getting worse, we are bumping along this bottom. This creates a dilemma for businesses. Should they continue with their defensive strategies such as avoiding risk, conversing cash, sitting hard on expenditure; or should they try to be first out of the blocks, attempting to steal a lead on more pessimistic competitors?

Here is a simple exercise to help you understand where your own planning vs. recession mind-set is:

Imagine the economy you operate in was clearly in growth mode at a reasonably sustainable level, but your own businesses performance was still where it was today. What would you now do differently? What ‘good to go’ plans can you instantly activate?

When one our of clients recently commissioned us to help in this area they realised they had nothing to push the button on, they had fallen into the trap of simply hoping that demand will pick up and that will convert into their own numbers growing healthily again.

This approach has two shortfalls. Firstly it means a more alert competitor might be exploiting post-recession opportunities ahead of you because they have planned accordingly. Secondly it assumes your market will be the same after this recession as before it, everybody just going back to business as usual.

Being in recessionary times should not restrict your creativity or more expansive thinking. Don’t confuse the timing of when you might do something with intentions – this is our innovation pipeline, these are our market beating ideas etc.

Career Thinking In Recessionary Times – Trying To Read The Curve

Many people would say having any source of income at this time is as much as you should expect, but if you are career rather than just job minded, this is no time to suspend your critical faculties.
Recessions are a form of economic change, a reordering of capital and (like war) an accelerator of innovation. Recessions also amplify business problems at the structural market level as well as on the individual company scale. Media is a good example of all these things at present.
There are profound changes going on in the newspaper sector, regional titles are closing through the onslaught of the internet, and changes in consumer habits (young people only read free newspapers, they get their news on line, PC and phone). Factor in the economy and you have a perfect storm. However in the UK, applications to study journalism are up 24% 2009 over 2008 (UCAS). Perhaps these putative writers see their future as bloggers, although the business model showing how that pays still has to be developed.

In Television its much the same, ITV are struggling to retain advertising spend, Channel 4 and 5 seeing themselves as subscale on their own. The latest thinking is the BBC should ‘top-slice’ its licence fee income to help out these broadcasters.

Streaming web content will develop a whole range of narrowcast options (and players) that will undermine satellite and terrestrial broadcasters’ offerings unless they find ways to complement and integrate. Copyright issues need to be transcended not fought over. The model of TV through your TV is on the way out.

A career in financial services anyone? Not only are there fewer jobs, the perception of Bankers has been severely tainted. When you see data showing people would trust their personal money with Tesco’s more than with banks you realise how much the world has changed.

People who do well in these times focus on one of two approaches. Either following their heart and do something they really want to do, putting material status, lifestyle issues etc. second, such as people who have left well paid city jobs and gone into teaching. Or people who see an emerging trend and follow it with real creativity and insight. There are many stories on the net of out of work software people designing games (apps) for the iphone and making six figure sums in a matter of months.

Career change is scary, dead-end careers are worse.

Distinctive Competencies – THE Route To Winning And Keeping Customers

Businesses that do well in a recession have more goods or services that people want to buy compared to the average supplier. Why is this?
The answer lays in distinctive competencies. It sounds too obvious, and it’s much simpler to say (or write) than to convert into practical application. Below we have provided a summary overview:

  • A competence is something the organisation performs. A distinctive competence is something the organisation performs materially better than its competitors.
  • Distinctive competencies deliver competitive advantage.
  • It is much easier to compete against organisations that have no strong distinctive competence.
  • Distinctive competencies are very difficult to copy.
  • Without constant renewal and refinement they will erode and lose their distinctive potential.
  • It is not critical to have lots of distinctive competencies but without any you will be constantly struggling to persuade your customers your competences are good enough for the prices you charge.
  • Strategic and discriminatory choices need to be made around which competencies you are going to develop into distinctive ones and which you are going to reject.
  • Your choices need to be aligned with market attractiveness and for the amount of actual and potential competitive intensity
  • Distinctive competencies derive from organisational capabilities, e.g. if you had the distinctive competence of being the Low Cost Producer in more sectors you would expect to find deep applied expertise around; cost and margin management, procurement, supply chain, outsourcing, resource management, MI etc.
  • You need a plan to manage the development of the required organisational capabilities.
  • The more learning focused and self-aware your organisation is the more easily it can develop distinctive competencies.


Are You Director Material? – A Follow Up

Last month we provided a checklist on being an effective director. This turned out to be one of the most popular articles we have published, with lots of comment from readers. This got us thinking – why? Below we’ve pulled together the comments and synthesized them with our own views into 6 major themes:


  1. The first and obvious point is there is a lot of ambition to become a director. It’s still seen as a real career aiming point, even though the rewards are not always obvious and the legal liabilities onerous.
  2. ‘I wanted to test my director against your checklist’. For many managers they do no hold their Director in very high esteem, our summary has given form to their frustrations.
  3. It seems that for some, the Director role is a function of position not action. The objective of becoming a Director has been achieved, that in itself is enough for some and their direct reports see it clearly.
  4. We also learned that for many Directors there is no clear mandate between their functional role and that of being a Director. Some were offered IOD training but many were not. As you might expect, this issue was more prevalent in Private, rather than PLC organisations
  5. Another common issue in Private, proprietor-led companies is the promoted, loyal employee problem. Often a successful, long standing relationship between an owner and key lieutenant is ‘rewarded’ with a directorship. The problem is the relationship doesn’t change, the new Director now having the right to see everything but feels embarrassed to ask, the owner carrying on as before, perhaps still with too much informality around procedure and board process. This problem can be especially acute when the employee director joins a board of family/shareholder directors.
  6. The long ago promoted Director who acts as an obstacle to progress. Experience is only of any value if it is leveraged effectively. If not, experience can be as much a liability as asset. It is critical Directors stay up to date and recognise their previous experience is a wasting, not growing asset. In this world of discontinuous change, insight and innovation are much more significant attributes for a director to have than just rear-view mirror experiences.

The major learn we have got from this thread of conversation is that the boardroom is rightly seen as a major driver of competitive advantage, but for many organisations they need to do much better.


Being Trusted – Perhaps The Critical Requirement For Today’s Leaders

All organisations are having to change, at a faster pace and in more radical ways than ever before.

This puts the requirement for leadership at a premium, where decisive, inspirational action from those in positions of power and influence is obvious and value-adding. The problem is many people who need to implement these different and challenging requirements look at their leaders with a crooked eye, thinking ‘Why should we follow you?’, ‘We don’t really trust you’.
With trust a leader can achieve much more, without it they will struggle to do more than exhort people to do better. Where does trust come from? To help clarify your own thinking we have put together a summary of the behaviours that stimulate feelings of trustworthiness.

  1. Consistent – You need to behave in ways that allow people to feel they always know where you’re coming from. People would prefer someone who is autocratic all the time to someone who flip-flops between being controlling one minute and laissez-faire the next.
  2. Fair – You cannot have favourites, or be mercurial in your decision making. People need to see you are objective and even-handed in all your dealings with others.
  3. Reliable – Always do what you say you will do, never over-promise and under-deliver.
  4. Values Driven – People need to see what you stand for through your dealings with others.
  5. Discreet – You are you good with other peoples’ confidences.
  6. Straight-forward – Effective leaders need to be political to some extent, but trusted ones are only political in the positive sense of being in tune with the hidden agendas and underlying group dynamics, not manipulating, double-dealing and back stabbing.
  7. Supportive – You not only help people with work related issues but offer broader support when needed
  8. Tough – You will say the (very) difficult stuff even when it makes you unpopular. You are not interested in how many Christmas cards you get, only in being effective and increasing the effectiveness of those around you.
  9. Human – People relate to you because you have empathy for their position, and you don’t put yourself on a pedestal.

These attributes are in no order of importance, and cannot be adopted as a short-cut to trustworthiness. People have got to have belief in your sincerity.

Are You Striking The Right Leadership Balance?

When times are tough people look for leaders to give them confidence and hope like never before. When the route to take isn’t clear, having confidence that someone in the team, the department or the organisation knows where they’re going makes it easy to follow. When people are behaving strangely in situations that they’ve never faced before it’s reassuring for others to know that there’s someone who is behaving in the way they not only expect, but they’d like to behave themselves.
Being a leader in tough times is no different than being a good leader in the boom times. Leaders strike a balance between confidence and empathy, they are able to clearly articulate their vision of what the future should look like, but are not so blinkered that they won’t listen to input from others or take account of a changing context. They are able to drive people forward with enthusiasm and motivate them to higher performance without pushing them into an uncomfortable stress zone.

Having one leader in an organisation is better than none, but having an organised and synergistic leadership team leads to sustainable higher performance. Unfortunately, much leadership reading and theorising focuses on the one transformational leader rather than the transformational leadership team. Having a group who respect and trust each other enough to have open discussions and to challenge the views and actions of others ensures better leadership, more robust decision making and effective implementation.

Finding the right balance at the right time isn’t easy, but Predaptive work with leaders to help them be more effective individually and to make a really positive impact as a high performing, functional leadership team. To find out more about how Predaptive can help your leaders to make a bigger impact contact: