‘We must adjust to changing times and still hold to unchanging principles’
Running a business in austere times relies on your mastery of the art and the science of the business game.
Austerity Business offers 39 tips, the critical non-essentials, often missed by poor managers but deployed daily by great leaders. They go to make the difference between good and great companies. These ingrained habits and learned behaviours occupy the territory beyond the standard characteristics of hard work, perseverance, and stamina that we all know to be the basic prerequisites for success in a competitive field.
Here’s as a second taster.
Adjust Your Set
When I was a lad, temporary reception glitches on our TV were not uncommon, normally accompanied by a message to sit tight and be patient. ‘Do not adjust your set’ the BBC voice would boom, in Queen’s English. Normal service, we were informed, would soon be resumed.
We are now living through just such a glitch in the global economy. More dollars have been written off that you or I could even begin to write down. In the UK alone, the economy contracted by over 6%, which is comparable to the fall during the Great Depression. The scale and speed of this contraction makes it worse than anything you, or I, have ever known. Massive economic wipe-outs don’t right themselves quickly. Do you really believe that normal service will soon be resumed?
We’ve just lived through a period in which capitalism has been through unprecedented turmoil. It’s time to adjust your set.
Just to recap, in most countries in the West, in the past couple of years it seems that we have only narrowly avoided the prospect of economic Armageddon. The commanding heights of the global banking system were nationalised by governments now overburdened by the colossal amounts of public debt they now carry. Put bluntly, we face years of economic misery, and a long, slow and painful recovery. We are held back by sky high levels of public and private debt, the inevitable tightening of regulation after the subprime horse has bolted, and by the demographic and pensions time-bomb which means that already, in the UK for example, there are more people aged over 60 than under 15. This is all scary stuff.
Austerity now seems inevitable. Businesses are going to have to do something pretty amazing to grow with less labour and less capital at their disposal. To pay off our debts and maintain our living standards, we’re going to have to do a lot more with a lot less. Consumers are going to be very risk-averse, and very savvy about how and where they spend their money. Public spending is likely to be cut drastically, and strikes and stoppages will almost certainly follow. There are going to be a lot more rules. Many employees may have to be prepared to accept less if it means keeping their jobs. Borrowing will no longer be a human right, as lenders remember than they need to make a margin and get their money back. Oil, food and water are going to be in short supply. Global power is going to shift from the creaky and indebted old economies of the West, to the new ones in the East, rich in sovereign wealth and young talent.
The tightening of economic conditions is going to make business a whole different ballgame.
But it’s not all doom and gloom. On the plus side, austerity conditions will feed a period of frugality that will push us into being less complacent about our prosperity. Austerity will make us hungry enough to be as bold as we need to be to win in the gladiatorial contest that is modern business. Austerity will mean that talent, space and money all become cheaper than before. You will find that your suppliers are more negotiable than they used to be, and you will also need to show more flexibility. These moments always hold rich pickings for start-ups and innovators. Some of today’s biggest brands all got going during tough times. Frugality breeds self-discipline and efficiency.
Make no mistake, though, we face an era of business as unusual. I’m taking the view that not only do I need to adjust my set, I need to go the whole hog and upgrade my cruddy old analogue set for some high definition digital equipment. This may not appear very austere at first sights. Think about it though – with a digital TV you get a much clearer picture. You need this in uncertain austerity business conditions.Alex Pratt is the Author of the new business best seller “Austerity Business” – available from Amazon now.