Posts Tagged 'perspective'

Leading through uncertainty: HBR July/August 2009

Reading this article in the most recent Harvard Business Review brought to mind dog agility tests. The dog, usually an Australian Shepard, runs manically, through the uprights, over the tipping bridge, under a log and through a canvas tunnel to reach the end line for a tiny reward:  small kibbles.

We, owners of remodeling companies, employees of remodeling companies and the myriad consultants, groupies and hangers on, of whom I count myself one, might be feeling like that dog right now.  Running, jumping, leaping and navigating tight quarters, often in the dark, to receive a tiny reward, at least tiny compared to two years ago.

Some perspective on the matter, however, might cheer us all:  if you’re still in business, if you’ve got sufficient cash flow, if you count hard working and engaged employees in your group, and among your clients satisfied long-term relationships, if your health is good and your family safe — you’re a lucky person!  And, just like that dog, ready to run the current obstacle course.

So let’s take this one step at a time.  One of the GREAT articles in the current Harvard Business Review is Leadership in a (Permanent) Crisis (page 62). The first paragraph reads:

“It would be profoundly reassuring to view the current economic crisis as simply another rough spell that we need to get through.  Unfortunately, though, today’s mix of urgency, high stakes, and uncertainty will continue as the norm even after the recession ends.”

Further on, it states:

“Crisis leadership has two distinct phases.  First is that emergency phase, when your task is to stabilize the situation and buy time.  Second is the adaptive phase, when you tackle the underlying causes of the crisis and build the capacity to thrive ina new reality.”

I hope by now most of us have stabilized:  gone through the heart-wrenching difficult tasks of letting people go, of changing the rent structure – perhaps even moving the office back into the home – and built a “starvation” company budget for the remainder of 2009.

Now comes phase two, “the adaptive phase”.  In this phase we’ll have to determine our new reality by re-thinking what we sell, to whom and how we sell it and how to best produce great outcome both in terms of customer satisfaction and quality construction.  Efficiencies, both in the production process itself as well as in economics of scale, should be put under the microscope for improvement.

Tackle, as always, the issues with the biggest payback first, leaving less vital considerations to fall off the ‘todo’ list over time.

Start now, prepare for the future by engaging your brain as well as your employee’s brains, ask your customers what they need most immediately and what they hope for down the road.

“Jack be nimble” should be our new mantra.  Starting today!

[Download reprint RO907F from HBR.org]

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Business Decline of 33% – How’s Yours?

I’ve been speculating for the past few months — not with stocks or bonds, not with gold or guns but with a projection for the remodeling industry.  Make that “my remodeling industry”.  There are many remodelers who fly ‘under the radar’ and with whom I have little or no contact – they don’t join the groups I join: Remodelers Advantage, NARI, NAHB, NKBA or the much-loved Splinter Group in Berkeley, CA.  They don’t attend the trade shows I speak at or attend:  JLC, The Remodeling Show.  And except for the remarkably active blogs on The Journal of Light Construction website, they don’t comment much on the blogs I write – either this one or that of Remodeling Magazine.  In a word, we don’t know one another.  So these aren’t members of “my remodeling industry”.

Members of “my remodeling industry” (and remember this is an industry made up of many, many members each of which – even the largest – accounts for a very small % of total overall remodeling $ spent in their marketplace) tend to be interested in running a full-blown stage 3 (at least) business as opposed to a craftsman shop, they’re primarily selling and managing the company, they know their numbers pretty well and they usually have an office outside the home.  Many of them have been quoted in Remodeling Magazine and a goodly number have been well-photographed on the magazine’s cover.

And many of these great people are in trouble, trouble I don’t even know about because we haven’t talked for a few months.  But I can tell you this, they’re not spending money with me.  My business has declined 33% for the first three months of this year over the same time last year.  If the recession began in December 2007, most of us didn’t even start to take it seriously till, at best, late spring of 2008.   And it wasn’t until September and October of 2008 that many people I know began making the first cuts in personnel.   And then we all began to draw up new year budgets with significant cuts in overhead.

When I told my good friend and remodeling consultant, David Gerstel (author of the great book “Running a Successful Construction Company” published by Taunton Press in 2002) that I was hard at work on an A/B/C budget accounting for a 20%/30% and 40% decline in revenue, he asked if I had prepared the “H” budget – “H” for “when hell freezes over.”

I hadn’t at that time but I have now.  If my business has declined 33% already, I don’t know where it’s going for the rest of the year and I am hard at work on that “H” budget.

This is what it means for me:

  1. My already minimal overhead can be decreased a few % points;
  2. My personal spending can be decreased by 10% relatively easily and by 20% with some attention (I’m planning a ‘stay’ vacation this year exploring my own beautiful backyard of Seattle rather than traveling somewhere exotic – like Mexico).

Add this to an increase in marketing energy   I’ve written and will send 12 letters to high-end remodelers in the Seattle area who I don’t yet know but who work in my neighborhood indicating my interest and availability in helping them get through this recession.  I’m also sending out letters to CPA firms asking for full-time, part-time work in construction accounting, client work-ups and budgeting.  In short, I’m turning up the dirt in new areas of my new city looking for new introductions, new conversations and the ability to help new people.

So I’m feeling better about the next 6 months. However, I’m not/we’re not out of the woods yet – no matter what happened last week in the stock market.

So make that budget, that “H” budget, then put it in a drawer but know you’ve faced the tougest test – what will I do if the unthinkable happens — if my business drops significantly more than originally anticipated.  I haven’t yet hit that 40% drop but because 33% is not that far away from 40%, now is the time to exert extra energy, focused attention to the task.

Good luck to us all.

PS:  I’d be very interested in how your business is faring.  I’d be glad to start a chart tracking the changes in volume of anonymous remodeling companies for 2009, Quarter by Quarter.  Please send yours to jfmiller@remodelservices.com.  I promise confidentiality.  Thanks.

What it takes to be a successful CEO!

As I survey the landscape of clients, colleagues and friends in the remodeling industry, I look for patterns of success as well as patterns of failure.  These patterns, I’ve discovered, are not black and white, but shades of gray.  That’s one of the beauties of growing older (of which there are many to my mind) – I’m not quite so intent on placing my personal opinion, righteously defined, into the mix as the only opinion.  There are, as Rick Steves said on a travel program last week “many different truths which many different people hold as self evident.”

So it was with interest that I read in the Sunday NY Times (March 15, 2009, Business Section “Openers”, page 2) that a turn-around expert defined one of “the keys to effective leadership” as “you treat everybody incredibly well and lead with a bit of humility.”

He also said, in the same paragraph: “so I’m constantly asking the question, ‘What are the two or three levers that, if done right, if pulled correctly, will really turn this business?'”

So the obvious questions which come from the first paragraph of this short column entitled “Can you Pass a CEO Test?” are these:

  1. Are you humble?  Can you see others’ points of view easily and not just acknowledge the potential reasonableness of theirs but also change your own mind based on what you learn?
  2. What is the primary lever to pull to change your business around?  What is the secondary and then the tertiary?  For many people the primary lever is cash — banks are cutting lines of credit, clients are slower to pay and cash is the defining line between success or failure.  For others who have protected cash, and not spent it during the past year, the primary lever is sales — these are hard to come by now; competition is fierce and speed to the client is definitely not of great importance.  And finally, it might come down to morale:  yours and and that of your employees:  how do you keep those valuable people who remain upbeat enough to focus on productivity, positivism and playfulness — the 3 “Ps” in my mind which drive good morale in any company.  Oh yes, let’s add a fourth:  PROFITS!

The last paragraph says quite clearly something I’ve been asking for a long time:  “If compensation isn’t going to be the same, where do you get your fulfillment in life?”

Read the article in its entirety (it’s short):

http://www.nytimes.com/2009/03/15/business/15cornerweb.html?_r=1&scp=1&sq=GReg%20Brenneman&st=cse

Stop it, right now!

I recently returned from facilitating a Remodelers Advantage peer group review – a good meeting with good people.  There was lots of conversation about what to do next and how to accomplish all that needed doing gracefully and with forethought.  Compassion, gracefully and focused were words used many times over those 3 days.  Many good ideas were generated but they were really just new twists on the basics:  know your business, know yourself, take care of your clients and do good work.  Easy to say, harder to do.

But the biggest idea that struck me was the pervasive sense of doom under which we currently live, scrambling like ants for the next bite of food. I believe the daily news has had an enormous impact on our consciousness.  I’ve fallen victim to the drug – reading every political and economic newspaper and magazine in depth, cutting out articles and, in fact, posting them on this very blog.  I’ve been watching The News Hour nightly, Washington Week in Review on Fridays and any other like show I can find.  AND I’VE BECOME HORRIFIED AND TERRIFIED SIMULTANEOUSLY!

It’s like driving by a terrible mangled tangled mess of cars on the interstate – what do you do?  I drive right by, looking the other way,  saying a silent prayer.  Yet I’m looking at this economic train wreck with the same intense interest that I deplore in drivers who gawk at the car accident.

I’ve stop it, stopped it right then!  The minute I left that meeting on Friday night I was determined to look away and say more silent prayers.

I can do little to impact the macro level but I can do plenty to impact my own micro level of economic reality.

That’s what I’m going to do from now on – and look at all the time that’s freed up to do it!

Go with the Flux

“Most of us do not accept or even believe in the continual flux of life.  However strange this may seem, once we truly accept this at a physical level, we will not need to search for certainty … As you tackle the tribulations of life insight helps you refrain from taking yourself, your challenges, and life itself too seriously, because you will know that no matter what situation you are in, good or bad, it will change.  This insight into the changing nature of the world will give you equanimity and joy.”  Kamal Samra in Mental Resilience: The Power of Clarity (New World Library)

Thought for the year!

Wittgenstein:  “Don’t get involved in partial problems but always take flight to where there is a free view over the whole single great problem, even if the view is still not a clear one!”

 

During this period of economic uncertainty, of global unrest and persistent revisionism on topics of varying import, maintaining a sense of perspective is often difficult.

 

I come back to Wittgenstein whose quote pushes me up the mountain to the “free view”.