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What Is the Global Economy Teaching Businesses?

Saturday, November 1, 2008

The Society for the Advancement of Consulting® (SAC) has asked its global membership to reveal how the turbulent economy is educating businesses. "It appears to be one of the most profound business development lessons for those willing to take the time to listen," notes Alan Weiss, Ph.D. and CEO of SAC, "which may cause voters to actually make up their minds on the day of the election and even in the polling booths."

Terrie Temkin, Ph.D., founding principal of the international consulting firm CoreStrategies for Nonprofits, Inc. has advice for boards of directors looking to protect their organizations during these troubling times. Call a special meeting to discuss just this issue. Ask staff to pull together key numbers that will give everyone a sharper picture of the organization's situation. While the board is likely to want to spend the meeting determining how to cut operational expenses, keep the session focused on strategic issues. Consider why you are doing things the way you are, whether those things are necessary, effective and efficient, and how you might do things differently.

Determine what success looks like in today's environment. Generate multiple options for moving forward. Be creative. Judge the options against your success measures and their potential benefits against their potential costs. Whatever you do, this is not the time to let your fund raising and PR professionals go, reduce their budgets or cut off funding for campaigns. You need those resources now more than ever.

As you move forward, keep the conversation positive and focused on solutions. Believe that you are capable of determining work-arounds for the obstacles you are facing now or could be facing in the near future. If you think you can keep your organization healthy during these trying times, you are far more likely to accomplish that desired result than if you allow yourselves to wallow in how tough it is for all nonprofits out there.

Gary W. Patterson, president of FiscalDoctor in Boston, MA provided these observations. Simply put, cash is king again when it comes to operating a healthy business. Companies that fail usually suffer from cash shortages.

Ask yourself these critical questions to avoid a cash flow crunch, or worse, an endangered company.

  1. What is our reasonable cash flow reserve?
  2. What items are (almost) as good as cash?
  3. How can you make better cash flow projections?
  4. How do cash flow projections work with our corporate goals?

Dr. Maynard Brusman is a consulting psychologist and leadership coach and president of Working Resources, a strategic talent management firm in San Francisco, California. He specializes in executive coaching for developing emotionally intelligent leaders and lawyers. He offers a few insights:

All of us are constantly watching the ups and downs of the stock market, reevaluating business decisions, and wondering what to do in such a tumultuous economy.

We need to look at the dark side of leadership failure to gain insights into leaders that helped create the current economic maelstrom. Recent corporate bankruptcies reveal that some CEOs and government leaders failed on such a scale that they brought venerable companies and the economy down with them.

Why did AIG, Lehman Brothers and others fail? What are the patterns and warning signs? How can we detect the warning signs in organizations before it is too late? Bad Leadership Styles are one of the major causes of our current global economic crisis.

  1. Incompetent: The leader and some of his/her followers lacked the will or skill to sustain effective action.
     
  2. Greedy: These leaders put self interest above all else.

Ann Latham, president of Uncommon Clarity, Inc. is tired of commiseration and complaints. "Too many businesses are too ready to blame the economy and simply surrender to the slide. Of course the economy has an impact on your business. How could it not? But consider this: 1) economic turmoil represents change, 2) change is constant, and 3) all businesses must adapt to change or die. Forgive me for stating the obvious, but those who don't embrace this change with the same vigor that they might embrace any change, are bound to slide, if not die. Many of my clients are thriving right now. To blame the economy is to become a willing victim, not only surrendering, but leaping into the pit. Stop complaining and start looking for the opportunities!"

Dr. Weiss concludes: "There are a great many businesses doing quite well right now, and we're all better off studying their strengths and comparing them to our own than morosely trying to become 'victims' or attend motivational seminars."

 
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