This is the attitude that practically sank IBM, General Motors, Schwinn bikes, and every other company that thought they could disregard and/or abuse their customers endlessly because their products were unique and indispensable. Surprise! They weren’t. Every business, every individual, has competition. The more you act like you don’t, the sooner you are to get it, and the tougher it’s likely to be.
2. Downsizing is going to get rid of a lot of dead wood and enhance the profitability of the companies that engage in it.
The standard drill for a company that is downsizing is to comb the ranks for volunteers before ordering involuntary departures. Who is most likely to jump overboard in return for augmented severance benefits? It’s not the seat warmers. It’s the people who are the best equipped to land on their feet somewhere else—with your competition, for instance—because they’re the most capable, talented members of your work force. Who’s going to hang on for dear life? Obviously, it’s the marginal types and those who would have trouble finding a job somewhere else. The law of adverse selection is at work here. As in insurance, those who most want protection are those who need it the most.
Also, sawing off limbs may be effective therapy, but it is not a sign of good health. Recklessly trimming employees means trimming revenues and market share. Companies grow by increasing revenues and market share. Don’t confuse a short-term survival tactic with a long-term growth strategy.
In fact, there’s a new buzzword that’s popped up called “dumbsizing.” There’s a reason. A study was made of 100 companies who had downsized thousands of their employees. One year later, these same companies were revisited and guess what? Same dumb companies! 35 percent of the companies’ bottom lines were the same as before the downsizing occurred, still drowning in red ink.
3. Always be nice.
Always be nice as long as you can, and when you can’t be nice anymore, do what you have to do. Hard looks, screaming, and jumping up and down may not win you any Boss of the Year awards, but they can be most effective as wake-up calls for the objects of the exercise. We all know that most of the big cigars didn’t get where they got on charm alone.
Still, there are certain rules of conduct, even tough conduct, that should be followed. Never chew out a subordinate in front of anyone else unless it’s an official termination and you want to make a record for legal purposes. In that case, you’re not going to go ballistic anyway, unless you like lawsuits. We’re talking about the ordinary, garden-variety flogging. When a third party is present when you lose your temper you have made it impossible for the floggee to save face and to correct their mistakes. Do it in private. You know what was said. They know what was said. That’s enough. (But keep notes. It’s a litigious age we live in).
4. The customer is always right.
The most revered aphorism of them all. How can I disagree? Well, the customer is usually right, but the one area where you have to be especially careful is in marketing. The reason something like 12 out of 13 new products flop isn’t because marketers haven’t tried hard to listen to their customers. It’s because customers often don’t have the interest to really focus on your marvelous new gizmo or improvement. Simply put, customers favor the familiar. As a result, they tend to give high marks to the knock-off that is familiar and easy to understand and shy away from the real breakthroughs. Can you imagine the reaction of the first focus group that was handed a pizza? I mean, who needs this gooey, oily thing when we already have toasted Velveeta-and-tomato sandwiches on Wonder bread? Or the fax machine? Who needs it? We have letters. We have phones. We have messengers. There comes a time when you have to go with your gut. You’re paid for being right, not just for asking someone else whether you are or not.
Harvey Mackay is the author of the New York Times #1 bestsellers Swim With The Sharks Without Being Eaten Alive and Beware the Naked Man Who Offers You His Shirt. Both books are among the top 15 inspirational business books of all time. Harvey’s books have sold 10 million copies worldwide, been translated into 37 languages and sold in 80 countries.