A Look Back
How to Take the Lead to Win in a Bad Economy
There is no doubt about it; the economy is in bad shape, although it is getting better, slowly. As we all know, the news media has learned over the years that bad news sells more copies, or gets more viewers, than good news.
In the past there have been other tough economies, such as the Great Depression. The question to ask is, what can we learn from the past depression that will to develop new business leading to cash flow and profitability? Looking back at the last depression will illustrate several ideas that can turn your company into a winner.
A long time ago when I was a kid, my identical twin brother and I were stuck in the back seat of the family car as we made the trip from Willits, California, an old logging town where we lived, to the big town of Ukiah, about thirty miles south, with a population of around 7,000. My brother and I used to peer out the car window to the west of Highway 101 at a white fenced dirt racetrack located way down in the valley. You could barely see it through all the giant gnarled oak trees.
We tried to imagine why the racetrack was there. Over the years, I traveled that road hundreds of times and on each trip I would look down and see the white painted fence of the oval track that gradually disappeared. No one ever paid any attention to the racetrack, but the rumor was that a famous horse used to train there. Two years ago I drove the same road, and when I got to that very place, I looked down and tried to spot that track. It was not there anymore, but I could still see where it once had been located.
Several years ago I read Laura Hillenbrand’s Seabiscuit: An American Legend and a short way into the book Hillenbrand describes Charles Howard’s purchase of the Ridgewood Ranch just south of a logging town named Willits. On this 17,000 acre spread Seabiscuit was trained and then healed to race again in a big comeback. Little did I know that in the valley that I knew so well there was a story of inspiration and hope.
The movie about Seabiscuit, which came out several years ago, ironically enough, prior to the current recession, told the story of winning in the depression, similar to what we are all now experiencing. There are lessons to be learned from this story about attitude, and winning.
Seabiscuit, a descendant of the great thoroughbred Man o’War through his son Hard Tack, is on the surface about a short awkward thoroughbred horse with knobby knees, and Johnny "Red" Pollard, a tall accident prone jockey; a trainer, Tom Smith, who was a lone plainsman living in solitude who had accepted his fate, and Charles Howard who became very wealthy only to find grief because of the sudden accidental death of his son.
Seabiscuit ties them together and gives them a purpose, and in the end, they heal each other, and win. The movie is really about self-reliance in tough economic times, for hanging in there, for second chances, for seizing the moment, and for saluting the little guy that never gives up. It’s about attitude. Isn’t that the same thing we are all after?
What a lesson for people. What a lesson for business.
In business, in the coatings business, in the construction business, in the architectural business, in the engineering business, leaders must lead. But even leaders are subject to pressures of their job for at times the demands of leadership can be staggering. True leaders know that they must hang in there, they must look for the second chance, they must recognize and seize the opportunity, and should never give up. That is why they are good leaders.
The strategy of leadership is extremely important in managing a business.
Leadership is about winning, and winning is about perseverance even on the muddiest track. Winning is about attitude. Following are some Winning tactics that will help you and your team get to the winners circle.
- Always have a Plan
- Develop a Team
- Look for Opportunities
- Pick Your Races
- Know the Competition
Always have a Plan: This is the most important part of getting to the winner’s circle, for when you have a plan, a business plan, it means you have a goal. Now I know from the seminars I have done that many companies do not have a plan. I also know that eventually when they do run into a problem they sometimes don’t even know it because they do not have a way to measure what is happening.
With a business plan in place you will have the ability to constantly measure performance, and be in a position to quickly make changes when you must. If your strategy is to develop a retail interiors niche and you constantly place in the pack, then something must change. A business plan is not set in concrete; it’s a series of benchmarks on your way to success. Think of it as the clubhouse turn and the quarter pole.
Develop a Team: You can’t do it alone. Someone must ride the horse, someone must train the horse, and someone must feed the horse. You must assemble a team of players, each one responsible for one area of the business.
For a painting and coatings company, your team will depend upon the organization of your company. But it should include administrative people, your estimators and sales people, as well as your business development and marketing person, head of field operations and a superintendent. These people represent your management team who’ll be charted with the responsibility to champion various company objectives.
Look for Opportunities: In every economy, there are always opportunities. Sometimes you have to sit down and ask, what’s working and what’s not working. Where do we go from here? Maybe it means changing the way you deliver services. Maybe it means focusing on a particular market niche. Maybe it means focusing your marketing dollars on promoting a different service. It has more to do you’re your attitude than anything else. Whatever it is, the company that constantly has the ability to evaluate and to make changes is the same as a horse moving up in class, or changing jockeys, or changing the distance. Adversity for some becomes an opportunity for another.
Pick Your Races: This is different from looking for opportunities. Picking your races means you constantly monitor all the variables regarding a particular project and pick those projects where you SHOULD be the selected, as you have the best credentials for the project, or the ability to have the best price, or you have the best designer for that type of project. Capacity means you can’t do everything. Capacity means you must pick your races to maximize your opportunities.
Know the Competition: You must know who you are running against. Watch out for Silver Slipper as he’s a last minute charger and will race you hard at the end; Youngblood is a fast starter but can’t hold the distance in the last furlong; and Postage Due will swing wide on the turn and give you an opening. Meaning, if you know who your competition is, and know their strengths and weaknesses, then you can pick your races and have a better chance for victory.
Seabiscuit wasn’t considered a great prospect.
Eventually Seabiscuit was matched with War Admiral in the 1938 “Match of the Century.” War Admiral was a taller and stronger horse, and had racked up with more wins. But Seabiscuit won by over four lengths in front of thousands of fans that cheered him on at War Admiral’s home racetrack, plus forty million fans around the United States who listened on the radio at the height of the depression. What is even more surprising is that War Admiral posted his best time ever for the distance. Seabiscuit ran an incredible race giving the out of work and homeless hope in a bad economy. If Seabiscuit could win, a knobby-kneed small horse that ate too much and ran in the pack with an overweight jockey; they could win. Seabiscuit had the right attitude.
Seabiscuit continued to win. In the return to Santa Anita, Seabiscuit was injured, and he was taken to Ridgewood Ranch near Willits, California to heal. Time went by and training started, and eventually he came back and continued to win against all odds. He eventually won the Santa Anita Handicap, a race that had eluded him for years.
How to Win in Today’s Economy
There is construction activity happening in the marketplace. Industrial is very slow and residential by the big builders won’t happen for several years, according to the experts until the short sales and foreclosures end.
However, there is some activity in the retail sector. Just around the area where I live, four major stores have opened their doors in the past twelve months – HHGregg, Binny’s, Ross, and Smashburger. That means that someone painted out these stores as they helped these major corporations open their doors for business. There is a trickle down affect as employee staffing, trucking, manufacturing are all impacted. Of course, none of this was reported in the news. This kind of pocket construction activity is happening all over the country as people, who have been laid off, or lost their jobs because of age, are tired of waiting, and are forging ahead developing their own futures.
These stores openings also means that architects, contractors and subcontractors are employed to get the work done. The question that must be asked, why are some construction related companies doing okay in this recession, while other ones are going out of business.
To try and understand this question, I recently talked with three companies, an architect, a painter and a construction manager. The architect is slowly going out of business. As it is typical with many businesses, the architects are not looking at how to shift the services they offer to attract new work. They are what I refer to as “hobby architects,” as they show up for work, go into their offices, and still do what I wrote in my 1991 book, Successful Business Plans for Architects, published by McGraw-Hill; they wait for the phone to ring. They don’t get it and never will.
Compare this company to a small painting company in the Chicago suburbs. Most of their work was with residential associations, which quickly dried up. The principal went back to single-family residences, and on making sales calls and developing an estimate, one homeowner said to him to “just give me an estimate for the second floor work, my husband will paint the lower half.” Realizing that this part of the market was also gone, he went back to the drawing board. He surveyed the market and identified a market niche where there was work dealing with specialty floor treatments.
After a lot of investigation and a huge learning curve, he drove across the United States where he purchased some used equipment and took training from the seller. He towed the equipment back and implemented a marketing program consisting of direct mail and telemarketing. He is now so swamped with work he is looking at purchasing additional equipment and hiring new employees. He is a great example of someone who refused to accept the conditions of the economy. He is someone who has a great attitude.
But unfortunately, like the architect, there are many painting companies that take the same road as the architect described above, for it is an easy road and filled with others who they can spend time with complaining. They cut staff, marketing, advertising, and next, they take jobs with no profit just to keep the doors open. These are like the architects, the “hobby painters.”
Last, I met with a very large construction management and general contracting company, who told me that three years ago he held a meeting with his staff, and told them that they were not going to participate in the slow economy. It would be business as usual and they would figure out a way to get the work and to maintain their accounts.
At the same time he was telling me this, one of his project managers came in to the office with a question on a project he was estimating. After a brief discussion the principal told him to bid the work high, as they can’t possibly staff the project. Their goal had changed to keeping them interested for the next time. This is an eighty-million dollar construction company and they have more work than they know what to do with.
The common thread to the painter’s success and the construction manager’s success is attitude. If you have a good positive attitude, then you employees are going to feel great working for you and their productivity and their enthusiasm will be unmatched. These companies also had a plan, and they developed a team of people around them. The looked for opportunities, they picked their races, and they knew how to compete.
The PDCA Peer Group has members who for the last five years have exchanged best practices. They help each other adjust to the marketplace. It’s like having the very best Board of Directors ever, as they are all knowledgeable. The Peer Group is facilitated by two diversified consultants who bring different experiences to the table to share with their members. The facilitator’s goals are to help the members see what sometimes they can’t see, or sometimes, what they don’t want to see.
But in the end, it’s the positive attitude that makes it all work, because these executives fly across the country three times a year to make a difference in their company, the other member companies, over long hard days in the meeting room, and longer evenings out in fine restaurants. Surprisingly enough, many of the “realizations” comes after hours among their group friends.
It’s all about attitude; it’s attitude that drives your employees.
In the end, your company may be viewed like that small ungainly boxy scrapper with stumpy legs that wouldn’t straighten, who became one of the most remarkable thoroughbred horses in American History during the great depression. Your competition might be saying, "Where did they come from." Many companies are often considered not to be contenders, but in the end, you just might win, for the very same reasons that made Seabiscuit a winner. Are you a contender or an also ran? Maybe your company will win the one-hundred grander, after all.
Look for Ron McKenzie at the PDCA 2012 Expo where he will talk about business plans, how to develop and use them effectively in your business. Contact PDCA or Ron McKenzie for information about the Peer Group Program.
