||The turbulent global economy, spreading financial crisis and impending recession present enormous economic and social challenges to all. Restricted credit, falling asset value and slow economic growth call for quick action, new strategies and opportunistic mindset to strive to survive and build strength for the future. Lack of
confidence and liquidity is at the heart of the financial crisis - and liquidity is the chief concern of businesses in this uncertain and slow growth environment.
For many companies, the need to improve working capital and cash management has moved front and centre compared to before. Assessing revenue streams, expenditures, cost structures, the state of the balance sheet, supply value chain and customer weaknesses are now critical steps. A clear understanding of potential risks and opportunities is essential when rethinking operating, financial and
Turning Adversity into Opportunity
Toyota for example turned adversity into opportunity by keeping the employees in their payroll despite the suspension of all their V-8 engine production due to weakening demand in their cars. The engines are used to power Toyota's Sequoia sport utility vehicles and Tundra pickups. Sales of these vehicles have plummeted in recent months in response to spiking gasoline prices. But Toyota adopted a
"three-pillar approach" to fill the 500 idle workers' time by implementing daily kaizan, continuous improvement activities, focusing more on training and development and encouraging self-reliance activities. The morale of the employees remained high and it kept them hard at work, improving both the plant and themselves.
If necessity is the mother of invention, then adversity is a good teacher whilst opportunity is the father of innovation. Growing up in the less affluent societies of Malaysia in the 1960s and 70s, the children of that era had no access to the myriad of board games and electronic gadgets available to the young generation today. Thus the baby boomers, and to a certain extent Generation X, had to
improvise with natural elements such as stones, seeds, sticks and pure imagination to create games that had kept them inquisitive, proactive and stimulated in their formative years despite living under less privileged conditions. Often in adverse situations, people naturally become more inventive and opportunistic.
In this new millennium when global warming, energy crises and other environmental concerns plague us, governments, industries and organisations are exploring viable solutions for sustainable business alternatives. For instance, the Petra Group conducts research on green rubber techniques which seek to recycle natural rubber, while Asiatic spearheads the quest for a species of oil palm that would
generate high-yield bio-fuel. Often when one set of conditions prevail, there will be opportunities arising which otherwise would not have been there. For example, when there was a ban on indoor smoking in Australia, there was a huge demand created for outdoor furniture as smokers had to smoke outside in some comfort. Many small trading enterprises and manufacturers of outdoor furniture prospered.
So during times of adversity, slowdown and downturn there will be conditions arising which would allow other businesses to thrive which otherwise might have been difficult to operate. There are many instances of such
businesses that have sprouted during adverse times. Hence, be on the lookout for such opportunities.
Rather than a time to languish in agony, times of adversity also offer opportunities for us to BUCK UP. Here are some management insights on how you can make adversity work for you:
B - Build a `response-able' culture in your organisation.
U - Upgrade your Adversity Quotient.
C - Celebrate your milestones.
K - Keep what's still useful.
U - Unload the unnecessary.
P - Pick out opportunities.
Management Insight #1: Build a `response-able' culture in your organisation.
A `response-able' culture is one in which people thrive on adversity. Challenges unleash greatness and people are at their best in trying situations and times. Growing a `response-able' workforce that can thrive in adversity-rich times requires a commitment to forego mediocrity and the courage to reinvent existing norms regarding control, ownership, reach and endurance. Managers need to pay
attention to how people respond to adversity the moment it strikes and establish norms for people stepping up to improve and address difficulties the moment they arise. Managers need to focus on what facets of a situation can be influenced, no matter how impossible they may seem at first.
Management Insight #2: Upgrade your Adversity Quotient (AQ).
The extent of your ability to thrive in adversity is known as your adversity quotient (AQ). While there are tests for IQ as well a variety of psychometric and personality tests to evaluate one's mental capacities and personal attributes such as attitude towards challenges, it is exposure, experience and training or practice that can effectively fortify one's AQ. Paul G. Stoltz, author of Adversity
Quotient: Turning Obstacles into Opportunities, attests that many successful people "come from disadvantaged backgrounds or worlds submerged in adversity." Therefore, management leaders must themselves possess strong AQ before they can lead their teams to be resilient amid adversity.
Management Insight #3: Celebrate your milestones!
Don't forget to celebrate your achievements even in periods of adversity.. Celebration recharges our emotional reserves, strengthens the ties with our support team and acknowledges progress no matter how modest it is. You can also take this opportunity to reflect on what have you have already achieved and re-assess what you could have done better.
Management Insight #4: Keep what's still useful.
According to Dr Ronald Heifetz, guru of adaptive leadership, adapting to change does not mean throwing away all that was there before. Instead, smart adaptation involves carefully considering what's beneficial to be preserved. As we adapt to situations of adversity today, let us not overzealously downsize more than we should to the extent that the organisation becomes anorexic and incapacitated.
Management Insight #5: Unload the unnecessary.
While taking care not to cut off your organisation's vital organs, you should consider offloading what is not a core part or activity of your business. This may include divesting unused and unproductive assets. Some years ago, Malaysian Airlines divested their building in the capital city while Menara Cititbank is currently up for sale.
Management Insight #6: Pick out opportunities.
While we cannot expect an adversity-free life, we can choose to pick the roses from the thorns. During the recession of the eighties, a well-known Malaysian entrepreneur revealed in her autobiography how she invested in a condominium in the Klang Valley at a depressed price and made a decent profit from it later on when the economy picked up. And though not all of us are as financially
well-endowed as Warren Buffett, the principle of picking out opportunistic deals apply - Buffett is one who goes for a great bargain and is in it for the long term. This year, he notably picked up US$3 billion worth of General Electric preferential shares.
Advancing from Adversity and Difficult Times
With renewed resolve, let us respond to the adverse circumstances before us, ever willing to change our mindset and to upgrade our skills and capabilities during difficult times. In doing so, we can excel and emerge from any challenge fitter and more confident in riding the waves of adversity, eventually reaping the fruits of our efforts when the tide swings in our favour. This is part of the
cycle of life and business that triggers adaptation, evolution, rationalisation and transformation not only in Nature, but also in the socio-economic, business and political realms.
Dr Wilson Tay is CEO of the Malaysian Institute of Management. The Institute, which celebrates its 40th anniversary this year, invites companies and professional managers to be members. Contact MIM Membership Support & Outreach at (03) 2164 5255; fax: (03) 2165 4681; email: firstname.lastname@example.org or visit www.mim.org.my