Any CEO or marketing executive that has been in the business world for any length of time has come to a fork in the road that could potentially make their company a lot of money or put it into danger. Too often these decisions are made but what is called ‘Gut Feeling’ and when things work out the CEO tells the story proudly how he just felt that was the right thing to do.
But if the company takes a nosedive that same CEO immediately reaches for what we call, “Reason Why Copy” that are explanations of why things didn’t work out. Making quick knee-jerk decisions is never a wise way to run a business, of any size, and yet this is more than often the case than the exception.
A much-preferred path is to stop everything you are doing and take three giant steps backward from the challenge, and then consider six issues:
- What has changed in our industry that wasn’t present before this challenge occurred?
- What changes have our customers made that they weren’t doing before?
- Is this a cyclical challenge we face each year?
- Which of our product lines are selling at the same or higher levels of the previous year, and which ones are selling at lower levels?
- What new competitors are there in our market?
- What can we do using our present resources to launch new product solutions to combat these new challenges, and what resources from outside sources are available to us to become competitive?
Unfortunately, most CEO’s who face these types of challenges rush to their P/L Statements to figure out what to cut to keep their expenses in line with their income. Although this is a very good practice as a general rule, it hardly serves a company’s best interest if this is its key strategy it uses to stay in business. There are a number of things wrong with this approach.
For one, it often eliminates the future growth drivers from the company’s arsenal of sales tools. These types of cuts today seem wise because it does bring the company back into balance, but at what cost? What if what was just cut was in fact the company’s major key to grow substantially in its future?
A much-preferred strategy is to figure out how you can lead your industry with innovative solutions and drive up new revenues by having the new solution customers need. Once a company’s planning committee understands how to drive long-term growth it will never go back to short-term cost-cutting methods because they understand that these same expenses will reoccur in the not so distant future!