REUTERS | Mike Blake

Don’t waste the downturn

One of my friends owns a gym.  He is currently sending out emails advising people not to “waste the downturn”.  At first glance this seems to be something of a counter-intuitive message.  But it isn’t and here’s why.

First: we have to assume that things will pick up in time.

When, to what extent and in what form is, of course, anyone’s guess but recessions usually end and are usually followed by an upturn.  Yes, we all know that “past performance is no guide to the future”, even though the proof for this is (and I think has to be) past performance.  There is even an FSA web page containing an article entitled “FSA research confirms that past investment performance provides no guide to future performance”.

Most people I have spoken to think that, although there will be an upturn, things “will not be the same”.  I am currently working on a research project using the Delphi Method to come up with some predictions (more about that in forthcoming blog posts).  In the meantime let’s just make the assumption that things will pick up.

Second: there are things that a downturn gives you the opportunity to do.

The gym sales pitch was initially focused on the fact that exercise is one of the best antidotes to stress.  People who are fit are more energised and more mentally resilient and that means that they are better able to deal with the problems that life throws at them.  However, a development of that sales pitch is to make the rather obvious point that if you are one of those people with “time on your hands” then you should not waste that time.

In busy times people often say that they don’t have the time to do the things that they would like to do.  In the gym scenario this is the excuse for not getting fit.

In a business environment you hear people saying that there are lots of things that the organisation needs to do, but there isn’t the available time or resource.  People are fully occupied with current work so the “important but not urgent” gets left behind.

Sometimes you hear people saying that they would actually like to take a couple of relatively senior staff away from current and new work for a while so that they can work on something which, although not generating revenue today, will put the business in better shape for tomorrow.

Well now’s the chance.  If we believe that things will pick up (and there is something of a self-fulfilling prophecy here) and we don’t use that “spare resource” to get our organisations into better shape, then we will have wasted the downturn.

Third: what shall we do?

1. Deal with your backlog

I often hear senior managers saying that their biggest problem is not a shortage of ideas but the failure to implement them.  If only people actually did what they said they were going to do.  When asked why this happens you get the “too busy” response.  (Starting something of a tradition on this blog, I googled “too busy” and got over 18 million hits!)

So, look back at the objectives that you have set yourself but have not achieved.  If the objectives are still valid, now is the time to achieve them.

2. Train your staff

They say that the biggest mistake in training armies is to focus on fighting the last war rather than the next one.  Is your training programme looking at the things that are coming up?  Do your people understand and are they able to confidently deal with the raft of sustainability regulations? Are you up to speed with the most recent legislation dealing with directors’ duties? (Actually this is a wise time to brush up on that topic just in case things get “hairy”).

However, this is not just about “more of the same” training.  A quiet time is a genuine opportunity to significantly raise the skill levels of your team.

There is a story about a general who decided to do this.  His country was at peace but he knew that if a war came the army would need to be much bigger.  The problem was that when the new recruits arrived they would all be inexperienced.  In anticipation of this he trained all the soldiers to be able to operate at the next rank up.  So corporals were trained to be sergeants, captains were trained to be majors and so on.  When the war came the bigger command structure was ready and waiting simply by moving everyone up by one rank.

3. Sort out your business processes

There are two questions that I am nearly always asked at my commercial management lectures at the Manchester Business School.  The first is what are the three most important things in making a construction project successful?  The answer is easy: management, management and management.  The fact is that the more management time you devote to a project (commercial, technical, safety, etc) the more likely it is to be a success and the less likely you are to end up in a dispute.

Second question: what is (from a legal perspective) the most common mistake made in construction projects?  Again the answer is easy: not getting the detailed business processes and contractual  arrangements in order.  This isn’t a question of esoteric contractual points.  It’s the basic stuff:

  • Is the specification clear and agreed?
  • What is included in the price and what is not?
  • Which risks are each of the parties taking?
  • Is there a contract and what are its terms?
  • Why are we using a letter of intent and what are its limits?

The reported cases are full of this sort of problem.  I am dealing with a dispute at the moment where the parties have now conceded to each other that neither of them can put a copy of the contract together.

I’m not saying that our industry is worse than any other in this area.  I understand that the cost of doing everything absolutely perfectly can push up overheads and make contractors uncompetitive.  But I think we would all agree that there is room for improvement.

Reviewing business processes is not the most exciting of things, but it must be a good use of available resources to:

  • Look at where things have gone wrong in the past;
  • Challenge why things are done the way they are being done; and
  • Work hard to create streamlined business processes for the future that are comprehensive and intuitive (and therefore more likely to be followed).

Those resources may actually be available right now.

So, let’s not waste the downturn.

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