Ready For The Storm?

Are you ready for the next big storm?

I’ve faced some unusually big storms over the years… both on the ranch and in the corner office.  What kind of storms?

I was just 25 years old when the first storm hit.  Full of confidence and ready to take on the world, I was thriving in my entry-level manager job within (what was at the time) the largest company in the world – a technology giant with more than 1 million employees. Like most couples awaiting the arrival of their first child, Sue and I were both excited and nervous.  I remember feeling good about the sense of security that came from being part of a well-established and respected organization such as AT&T.

That feeling of security slipped away quickly when the federal government mandated the breakup of our company into eight different pieces. This storm changed everything for the technology giant and was a huge learning experience for a twenty-something just getting his feet wet in the corporate world.

It was a decade or so later that the next big storm hit.  I eventually left AT&T to join a newly minted organization launched by the Blackstone Group.  After a decade of strong organic growth and rapid acquisitions, we had become a travel industry powerhouse and publicly traded company.  The next step was a multi-billion-dollar merger designed to provide tremendous synergies and continued strong growth. It was an exciting time and our stock price was soaring.  Everything changed just a few months later.

I was in Ireland working on expansion plans when I learned that the company we merged with had inflated revenues by $500 million over a three-year period.  At the time, this was the largest case of accounting fraud in the country’s history.  Almost overnight, we lost approximately $14 billion in market value and our focus changed from growth to survival.  I spent most of the next four years as part of the executive team involved in salvaging what was left of the organization that almost crippled us.

Another decade… another big storm.  At this point, I’ve been recruited to lead the revitalization of a global hospitality business.  I found myself spending more time in London (and our other offices around the world) than at home. After years of big customer losses, we were finally adding more customers than we were losing and were actively involved in discussions to acquire businesses that would increase revenues and profits.  It was hard work… but very rewarding.  That’s when the storm hit.

The “Great Recession” struck just as we were hitting our stride.  Exciting acquisition plans were suddenly replaced with challenging downsizing plans.  Financially stretched as a PE-backed firm, we had to make some of the most difficult decisions of my career.  Perhaps more than any other, this storm taught me hard lessons about what happens when you are not prepared for the storm.

Each of these (and many other) storms taught me a lot about the importance of preparing for the storm… and of being both thoughtful and intentional in response to the challenges each storm brings.

Preparations can take many forms – financial, strategic, cultural… the list goes on.

Financially, it’s important to not only plan for what you hope to achieve… but also for challenges that might be lurking around the corner.  New competitors that steal market share or drive down prices, economic turndowns that cut into cash reserves, labor shortages that drive up the cost of attracting and retaining staff, new regulations that add expenses or cap price increases – the list of things that can create financial challenges is long and varied.

I encourage organizations to avoid straining their finances to the point that they have little room to maneuver.  This might mean giving up (or holding off) on some desired initiatives until more cash reserves are available.  This can be very difficult for leaders (and investors) who are so focused on growth targets that they (often unknowingly) put their organizations at risk.

I also challenge leaders to include “what if” scenarios in their budgeting process. For example, as budgets are being reviewed and approved, leaders can be challenged to identify the adjustments they would make if they had to reduce expenses 5%, 10%, etc.  While not pleasant, this process leads not only to more thoughtful financial planning, it also provides the leadership team with a strong starting point for quick response to financial challenges.

Prepared or not, what matters most is how you respond to the storms that come your way.

Blockbuster might not have seen the online streaming storm on the horizon, but they certainly could have responded to it more quickly and effectively.  It may surprise you to learn that the CEO of Blockbuster rejected an offer to strategically partner with the (then) upstart, Netflix.  Ten years later, Blockbuster was bankrupt, and Netflix was valued at more than $28 million… a fraction of its valuation as of this writing. Now it’s Netflix’s return to respond to the fast-building storm of streaming video competition.

Ric Leutwyler
Ric Leutwylerhttp://ricleutwyler.com/
MY work journey has taken me from dishwasher to CEO, from fast food to cloud based technology, from Davenport, Iowa to more than 30 countries around the globe. Along the way I have enjoyed leading, learning, contributing, mentoring, strategizing, innovating and giving back. One important lesson learned along the way is that there are opportunities to make a difference in all aspects of our lives. This has made the journey all the more rewarding.

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