Tuesday, December 16, 2008

THINK GROWTH! an article by Kathy Ullrich

Think Growth, Not Self-Preservation
By Kathy Ullrich

“Self-preservation is the worst mistake a CEO can make,” shared StrongMail CEO Sam Cece at the most recent Getting to the Top program at Stanford Graduate School of Business. “The role of the CEO is growth of a business and if the CEO is worried about self-preservation, he cannot be effective at growing the company. Just like the fastest race car drivers on the track, the best CEOs need to go for it. If you make decisions based on keeping your job, you will get crushed.”

The same concept may apply to companies in uncertain economic times. Of course companies may have some belt tightening to shore up resources. Beyond that are the strategic moves that can put a company ahead of competitors as the recession dissipates.

A McKinsey Quarterly article, Preparing for the Next Downturn, shared learnings from the previous recession. The article stated that despite many companies toppling from the top quartile, “Fifteen percent of companies that had not been market leaders prior to the last recession vaulted into these positions during it.” These companies had several common characteristics entering the downturn: balance sheet flexibility through lower debt-to-equity, operating flexibility from reducing costs, and diversified product offerings, including geographic diversity. All these gave the companies strategic flexibility to take advantage of opportunities.

To set the strategy and execute on it, companies need the right talent. For employees of all levels, self-preservation can mean doom. Employees need to think through how their efforts drive revenue, reduce cost or create strategic flexibility for the company.

As Silicon Valley came out of the last tech recession, I was quoted in USA Today. Google had hired Vinton Cerf, a father of the Internet, and the reporter wanted comments on companies’ use of executive recruiters. That was a time of major companies in Silicon Valley – SAP, HP, Microsoft, Yahoo -- hiring numerous executives in building toward business growth strategies. During weaker economic times, many key executives remain in positions rather than face unemployment and are therefore open to a new job for the right opportunity.

I encourage companies to think about not the incremental, but the big move that will propel the company, whether strategic or people changes. In softening markets, once the company has created strategic flexibility, it is the perfect time to take advantage of growth opportunities over other companies worrying about self-preservation.

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