Just like aviation seems to have mastered the science of stable flight, so does business look stable and predictable from afar. But at a closer look tailspins are never far-away and remain a possibility. Many companies don’t go out of business over prolonged periods of decline, but rather suddenly. The warning signs for a vicious cycle are there, but the signals are usually weak and management overlooks them until it is too late. At that point revenue spirals downward, less money is available to pursue new business resulting in a reduced probability of getting business, and the enterprise is headed straight for a spectacular crash.
I will save the details for how a company enters tailspin for another blog, but here I want to focus on the key strategy to recover from vicious cycles, and even turn them around into virtuous ones.
The tempting thing to do while in a tailspin is to maneuver all controls at once, to panic and to go after lots of opportunities, not matter how remote the probability of getting them may be. This is fatal, as what little valuable resources remain are wasted on going after too many birds at once. Now is a good time to heed Peter Drucker and do “one thing at a time”.
I propose the strategy to recover to be rather counter-intuitive; instead of trying to pursue more business, the strategy is to pursue less and focus all remaining resources on a select few opportunities. This presents a risk in itself, but I would suggest it is a lesser risk than indiscriminate pursuit of many opportunities. The company’s leadership has to take a careful look and remember if necessary what the identity and core differentiatiators of the company are (were), and use those in the selection process for opportunities. Once there is agreement on the opportunities, no resources should be spared in pursuing them, and no corners should be cut. It’s all or nothing at this point, and this is actually a calculated risk given the alternative of certain extinction. If the recovery is successful, this strategy can be further pursued to go selectively after those opportunities that reinforce key differentiators as a path to a virtuous business growth cycle.