- Management Methods | January 3, 2017
In Uncertain Times Make Your Business Sure
If we want to be insulated from the ebbs and flows of the market, we’re probably in the wrong business – even though there isn’t another industry we’d choose to commit to. Construction is continually exciting; it drives the economy. At the same time, it’s also heavily affected by capital spending, government budgeting and regulation, labor availability, and consumer confidence – in short, just about everything at play in the economy’s ups and downs. That means that far beyond our control there are simply fat times, lean times, and we-just-don’t-know-yet times. So as the industry holds stable in its slow recovery, and while owners and economists can’t guarantee what 2017 will bring, electrical contractors have the opportunity to make themselves sure about the future of their business by investing in the future now.
Choose to March Ahead
Among the handful of key concepts that Jim Collins and Morten Hansen discovered in “Great by Choice” that seem to determine whether organizations thrived or floundered in uncertain times is a behavior they call the “20-Mile March” – the discipline of staying disciplined.
Imagine two people set out hiking from one coast to the other. The first might have a 40-mile day when the terrain is easy but an eight-mile day through the mountains; then, he might take a day off if there’s sleet coming down, try to make up for it the next day and end up overexerting himself and have to rest. But let’s say the second person commits to 20 miles every day, rain or shine, even when the conditions could let her do more. Who will get there first? Collins and Hansen’s research suggests that companies who commit to a consistent 20-mile march consistently come out on top. Why? They stay consistent in good times and in bad, so they’re never catching up. They respond but don’t react.
Let’s look at the idea in the real world. Toward the end of the 1990s, companies could sell accounting software as fast as they could say, “Y2K.” Everyone was concerned about making sure their system would still work when the digits rolled around to “00,” so businesses that didn’t even need it yet were buying it in a hurry. Of course by the time January 2000 came, everyone who was going to purchase software had already done so. What followed was a long, long drought.
But it wasn’t demand drying up that knocked out a bunch of software companies – it was the market picking back up. Most saw the rough road ahead and immediately began cutting staff and scaling back development. That’s like the first hiker coming up on a mountain and lightening his pack to be nimbler. Very few took the opposite tack, retaining talent and increasing R&D spending. They loaded up their packs with more provisions, thinking the industry would bounce back in a few years and they’d be ready for it. So when contractors began to buy software again, the companies that had slowed down and weakened their position were headed down a mountain without enough food for the journey. The crazy ones, the ones that lumbered steadily up to the peak not sure how high it went or what exactly lay on the other side, were able to continue strong – and tell the tale 15 years later.
It’s the same story for different industries at different times – even for an industry as responsive to the market as construction. Construction is less insulated from fluctuations than many other industries, and it often demands greater responsiveness to adapt operating budgets to changing market conditions. But the principle of disciplined forward progress can guide contractors just as well. It’s an exercise of boldness in the face of uncertainty that allows thriving companies not to slow down, even when the market does.
Contractors should use uncertain times to invest in (1) technology, (2) marketing, and (3) hum