When times get tough, leaders rethink and reimagine what is possible. Eliminating unneeded resources and cutting the fat out of the enterprise protect the organization from losses or demise.
In good times, nonessential expenses rise and leaders expand resources looking for new opportunities. In lean times, managing expenses and cutting costs is the prudent course of action.
But it sends the wrong message.
Reducing the footprint of the enterprise speaks loudly to team members. Choices to freeze hiring, gap expenses, and reduce budgets tell everyone in the organization that times are tough and sacrifices need to be made.
What it also suggests is the enterprise or business is in temporary (we hope) decline and waiting for conditions to change. This demoralizes the best performers and paralyzes the bold actions necessary for growth.
Waiting it out is not a winning strategy. No business or enterprise becomes great through cost reduction and expense controls. That is not to say leaders should ignore market conditions and spend like drunken sailors. Managing expenses is wise in any market and cutting costs is often smart and necessary.
But curtailing costs and lowering expenses is a defensive move, one that sends a depressing message to those who want to drive toward excellence and keep the train running at high speed.
The best leaders understand this and balance the defensive posture with a strong offensive move. They never stop making select investments in areas with big opportunities. Even if it means reallocating resources or robbing Peter to pay Paul, they recognize the power of select investment on team morale and productivity.
Making strategically powerful offensive investments sends an important message to the organization. Great organizations never stand still or wait things out. They move forward, even if they do so selectively.
Reallocating precious resources can sometimes create conflict and temporary winners and losers, but good leaders don’t shy away from the hard call to do so. When possible, they openly debate where to invest to create more buy-in.
First and foremost, they know it is essential that some pocket or area of the enterprise actually gets more investment during the downtime. This keeps everyone engaged and hopeful. More importantly, it says loudly and clearly that great organizations continue to innovate and grow wherever they can. A strong offense makes for a stronger defense every time.
A Daily Dispatch from the Front Lines of Leadership.
