With Sterling taking a beating again last week due to more uncertainties in the Brexit negotiations and Trump again doing what he does best – tweeting and suggesting the people responsible for an explosion on a London tube train last week was known to the Metropolitan police; it is no wonder that people are anxious about what the future holds.
It’s almost a decade since the 2008 financial crises. We now live in a world where the unemployment rate is the lowest its been in 16 years; where indexes are breaking through record ceilings; in a world with low inflation and interest rates and growing salaries. We can be forgiven to naively think that Brexit will be soft and that everything will be rosy in the future as they are now.
Whatever the crystal ball is showing us, we know that Newton’s law will never fail and everything that goes up must eventually come down. Therefore, it is a wise leader who hopes for the best but, plans for the worst. Never to be held back by past events, but rather learn from events following 2008.
With this in mind, and listening to the words of Trump, in that we are in a bubble set to burst anytime; I thought it was a good idea for me to ‘sharpen my saw’, as based on Stephen Covey’s 5th principle and scrub up on my leading and management skills for when the tide turns again and in order to be ready and prepared. Austerity Business – 39 Steps For Doing More With Less by Alex Pratt is exactly what a person needs to face the challenges head-on in our next austere cycle.
I have been in the fortunate position to know Alex as a leader, mentor and friend for the last 14 years. Skilled in spotting opportunities where most don’t; is what makes Alex one of the leading entrepreneurs in the country. “Far too often, business books look in the rear-view mirror”. The age of austerity business is all about boldly going where your business has not gone before, says Alex.
Alex goes on to say – “…I don’t presume to tell you that I know better than you. Like you, I’m still learning…What I have done is dedicate myself to running the most interesting small business I can…”. Personally, I can attest to that.
The three most powerful points I took from the book were;
To survive in the world of austerity business, you must escape your inner giraffe
The best people to have around you in austere times are the ones who invest in their own human capital, rather than expecting to have it all handed to them
We create our corporate reputation through countless little actions every day
The book is divided into four areas crucial for any business to get straight: attitude; people; customers and strategy. Below are short summaries of my favourite tips;
Tip 1 – Face The truth.
Alex starts by asking; do you still think that chasing turnover is the right way to measure success? Wouldn’t the efficiency with which you put your cash to use be a better way to look at things? Do you still measure your success as a leader by the size of the team you manage, or by how much you improved the balance sheet? Would you ever walk away from an unprofitable customer who was waving money at you? Get real – Alex says.
Too many people ingrained in the ways of modern business, these behaviours may well seem a little old-fashioned. They are. They’re the basics, the foundations of every business success. Get to know and like them again, states Alex.
Tip 2 – Giraffes don’t jump.
Now, you’re almost certainly wondering what on earth a giraffe could teach you about managing and growing a business through the age of austerity, asks Alex.
What it means is that a baby giraffe emerges onto the planet and is immediately faced with a six-foot drop, and is almost certainly dropped on its head. Throughout their twenty-odd year lifespan, giraffes don’t jump. Never. Paradoxically, the world’s tallest animal is actually scared of heights, says Alex.
He goes on to say that the point of all this is that as managers, entrepreneurs and employees we’re all far guiltier than we might think of behaving like giraffes. We too are conditioned far more than we think by our earlier experiences and how we interpret them. This may be limiting enough most of the time, but when recession and austerity strike, it’s downright dangerous.
Alex explains that certain values, particularly frugality, are worth revisiting in the era of austerity business There is a lot that we can learn from the past, yet in other ways, the world has moved on so much further and faster than we have ourselves.
To survive in the world of austerity business, you must escape your inner giraffe. To survive in the brave new era of austerity, you must work in the world as it really is, rather than living imprisoned by yesterday’s truths and assumptions, says Alex.
Tip 6 – No entrepreneur is an Island.
“We all know by now that you can’t get anything done alone, that you need to build, work with and motivate a team to make things happen”
The underlying team culture forms various, well-trodden paths, good and bad, that affect every aspect of your business, from how you handle customer complaints, to how you approach new product development and how you deal with your debtor book.
Alex mentions that in the good times, you may well have tolerated the inefficiencies of squabbling and silo working. But. it’s in the really tough times that your team has to be just that - a team.
Any team, and therefore any enterprise, wins or loses on the combination of the habits, standards and patterns by which it lives and operates, plus the talent and determination with which these attributes are executed in the field of play. Alex goes on to say that pulling together and making common sense common practice is the really smart thing to do.
TIP 12 – Keep Fit.
I don’t want to lecture you, says Alex, but it’s true that staying physically and mentally healthy is the only way to generate the energy you need to keep on keeping on. “Show me an unhealthy yet successful business leader, and I’ll show you someone who is either lucky, or privileged.”
Above all, you need mental fitness not to buckle under all this pressure. There are many ways of achieving this, says Alex - whether it’s time spent with family or relaxing in the garden, but here are a few of Alex’s favourites.
No shame in a laugh - If you’re not laughing at yourself or your situation pretty much every day the chances are that you’re not coping very well either. The best offices are like laughter kegs waiting to burst at any moment. No-one wants to work somewhere that you could cut the silence with a knife. Far too many people mistake being serious with being boring. If anything, you need more laughs when times are tough.
Meditate - We all need moments when we can switch off completely. Meditation is the best ‘off’ switch I know, says Alex. The returns in well-being and productivity of 10 minutes of complete shutdown every day will far outweigh any opportunity cost.
Embrace serendipity - Think of your journey as a ramble across uncharted territory, rather than a train going down the tracks, says Alex. Even though austerity is likely to sound the final death-knell for such cosy ideas as a job for life, it’s too easy to get stuck on one route and never get off. Instead, you need to bump into people you shouldn’t meet and take an interest in new things. Survival will become all about fusion - a fusion of new ideas, practises and cultures. Don’t confuse being focused with being blinkered.
Read, read, read - Knowledge and learning will make a huge difference to your ability to seize the opportunities to see you through austerity. For the price of a few books, you could see the world in a whole different way. Ask the people you respect for their advice on the books that changed the way they saw business. For starters, I’d say that if you haven’t read Who Moved My Cheese, The E Myth and Good to Great - you need to pick one and order it now. You can look for inspiration in the words of Winston Churchill or Martin Luther King or the poetry of Rudyard Kipling. What have you got to lose, asks Alex?
Lose the fear - Make sure that what you’re fighting for is worth fighting for. Is it really worth it? Does it put a fire in your belly? If not, you need to change something, says Alex. You’d soon put down a boring book, or switch from a rubbish TV show, so why carry on doing a job that bores you to tears? In the end, your success always starts and ends with you.
TIP 14 – Follow the leader.
Alex is of the view that austerity gives all business leaders the permission to act decisively. “In the search for leaders, I always remember the advice of my wise old economics professor that the way to spot a leader is to look for their followers - the leader won’t be too far ahead”.
It’s that simple, says Alex. Leaders in tough times are the ones who are out there, trying new things, setting new standards, and who cajole, inspire and manipulate others to follow suit. Leaders paint a picture of the world, in stark, black and white terms, and get other people to act based on that.
Despite how much is talked about motivation, even the best of leaders can’t motivate lazy or disinterested people. Motivation comes from within, says Alex. All the leader can do is inspire good people to greater things. “What distinguishes the best leaders, however, is an ability to admit their mistakes on the run, and be resilient, responsive and flexible”.
Tip 15 - Abolish Slavery.
How many times have you heard the phrase ‘our people are our greatest asset’ and there is no ‘I’ in the team. All these statements deserve pride of place in the lexicon of meaningless business English.
The problem with the whole ‘our people are our greatest asset’ theory lies in the little-noticed fact that companies don’t actually own their people. They just rent them. Unless, of course, you’re a plantation owner in the 18th century America. Didn’t think so.
Whether you own an asset fundamentally alters your approach to invest in it. Alex asks - "Would you install a new kitchen in a rented flat with a six-month lease on it – probably not?" In the same way, no business can afford to invest mindlessly in the people assets it employs. The employer who does so is deluded – the capital appreciation will all accrue to the employee. Quite a controversial tip, Alex admits, but he goes on to say that the contract between employer and employee is a very complex one and wants to make the point that the best people to have around you in austere times are the ones who invest in their own human capital, rather than expecting to have it all handed to them.
The best people want to improve, practice what they do and love being thrown in at the deep end. While you don’t own your people, you do own the team, the way it plays and the results you get at the end of the day. This is where your investment should be targeted.
Tip 22 - Marketing.
It’s both your biggest opportunity and your biggest threat in an economy which has bottomed out, says Alex. “Only a fool would indiscriminately slash their marketing spend on the basis of an accounting spreadsheet”. By spending on marketing, carefully and wisely, you will give yourself the greatest possible opportunity of getting out and surviving. The opportunity cost of not following your good ideas is much greater than giving them a go. Be smarter, not cheaper, advises Alex.
Tip 27 - Forget out-of-focus groups.
Focus groups are expensive bear traps, says Alex. “The best businesses aren’t customer led, they’re behaviour led”. The weakness in looking to your customer to bring you new ideas is that their experience revolves around what you already do, so the best you can hope for is, ideas for a tweak here and there. So many businesses stumble and falter when it comes to innovation, says Alex. “One of the biggest lessons you can learn about this is that the best new ideas often come from your team.”
Another trick of developing innovation that actually ships, is to get beyond what the customer consciously thinks by taking a careful look at how they actually behave, says Alex.
“Nobody likes to be treated as a number or part of a group; the best innovations treat customers as the individuals they are”
Tip 29 - Your word is your brand.
When the business environment around you switches from plenty to poverty, from disposability to durability, from bling to austerity, your reputation can save or strangle you, says Alex.
“Here is my advice to you – ban the brand and instead rekindle a heartfelt passion for your reputation across your entire team”. We create our corporate reputation through countless little actions every day, says Alex. With reputations, as with so much else, actions really do speak louder than words.
You need to sit back and think: What should ‘made by you’ mean? What do you want people to expect from you? What would be our character? Will you be professional or amateur? Personal or commoditised? Serious or playful? Once you have got it, says Alex, you need to make sure that everyone else understands that too. Then do that repeatedly.
Tip 35 - Focus focus focus.
What do you need to really focus on to win, and what can be allowed to fall by the wayside, asks Alex. “Surrounded by economic detritus, it’s easier to say that you should focus on your priorities than to actually know what they now are.”
For Alex, the three things that we need to prioritize on are all fairly obvious. They are:
Growing the bottom line
Building your brand
Improving cash flow
“Concentrate here”. Test and measure everything you do against these three headline objectives, advised Alex.
Tip 39 - KISS.
This kind of KISSing is anything but romantic. Of course, I mean ‘Keep It Simple Stupid’
As humans. We crave simplicity, states Alex. We like clear messages and easily deciphered patterns to emerge from the chaos of everyday life. The annoying thing about simplicity, unfortunately, is that it’s much more easily said than done, says Alex. “ Simplicity is lean and mean”. Operate a regular discipline of decluttering your workspace, mind, plans and systems.
Alex ends by saying; “Business is easy. If only the world would stand still.”
What I took from it.
After years of growth following the 2008 financial crisis, business leaders will have to brace themselves for the inevitable austere times that is sure to come. Its just the natural cycle of economics. Therefore, it's not a question of 'if', but 'when'; and in addition to tackling the economic challenges, entrepreneurs and leaders will need to keep their eyes open for the challenges and opportunities that goes hand in hand with austere times.
Based on many years of real business experience, Alex gives great tips in this book from how you can reinvigorate staff with the Dunkirk spirit, to building revenues on a shoestring.
Packed with inspirational quotes and common sense advice, Austerity Business is a must to read for any serious leader.