Tuesday, October 23, 2012

Bad Things Can Happen To Good Companies

During my 33 years in business, this Blogger CEO has managed through three Recessions, often accompanied by real estate downturns,  9/11, the Financial Collapse that began in 2008, both the highest and the lowest interest rates in my life time, inflation, stagflation and deflation.  When all of these things occur, often beyond any one's control, Bad Things Can Happen To Good Companies. 

After 9/11 and then again after the Financial Collapse in 2008, we saw our business drop by 35% in 2002 and then 50% in 2009.   Even during the worst of times, we had never seen a decline in business that great.   Of course, this resulted in tough decisions and painful lay-offs.  Certainly, dealing with growth spurts, which we have also done; though sometimes challenging and difficult is a hell of a lot more fun.  Yet, the most important job of the CEO is to do whatever is necessary, within legal and ethical bounds, to insure the survival of the company to live and fight another day.  It is when Bad Things Happen that this all comes into play. 

We lived through what happened in the movie "To Big To Fail", when the Money Markets froze up in September, 2008.   We had never experienced anything like that before.  Fortunately, President Bush and Secretary of the Treasury Paulson put the full faith and credit of the United States behind the Money Market funds; otherwise, there would have been a complete global financial collapse that would have impacted everything and everyone.

Most people just do not know how close the world came to this precipice.  I had the opportunity to be at Conference where George W Bush was a speaker.  You can bet I thanked him for acting decisively and quickly to deal with this crisis because I fully understood the implications if Bush and Paulson had not acted.  Recession would have turned into another Great Depression.  This could have been another occasion when Bad Things Can Happen To Good Companies and in this case lots of people.  

Years ago, we lost a major client that we had for 11 years even though we had provided outstanding service.  Procurement got involved in a bidder process demanding that they adopt a different business model than the one that had been very successful for years.  Our client contact, who we had helped succeed and get promoted was just not strong enough to fight this off.  Ironically, this proved to be a very bad decision.  

The supplier that was selected was acquired a few years later by another company that ultimately filed for bankruptcy.  In fact, we were almost called in to be the White Knight because this bankruptcy caused major problems for the client.  In any case,  it was the first time in my business experience that I had ever seen a contract terminated when service was great.   It demonstrated to me that some times Bad Things Can Happen To Good Companies.

When Bad Things Happen, management should allow for a short grieving period, for me about 15 minutes, though I must admit I allowed myself 4 hours, on the drive through California back to our home in Reno, Nevada to deal with this particular client loss because I was personally very involved and vested in this client.  But once grieving is over, it is time for Plan B.   Though it would never be my preference that a valuable employee leave our company, when it happens, rather than the doom and gloom I sometimes hear from our Managers, I see it as an opportunity to reevaluate our talent strategy.  Good Managers always turn lemons into lemonade.  

Bad Things Happen To Good Companies all the time.  So what.  Great Managers are always glass half full personalities.  Bad Things That Can Happen To Good Companies are what make great managers even better during Good Times.

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