Strategic planning helped my company during the previous economic crisis. It helped my company during the current recession. And it will help my company during an even bigger economic downturn.
I always tell people, when the next recession hits and we are in a position to do something, we do not do nothing— we do something. When the next recession hits and you have cash-flow problems, you do not wait to see where the money is when you find it, or how much the company is losing, or how you should run the business— you stop doing nothing and do something.” In other words, during recessions, a well-conceived, sound plan keeps you on the path to growth and profits.
In the past several decades, there’s been an increasing recognition that companies can’t grow and do profits during a recession. During this recent recession, several high-profile companies like Xerox, U.S. Steel, Home Depot, and General Motors laid off hundreds of thousands of workers and closed or sold off their plants.
A recent survey, completed by more than 1,000 employees at 30 companies including the U.S. Postal Service, Verizon, The Gap, Procter & Gamble, and the University of Texas, concluded that employees don’t ‘get strategic planning’ but that they need ‘strategic planning to thrive.’
Why, in the real world, wouldn’t leaders and managers find the time to conduct such important strategic planning? I agree! Strategic Planning in a Tight Spot!
During the recession, our company had to make difficult trade-offs between capital efficiency and growth. In addition, company sales had to shrink and margins had to stay healthy given reduced operating margins. My predecessor’s experience as a CEO is one indicator: the year before he had to be the CEO of Ford and he realized that he was in a better position to grow Ford in spite of declining sales and lower margins than in the past when he was the CEO of a company that had a great balance sheet.
During the recession, the company needed to make choices about how to grow the business. Strategic planning helped our business make those decisions. For instance, in a period when the company had to sell off several businesses for lack of customer demand, we chose to consolidate the company through a share repurchase effort. We had to make that decision—we weren’t able to raise additional capital for our existing portfolio. Strategic planning helped us make that decision, the right decision. Strategic planning helps you make that decision. That decision also helps you determine if, and when, you should be acquired and/or whether you need to raise capital. And that decision helps you make decisions on whether or not to enter new business lines or new product lines. And finally, strategic planning has helped the company as it grows, just like it helps any business grow.