2 Strategies To Reduce The Impact of Economic News on Business Decisions

The Dow Jones Industrials Average is down again.  Gas prices are up.  Unemployment is well above expectations yet again this month and layoffs keep coming.  It’s a wonder anyone can sleep.  And, the bad news keeps coming. 

How should we as business owners react?   The more alarming question is to ask how the bad news is impacting decisions that employees are making in your organization on your behalf.  There are many things you could do, but here are 2 high priority organizational behavior strategies to reduce the impact of bad economic news on employees and the business decisions that they are making on behalf of your company.

Expect The Economy To Get Really Bad

This is not just a psychological exercise to reduce stress.  Instead, if you really expect the economy to get really bad, then establish a plan for how you will react and the steps you will take as the economy gets worse.  Then, the news you hear daily simply reinforces the premise and the plan you’ve had all along.  Otherwise, this is a vicious downward cycle.  Break your own downward cycle and help your employees do the same.
 
When confronted with fearful news and/or events, the human brain may kick in the basal instincts of FIGHT or FLIGHT responses.  When that happens, the ability to reason and calculate a response is gone.  The FIGHT or FLIGHT response takes over and every piece of bad news just makes it worse.

Expect the economy to get really bad and, at some point, you’ll be wrong when things actually start getting better.

Resist Short Term Thinking

In short, don’t overreact.  While you may be faced with some really difficult decisions because economic conditions have changed the rules of your game, don’t think only short-term. 

For example, instead of laying off your customer service people, can they, for a period of time, be offered to your larger customers whom they serve every day?  Large companies may be laying off permanent employees, but they may welcome your already trained people under a contract arrangement.

Resist short term thinking and look for opportunities to preserve and proactively build your business.

In summary, apply these two strategies and you’ll achieve better results than would otherwise be possible in this economic recession.

Use the Recession to Improve Your Business Results

Use our current economic downturn to challenge the “It Can’t Be Dones.”  Based on the last sentence, I’ll bet you already have a picture in your mind of one of your employees who frequently says that it can’t be done.  The “It Can’t Be Dones” are the unwritten “rules” that drive your organization.  It takes five days to ship an order.  We’re not set up to do big jobs.  We have to follow the ten step project management process.  Our management meeting is always four hours.  That machine can’t be operated by less than three people.

Now is the time.  Go challenge every “It Can’t Be Done” and every unwritten rule that operates in your organization without your permission.  Use the economy as an excuse to improve productivity.

Now Is The Time!

Economic uncertainty can present many challenges for the business leader.  These challenges include falling sales, increasing costs, lower productivity and a hesitation to proceed with plans for growth and expansion.  On the other hand, economic uncertainty may also be a great time to evaluate your operations and make the most of the opportunity to improve organizational performance.  Why is now the time?  There are thee reasons.

First, tough economic times often expose weaknesses that are present in an organization, but that are not as noticeable in good times.  There may even be issues that are undetected when times are good which are more clearly seen now.  For instance, if you have four product lines and the company is making good money in a period of solid growth, the company may not give much attention to the fact that one of those product lines is losing money.  Overall things are fine.  But, when times get more challenging, we often look more closely at the details.

The ebb of the tide may expose issues in your organization that need to be addressed.  Some of these challenges might include low productivity, poor service, inefficiencies, low morale, ineffective leadership or a cost structure that is too high.  When things are going great, these issues are easy to pretend away.  Now is a great time to address these issues and improve your organization’s performance.

Second, in more challenging economic times, high quality talent may be more readily available.  I’m not suggesting just hiring high quality people that other companies simply can’t afford anymore.  More than that, I’m suggesting that, if your company is in better shape than a competitor’s organization, you might be able to recruit away a star player for your team.  It happens in professional sports all the time.

Tough economic times are not always just a time to hunker down and wait out the storm.  There may be opportunities to build on to your company’s offerings, capacity and expertise.  Consider this possibility and you may advance your position in the marketplace.

Finally, challenging economic times are a great time to plan for market opportunities that lie ahead.  Take some time now to define market niches in your industry that might give you a good chance of dominating those niches.  Do you want 1% of a huge market where you are at risk of being squashed?  Or, do you want 70% of a niche in the overall market?  For example, do you want 1% of the PC market or 70% of the rugged built PC market?  Do you want 1% of the leisure travel business or 38% of private label tours sold through travel agents?

Spend some time analyzing key market opportunities and identify where your company could succeed while your competitors can’t succeed.  Here’s an example.  Can you provide smaller volumes of a highly customized version of a product or service while a competitor is only set up to do larger volumes of products or services that have no customization?  If you pursue that market niche opportunity, you could dominate that market while your competitor would have a hard time competing with you.  Think about where there might be those kinds of opportunities in your market.

If we were able to choose, we’d choose economic expansion over economic uncertainty.  However, economic uncertainty provides opportunities if we’re willing to investigate them and pursue them.  Be the company in your marketplace that takes advantage of those opportunities.