|
|
|
ONLINE FEATURES
Book Reviews
BW Video
Columnists
Interactive Gallery
Newsletters
Past Covers
Philanthropy
Podcasts
Special Reports
BLOGS
Auto Beat
Bangalore Tigers
Blogspotting
Brand New Day
Byte of the Apple
Economics Unbound
Eye on Asia
Fine On Media
Green Biz
Hot Property
Investing Insights
Management IQ
NEXT: Innovation
NussbaumOnDesign
Tech Beat
Working Parents
TECHNOLOGY
J.D. Power Ratings
Product Reviews
Tech Stats
Wildstrom: Tech Maven
AUTOS
Home Page
Auto Reviews
Classic Cars
Car Care & Safety
Hybrids
INNOVATION
& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip INVESTING Investing: Europe Annual Reports BW 50 S&P Picks & Pans Stock Screeners Free S&P Stock Report SCOREBOARDS Hot Growth 100 Mutual Funds Info Tech 100 S&P 500 B-SCHOOLS Undergrad Programs MBA Blogs MBA Profiles MBA Rankings Who's Hiring Grads |  |
JULY 10, 2006
By Jack and Suzy Welch The Danger Of Doing Nothing Listen to Drucker: If you weren't in the business you're in, would you enter it today? Five years ago we started a company in the then-red-hot fiber communication industry. We've fought hard to stay viable, but now it's obvious that the "growth space" for our company is much more limited than we'd hoped for. Should we give up and start again in a new area or stay in the survival game? -- Ling Chen, Sunnyvale, Calif. Since you're from Silicon Valley, you probably know the answer to your question: The survival game stinks. And nowhere does it stink more than in the technology sector. In fact, sticking it out in a low-growth technology business is a fast road to commodity hell, where you will be forced to endure a painful eternity of low-cost slugfests with offshore manufacturers. What a way not to go. Clearly, you would be better off to find a new business where you and your team can grow and flourish. It appears your company has a business model, so survival, at least for the foreseeable future, is an option. That's good news. It means your immediate challenge will be harvesting the living daylights out of what you have to keep the cash flow coming. Meanwhile, you can figure out the new game, allocating the resources to acquire a business or start one from scratch. Now none of this may seem particularly easy or pleasant -- exiting a business rarely is. But you can take solace in the fact that your situation is entirely common. The environment starts to change under your feet, and suddenly your business doesn't make that much sense anymore. It happens every day all over the world, not just at startups. In fact, it's particularly common at established companies where new competitive dynamics emerge almost out of nowhere to upend the status quo. All too often in big corporations, unfortunately, certain businesses have become such shrines that managers do not react with the kind of clear-eyed realism that your letter suggests. Look, change requires leaders to overcome all sorts of human dynamics, like inertia, tradition, and head-in-the-sand hoping that things will get better. But strategic moments require courage, or at least a lack of sentimentality, which is rare. It is in these moments that the best leaders find a mirror and ask themselves the defining question that the late, great Peter Drucker posed nearly 40 years ago: "If you weren't already in your business, would you enter it today?" If the answer was no, Drucker said, you need to face a second tough question: "What are you going to do about it?" Every leader should heed his advice and, if need be, follow it through to its conclusion -- whether it is to fix, sell, or close the business. Congratulations for having done that already. Your decision may be tough in the short run but will ultimately release your people from a losing work environment and give them a chance to find a future filled with opportunity, perhaps even with your new venture. I run a small shop -- just five employees. Lately, I've been thinking about sharing my financials with the team, hoping they'll see why we need to be efficient every hour of every day and minimize absenteeism. I'm also hoping that "exposing" our numbers could build teamwork and foster innovation. What's your advice? -- Bob Winyard, Cherry Hill, N.J. Surely you know the old saying: "No good deed goes unpunished." Well, you might find yourself living it very soon. That's not to disparage transparency. In general, the more information you share with employees about costs and competitive challenges, the better. As you suggest, when people know what they're up against, they feel a greater sense of ownership and urgency. And the sense that "we're all in this together" can jumpstart teamwork and innovation, often sparking improvements in processes and productivity. But there are real perils in opening the books, the main one being that it's hard to open them just a little bit. To make sense of costs, you also need to expose revenues and profits. So are you sure you're comfortable with the team knowing how much the business makes? They will, naturally, compare that number with what they make, and eventually they will be able to extrapolate how much of the pie you have -- and they don't. That gap may very well be something you're willing or even proud to explain. If so, then there's probably no downside to sharing financial details. But remember that all employees, no matter what size the company, have a pay scale in their heads that estimates what they and every co-worker is worth based on performance. If you get the sense your information spree will scramble those notions, then try to find a less perilous way to get your people to care about the work as much as you do.  Jack and Suzy Welch look forward to answering your questions about business, company, or career challenges. Please e-mail them at thewelchway@BusinessWeek.com For their podcast discussion of this column, go to www.businessweek.com/search/podcasting.htm
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2006, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version