These are very difficult times – the longest recession many of us can remember.
The design market, in terms of fee-income, is still the same as ten years ago, since work has migrated in-house and to other creative disciplines. With the advent of procurement departments and economic pressures, unit prices are the same as ten years ago, while salaries have continued to rise. There could be no harsher trading environment.
Having said this, the economy is showing signs of improvement and design leaders must dig deep into their inner resources to ensure survival and prosperity in future years. What is required now is a different mindset.
Talk to any transatlantic sailor and they’ll tell you that preparation for crossing the Atlantic in summer is totally different to a winter crossing. Being prepared and staying positive is what it’s all about.
While most groups have downsized and had to deal with the pain that accompanies the process, few have stood back and acknowledged the positive outcomes. These are the upsides to being a smaller, leaner business:
Better client base
With fewer staff you should try to review gross margin on a client-by-client basis. You may soon discover that some clients are not worth keeping. Loss making clients sometimes are, but only if they add something tangible.
Better quality people
You are able to consider performance issues that would go unnoticed in the good times. You identify the coasters and the people that have stopped growing. You also look at areas that can be outsourced. While it’s nice sometimes to have everything in-house, it doesn’t always make sense.
Adversity brings people together – look at the England football team before their recent match with Turkey. If you’ve been through the redundancy process, hopefully you are communicating with your staff – everyone needs to know what is happening and why.
With fewer people and less time to do things, you can focus on the really important things you need to know about in the business. Fewer, better reports are produced. The accountants are forced to think about what they are producing and why. Key ratios become even more important.
Companies, like people, store up baggage and carry it with them in life. Sometimes it’s better to offload this baggage and negativity in order to move forward. We’ve all experienced that relief sometimes when after someone has left the whole atmosphere improves. There’s nothing like a downturn to get people to question what they are doing and where they are going – sometimes it’s simply the right time to move on to pastures new.
The strain of running and feeding a larger business can eventually take its toll. Many leaders are forced into roles that don’t play to their strengths. It was interesting to listen to [fashion designer] Zandra Rhodes the other evening say that as she became more successful, she was doing more and more administration. Smaller businesses require less managing at the end of the day.
It’s easy to carry on with life and then to find yourself somewhere you don’t want to be or doing a role you don’t enjoy. Adversity encourages a lot of questioning and a fresh perspective. It forces you to make some decisions that you did not want to make and to focus on your strengths. Ultimately, leaner businesses can have more direction and dynamism.
This is easy to say, but often difficult to do. Here are some tips.
Lead from the top
Don’t ask people to do things that you aren’t doing yourself. Don’t ask people to take salary cuts unless you’ve cut your own salary. Don’t ask people to work longer hours unless you are working longer hours.
Communicate, communicate, communicate
Talking reassures people. They start to understand how you are thinking and what your plans are. They’ve seen friends and colleagues go and now they are looking for reassurance from you that things are stable.
Most leaders tend to be positive people, thank goodness, but it is important to admit mistakes and recognise the situation you are in. Don’t go around with rose-tinted spectacles. If the order book is dire then admit it – and say what you are doing about it.
You can’t have all the answers all of the time. Being the leader does not mean that you are perfect. It’s important to share your concerns and to admit your own weaknesses or failings. You need team members to compensate and fill the gaps that you can’t fill. This makes people feel valued and wanted.
Listen to someone objective
We all need people we can turn to for advice and frank feedback. This is unlikely to be someone in the business or your spouse. They’ll tell you the things you need to hear, but hopefully in a kind and constructive manner.
WPP Group chief executive Sir Martin Sorrell forecast we’d all be taking a bath this year, but now’s the time to towel ourselves dry and move on.
Ian Cochrane is chairman of management consultancy Ticegroup