What leaders DO: innovate in a downturn
by Miki SaxonPost from Leadership Turn Image credit: kishbee
Yesterday’s stats showed that lay-offs aren’t the smartest move a company can make even though they make Wall Street happy.
Bob Turek over at Project Management 411 says, “When the going gets rough, we go to the innovative companies who see reduced financing costs and lulls in demand as opportunities to upgrade their technology and get ahead of the competition.”
Internal innovation is good, but the smartest companies go further using one of two approaches. Both approaches succeed when management is comprised of passionate leaders who are long-term thinkers, know how to plan and are talented at executing.
First, there are the companies that see a downturn as an opportunity to grab the brass ring, ignoring the naysayers.
The example that always comes to my mind is Nucor Steel and its CEO Daniel R. DiMicco, who used the last crash (2001) to buy ten steel mills for pennies on the dollar. When the economy turned, as it always does, “Nucor’s profits soared seventeenfold, from the $62.8 million earned in 2003 to $1.1 billion in last year [2004]“
Then there are the companies that totally ignore economic ups and downs to always focus on innovation, large and small, inside and out.
My favorite example in this class is Amazon and Jeff Bezos—the CEO that Wall Street loves to hate. They hated it when he expanded out of books; they predicted Amazon’s demise when is used its expertise to do fulfillment for other companies and again when Amazon opened its vast computing power to developers and now to companies.
Bezos’ attitude is encapsulated in this short interview ending with a perfect wrap when asked if he feels vindicated by the company’s success.
‘No. I’ve taken plenty of criticism, but it’s always been about our stock price and never about our customer experience. After the bubble burst, I would sit down with our harshest critics, and at the end of the meeting they would say, “I’m a huge customer.” You know that when your harshest critics are among your best customers, you can’t be doing that badly.”
What’s your plan for innovating during this downturn?
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April 22nd, 2008 at 3:53 pm
Miki- thanks for the link. It’s always amazing to hear negative reports from executives who get sucked into the “sky is falling” syndrome. Much of the economic condition is a confidence game that the media milks with small minded executive quotes. Interesting that you beat me to the punch on the link- I have a link to you, pre-posted a week ago for publishing tomorrow, on your Ken Meador post!
April 24th, 2008 at 9:41 am
Bob, great minds:) The hot dog story is a great example of how people can talk themselves into a hole and, hopefully, back out.