I was reading with great interest an article called “The upside of the downturn” by Geoff Colvin (in FORTUNE, June 8, 2009) and the article highlighted five moves to make now which I found to be right on…so much so that I wanted to re-enforce Colvin’s ideas here:
- Evaluate employees better – in good times managers fool themselves into thinking they’ve got all “A” players – in tough times, it’s easier to distinguish true stars from third stringers.
- End guidance – telling investors what quarterly earnings are likely to be, then talking that number up or down as the quarter progresses, and then contriving to beat it – that corporate game has never served a useful purpose and can lead to harm as managers feel pressure to hit announced targets.
- Manage for value – more than ever, it is critical to focus on what really matters, which is earning a return on your company’s capital that exceeds the total cost of all the capital in the business – obvious but reflect on whether or not anyone is being paid explicitly for achieving that goal.
- Expand your mind about risks. Address the most dangerous risks – formerly the taboo subject – now essential.
- Mine employees for ideas – Potential improvements can hide in a million places. Ask your associates.
Thanks Geoff Colvin – excellent guidance!