When the economy tightens, everyone gets back to basics.  After closely observing three different executive teams over the last few months, it's clear (in retrospect, even painfully obvious!) that how fast you can make  strategy adjustments is directly proportional to how well the current strategy is articulated, communicated and understood; and much less dependent on the content of the strategy itself.  In short, if everyone needs to stop and turn left quickly, they've first got to know which way you're headed today.  Let's look at these examples.

Company One makes the high tech headlines daily.  This fifteen year-old firm prides itself on communicating substance to its employees.  For example, attached to each employee's name badge and card key is a card with the firm's long-term goals and one year initiatives.  Obviously, it's just one small indicator but can you say that about your company?  (Would your firm's even fit on a small card?)  A similar indicator is their  internal homepage.  It plays as central a role inside as the Wall Street Journal does for the external world.  It has so much cache that I've seen executives boast when their business unit makes the headlines.  

Like many, the economic turndown came faster than Company Ones' leaders expected.  What started as tapping on the brakes has in turned into an emergency stop, with all the associated dislocations and concerns.  What is different about Company One is that there has been relatively little confusion about what to stop, where to turn and how fast.  Like a Formula 1 car at Monaco, Company One has braked, down shifted and pointed itself into this change smoothly.

Company Two is only slightly older but has undergone significant business and leadership changes over the last year.  It has divested of one business that historically generated over 50% of the revenue in order to get into faster growing, higher margin alternatives.  The largest remaining business recently shut down operations in one region to trim expenses.  Many on the management are in new roles.   

As I watched them adjust to the new environment, they took far more time than Company One understanding the and assessing each alternative.  As I observed, it became clear that while they could agree on what their current strategy was at a 50,000 foot level, they did have a common understanding of  the underlying assumptions and how the pieces fit together.  Unable to assess choices effectively, the CEO had to step in to make and communicate the new direction.   In contrast to the smooth driving style of Company One, Company Two is not set up as it heads into the corner and has to go much slower around it.

Company Three is a start-up with 200 employees in the heart of the hot telecommunication space.  Their focused on getting the product into the market before the cash runs out.  In a nutshell, that's as good a statement of their strategy as any.  With investment capital being tight, they've had to tightened down on spending and put more executive time than they expected into attracting additional investment.  

Though blessed with a simple agenda, Company Three has far more anxiety to address than either Company One or Company Two.  Executives and employees worry that potential customers may extend trials and purchase decisions due to capital restraint.  Employees wonder will they make it?   Company Three leaders quickly defined new spending guidelines and defined a 90 day strategy.  However, when it came communication, the new spending guidelines were distributed but not the 90 Strategy.  There was nothing malicious about this, they're just immature and don't have a rhythm.  Almost instantly, the spending announcement caused rumors and misunderstandings about the firm's future that took valuable time from product development and financing.   In short, Company Three braked well but entered the corner unevenly but didn't drive very smoothly.

What can we learn from these experiences.  First, 2nd generation speed leaders know that making strategic changes quickly and smoothly is as important as going fast.  Two, while the role of strategy is to allocate resources and focus investment.  When changes are required, knowing where you're going determines how fast you change direction.  

©2001 Christopher Meyer, Ph.D.