Companies have a tendency to want to put their heads in the sand and not take any risks during uncertain times. At the moment, based on data we are compiling on our own as well as economic data produced by others, well let’s just suffice it to say there is no clear picture as to where the steel industry is headed.
According to Keith Prather, co-founder of Armada Corporate Intelligence, “Uncertainty does weird things to markets and organizations.” In their Armada Executive Intelligence Brief published on Wednesday, October 21, 2015 they point out four areas where companies make what appear to be smart decisions which end up really being dumb.
These are the four areas identified by Armada Corporate Intelligence:
• Avoiding Risk
• Trying to fix problems yourself
• Cultivating overly positive news
• Laying low until everything passes
The following was taken directly from the Armada Executive Intelligence Brief:
1. Avoiding Risk
The First Instinct: Market uncertainty can deplete an organization’s risk tolerance. In choppy markets, the financial requirements of opening the doors can involve tremendous risk. The smart business move may appear to be making only safe decisions, saying “no” to anything new, and avoiding unnecessary strategic decisions until things stabilize.
Then This Happens: Even if your organization is not taking risks, others are. A current competitoris introducing an innovative product. An unlikely new competitor is trying to disrupt your market with a radically different offering. And who knows how many customers are risking a supplier change because your organization is not leading as it once did. These risk takers all increase the vulnerability of playing it as safe as possible.
When THIS Is Smarter: Taking smart risks is smart. Avoiding risks entirely is dumb. Challenging times may demand a buttoned up prioritization process for investments and associated risks, but you cannot sit still and wait for more certainty. This is when leaders need to be savvier than ever to push forward in smart, high-impact ways when external indicators suggest caution.
2. Trying to Fix Problems Yourself
The First Instinct: When things are challenging, leaders can adopt a “self-reliant hero” mentality. They solitarily assess situations, determine tactics, and attack like crazy. It is real kick ass and take names behavior; it does not get more heroic.
Then This Happens: The self-reliant business hero becomes dependent on a narrow, personal perspective. During uncertainty though, it is overwhelming to try to personally track and accurately evaluate confounding indicators and market behaviors. If progress is not forthcoming, internal resistance to a leader’s solitary path develops, and it gets lonely quickly. We have seen leaders talking incessantly about “I figured that out” and “I’m doing this” that turn allies into indifferent stakeholders, content to watch the hero flounder without assistance.
When THIS Is Smarter: The more uncertainty, the more smart leaders need proven and new perspectives to help interpret business conditions. Success depends on a broader set of people and inputs than during “normal” times.
3. Cultivating Overly Positive News
The First Instinct: Some organizations reward spinning positive news during unnerving periods. Staying too positive masks fundamental business issues signaling bigger problems. When illequipped management uses bad news to engage in shoot the messenger behavior, it looks smart to deliver good news – even if it is not what management should hear.
Then This Happens: Conditioning employees to hide missed projections, failed deliverables, and precarious events is dumb. It suggests management is hoping problems will fix themselves or that they will magically disappear. How often have you seen a popular startup’s management talking “happy talk” right up to the day it folds, with no previous hint of problems?
When THIS Is Smarter: Leaders should be positive and foster motivating environments. Motivation and success need to co-exist, though. That demands a realistic sense of how a business is operating. Successful leaders are open to challenges and criticism; they welcome honest information, feedback, and solutions since they are vital, especially during rocky times.
4. Laying Low Until Everything Passes
The First Instinct: When an organization faces marketplace challenges, it may retreat from public view. Advertising and marketing investments are dramatically cut, press releases are curtailed, and social networking is avoided entirely. It can seem wise for a company to hide from problems creeping into public view, hoping its challenges will be overlooked.
Then This Happens: Despite a troubled company not communicating, audiences continue to talk. If things are bad, the conversation will generally be negative. We cautioned one CMO at a challenged company about the mistake of not putting its own videos on YouTube. When his brand did not set an affirmative tone, the only YouTube videos about the brand were from external parties highlighting how serious the organization’s financial predicament seemed.
When THIS Is Smarter: Don’t stop talking, sharing, and communicating news about what the brand is doing. Acknowledge challenges facing the brand and what it is doing to address them. Communicate these messages in a credible, honest, and transparent fashion. In challenging times, it is important to share more to frame marketplace conversations about the brand. Leaving an
information vacuum about your organization simply leads to bad information filling up the void you create.
From the Steel Market Update perspective “uncertainty” is when time should be spent on training, networking, developing new business and educating both yourself and your employees. We can help that process through our Steel 101 workshops, Sales Training, Leadership Conference (March 7-9, 2016) and our Steel Summit Conference (August 30-31, 2016). You can learn more about these programs in the Events section of our website or by contacting our office: info@SteelMarketUpdate.com or 800-432-3475.
John PackardRead more from John Packard
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