The opening quote of Francesco Guerrera’s Analysis article in this morning’s FT caught the eye, “A crisis is a terrible thing to waste” (but then I don’t work at Citigroup, so hadn’t heard it before).
What struck me, however, and what is applicable to law firms as much as any other business was this,
Experts argue that although most companies see the need to reform in a crisis, many embark on the wrong kind of change. A common mistake is to go for across-the-board job and cost cuts that weaken the company without sharpening its core businesses. “The first thing you have to do is to protect and strengthen the core,” says Bain’s Mr Rigby. “In the same way our bodies allocate blood flow away from expendable extremities in favour of vital organs during a crisis, companies must make sure their best markets and consumers are protected.”
Driving change may be easier in times like these, but, as Guerrera notes,
In the middle of the worst economic downturn since the Great Depression, companies face a daunting choice. Do they exploit the tough times to lose the ballast accumulated during the boom years and make risky strategic changes in the hope of emerging as lighter but stronger organisations? Or do they adopt a defensive stance, trying to weather the storm without rocking the boat until their markets and the economy rebound?
Read Stefan Stern’s latest column in the FT, Time to get your strategy right. It has been a pretty grizzly year, and it is not getting easier fast, but we will come out of this recession: and professional service firms, like any other business, need to be ready. So, as Stern opens, “We need to talk about strategy” – but, and this is where it starts,
. . . business leaders ought to recognise, as they catch their breath after months of turbulence, that the strategy they were pursuing until recently is unlikely to be right for today.
It’s not just that markets have changed. Your organisation has changed. You may have all been through a near-death experience. Even if you avoided calamity, it is unlikely that colleagues are the same carefree people you remember from a year or two ago. Most businesses have been making serious cutbacks. Co-workers may be doing their best to look calm and positive. But they can see unemployment rising and know that sustained recovery is a long way off.
If you haven’t read Rob Millard’s post The Greatest Banking Crisis of our Generation on his blog The Adventure of Strategy, you must.
It is very sobering stuff ~ but absolutely spot on
If you have not yet switched the focus of your strategy to creating contingencies to deal with the very serious possibility of survival under the worst possible economic scenarios, then do so now. Do not delay.
1. Make sure that you have jettisoned all non-essential costs (but not the essential ones)
2. Make sure that you are getting accurate and objective information from the market …. keep especially close to your key clients
3. Make sure that you have a plan based on the “What If?” scenarios that you have identified might emerge
4. Keep your eyes peeled for opportunities as well as threats to be warded off
5. Unless absolutely unavoidable, stay true to your core strategic intent
This time will pass. Right now, a clear mind and strong leadership are absolutely essential.