Most of us have heard the saying that "in crisis there is also opportunity." However, few leaders and organizations take clear, consistent action enabling them to capitalize on specifically what this opportunity is for their situation. So let’s unravel this mystery so you and your organization can take advantage of your opportunity.
The easier opportunity to see, of course, is for those organizations who continue to experience a strong competitive advantage. For some it is because their markets are unaffected or even strengthened by today’s conditions (for example, security businesses, health services). For others it is because of their well-managed financial state (good cash flow, strong P&L management, and a sound balance sheet). Regardless of the source, unfavorable economic conditions provide these organizations with unparalleled opportunities for growth in a buyer’s market where weaker competitors are seeking to end their suffering.
In focusing externally on buy and/or build strategies, stronger players need to focus on two key considerations to ensure they don’t waste growth opportunities. If buying, we know from the past two decades of experience that between 70%-90% of all acquisitions and mergers failed due to incompatible business cultures. This single biggest source of failure can be easily seen through the past history of key leaders, the way the organization conducts its business, the resources it has demonstrated it values most through key decisions and actions, and what customers say about it 
(including the nature and length of such customer relationships). For instance, I have a colleague currently looking at two acquisition opportunities—Opportunity #1 with a strong culture fit and moderate assessment upside in the short-run versus Opportunity #2 with a questionable culture fit with higher easier, short-run upside. Which would you pick, all other things being equal? Most organizations tend to opt for Opportunity #2—which, unfortunately, has only a 10%-30% chance of sustained success.
On the other hand, if you are a stronger player operating with a building strategy, the most important consideration in this scenario is selecting the right product/service for your business. For instance, another client is currently considering Opportunity #3—buying a business he previously succeeded in and knows how to make successful, but no longer has passion for, versus Opportunity #4—a business he has never operated but one for which he has high energy and strong interest from both a business and personal lifestyle perspective. So, which would you advise? Remember, the key is always sustained success if one is looking at this as a business growth opportunity versus a ‘buy and resell’ option. We would recommend Opportunity #4. Most organizations and leaders were not experts in the businesses they created, recreated, broadened, or deepened. However, their passionate, sustained commitment led them to gain the capabilities required for success and stay the course because of the emotional and financial fit!
Organizations significantly weakened by the current economic crisis also have unique opportunities, though it may be tougher for them to see and act upon these in positive, productive ways. The most important point for them to remember is that each of the more than twelve recessions of the past century has also ended, and has been followed by an upswing. Those organizations that survived and were prepared made tremendous gains in the first 6-18 months that followed! That said, what do you and your organization need to do to make sure you are in this same position right now?
The further good news is that both of these opportunities are within your organization’s control. Client organizations with whom I work in these industries are currently experiencing from 30% to 70% less revenue than they have typically generated annually. And, while any well-managed, soundly financed organization can withstand this for a year, if it continues for two to three years and possibly beyond, then it calls for major changes to survive.
The first survival opportunity for businesses in this situation is to focus on the talent required for its sustained success. In this regard, two common options facing businesses are Opportunity #5—keeping the most capable current performers regardless of commitment level or Opportunity #6—the most commitment, even if only producers but not stars. Did you pick Opportunity #5? If so, we suggest you think again because successful organizations don’t require and can’t afford such "A Players" in all positions. Furthermore, teamwork between "B Players" over time produces much more synergy and success in the interdependent functions required for business success. Unfortunately, many organizations continue to be fooled by the seductive simplicity and appeal of "capabilities" without realizing that commitment continuously results in strengthened individual and collective capabilities over time!
An additional opportunity for such organizations is to minimize waste in their processes in hard times. Only when things are not going well is it so easy to differentiate the ‘must do’s’ from the ‘nice to do’s’ in business operations. Studies repeatedly show that most organizations have at least 30% waste in their processes. Tough economic times provide an opportunity for organizations to retool their practices, and the easiest to eliminate are those unnecessary processes that customers, owners, or employees are not willing to pay for themselves. In some cases this involves further capitalizing on under-used processes or strengthening them. And, in other cases, identifying new processes that will help their organization move from surviving to thriving both in current conditions and when the economy once again takes its natural cyclical upswing!
Dr. Michael O’Connor is a recognized thought leader, executive coach and founder of Life Associates & The Center For Managing By Values. Michael is the co-author of several books, "The Leader Within," "Managing By Values," the Personal Global Profiles System (‘GPS’) Online Resource for Assessment and Development, and more. For additional information visit www.lifeassociatesinc.com.
