The first step in building business resilience, is to understand your customer’s concerns.
A point in case. In the 12 months following the GFC in 2008, new vehicle sales in the US fell by 43%. I can imagine people in dealerships and car company HQ’s in the US sitting around asking, “How can we sell more vehicles?”.
The result saw the opening of the discounting flood gates with one dealer even offering a two-for-the-price-of-one deal, “Buy a new vehicle at the retail price and we’ll give you a new one free!”.
Even such mad discounting had no impact on new vehicle sales – companies were thinking of their own concerns and asking the wrong question, “How can we sell more vehicles?”.
However, one company asked a different question with outstanding results,
“Why are people not buying?”. The answer was not because they couldn’t afford to buy, but that they were afraid of losing their jobs. This company therefore introduced a ‘Returns Policy’ – “Buy a new vehicle (cash, credit, lease) and if for any reason (other than criminal) you lose your job over the next 12 months, return the vehicle and we’ll give you back every dollar paid, and you’ll keep your credit rating”.
That company identified their customer’s concerns – fear of job loss - and increased sales year-on-year by 13% - Hyundai!
In addition to understanding your customer’s current concerns, what also helps in building business resilience is to clearly identify just who are your customers?
For example, in 2006, three New Zealanders Gerard Hickey, Jason Ross and Greg Evans, were sitting around in their hometown, Havelock North bemoaning that they couldn’t get a good quality steak, despite New Zealand having some of the best grazing pastures in the world, and potentially some of the best cattle.
The problem they discovered was that back along the supply chain from the supermarkets to the farmers, everyone was trying to squeeze the last dollar out of the deal. The result? Farmers were producing beef cattle that would provide the best (meagre) margins and so on up the line to the end customer. Unfortunately, quality and price did not equate.
So, Gerard, Jason and Greg decided to do something about it. The first step was to find that the best beef was being produced in Japan – Kobi beef, more commonly known as Wagyu. And it was being produced in grain fed beef feedlots which are fabulous for developing consistent quality.
Next step was to identify who was buying such meat in quantities (and at a premium price) and where. That was New York city. Cleverly, they identified the NY restaurants serving Wagyu and the supermarkets selling Wagyu. However, the cleverest research resulted in them identifying the profile - age, sex, socio-economic background, profession, etc. - of the typical Wagyu buyer.
With a very clear idea of the quality of meat required, the best market and the ideal client, they then got together with a small group of progressive thinking farmers to see how the same quality could be produced naturally from grass fed cattle in New Zealand, rather than feedlots.
The result? First Light wagyu beef, which is now widely available in New Zealand and has a huge export market to the US, with Forbes Magazine rating First Light the “best Wagyu beef in the world”.
The First Light Company now have more than 30 farmers in New Zealand developing grass-fed Wagyu and employ over 60 people both in NZ and their US office in LA.
So, to build business resilience, your business needs to focus on two things:
- Have a very clear profile of your ideal customer
- Understand and help allay your customer’s current concerns
In addition to business resilience, owners, leaders and managers in successful businesses also need to have personal resilience. Here too, there are two key components to increased personal resilience.
The first of these was confirmed for me when I read a sports article by one of my favourite sports journos, Spiro Zavos of the Sydney Morning Herald, way back in May 1998. Spiro was explaining why one of two semi-finalist rugby teams always seem to lose the close matches and the other always seems to win these – the coaches’ emotions!
In part, Spiro reported, “He (Coastal Sharks coach Ian McIntosh) was at his over-emotional worst at Lancaster Park on Sunday. The eyes rolled more wildly than ever, he stalked the sideline. Not even the television cameras were safe from his flaying arms.
McIntosh’s antics sent a damaging message to his team: that the fates are conspiring against them and they are, somehow, destined to lose. And for the second week in a row they lost a critical game.
Crusaders’ Wayne Smith (the opposing team coach), sat impassively in the stands. The sign he gave to his players with this emotionless posture that if the players wanted to win, they had to do it themselves. And they did – just.”
Zavos went on to explain that the reason for the Sharks’ loss was McIntosh’s focus on ‘external discipline’ - the players having to constantly look to the sideline for advice/instruction. Smith’s focus on the other hand was on ‘internal discipline’ – the players were given responsibility to manage the game themselves without needing his interference.
Psychologist Julian Rotter first established this internal/external discipline concept that he called “Locus of Control” in 1954. People with an external Locus, tend to blame external factors for failures – in business, things such as the economy, regulations, increased competition and so on – and when successful, attribute good fortune, luck or happenstance as the reason.
Conversely, those with an internal Locus, when experiencing disappointment or failure, look to see what they did and how they could do things differently. When succeeding, they clarify their actions that led to success and look to keep doing them.
It’s no coincidence then, that personal resilience has been correlated with an internal locus of control. As the environment around you changes, you can either attribute success and failure to things you have control over, or on forces outside your influence. Which orientation you choose - internal or external - has a bearing on your long-term success.
For personal resilience, there are a number of strategies social scientists have found that help to develop an internal locus of control – regular physical exercise, giving gratitude, mental exercise such as word association exercises, art, and of course, a positive mindset.
And one of the simplest I’ve found, is to focus on using the positive words that are likely to influence both our thinking and behaviour about managing challenges. Almost 30 years ago, I had what might be called, an ‘epiphany moment’ showing the impact of using positive words. I was in a gift shop in Canberra, Australia – one of those shops where there are a lot of breakable items that one can touch and inspect – when a mother with two young boys (about four and five years of age) entered the store. ‘Hello’, I thought to myself, ‘this is a recipe for disaster’! If you were the boy’s parent, what would have been your instruction to them? Probably, “Boys, don’t touch anything”. In those days, mine would have been similar.
The problem with the word ‘don’t’, however, is that our brain has no image of ‘don’t’, whereas ‘touch’ immediately elicits an image of touching something. And so, the only image the boys get with our instruction of “Boys, don’t touch anything”, is “Boys, touch anything” (and boys being boys – well, you know the rest).
To my surprise, the mother’s instruction was, “Boys, keep your hands in your pockets till we get back outside this shop”. Brilliant!
Since that time, I’ve done extensive research on how the words we use, not only impact others’ behaviour, but also our own thinking and behaviour. The evidence is very clear. One of the simplest ways of developing an internal locus of control is to start by eliminating the word ‘don’t’ from our vocabulary. Doing so immediately provides an image (to you) of what you can personally do (and in some cases avoid doing) to build personal resilience.
So, to build personal resilience, you need to focus on two things:
- Take control of your life – decide to develop an internal locus of control
- Become more positive – start by eliminating “don’t” from your vocabulary
Does this work? Absolutely!
At age 27, I knew nothing about locus of control, but I did believe I was quite a positive person and if I worked hard, I could achieve anything I wanted. I applied for a good job, was shortlisted and given a “battery of psych tests” (I now know why they are called,” battery”). In the debrief with the recruiting psychologist, he said that I’d done well on all tests except IQ saying ,“Your IQ results tell me that you’re not smart enough to complete a university degree”. Wow! Really?
Had I had an external locus of control, I could have easily believed him as being the ‘expert’, and done nothing about it, probably thinking, “Ah well, I guess I’m just not smart enough”.
However, as I was just completing a four-year management course at evening college at the time, I decided then and there to enrol at university to do a degree in psychology (once again evening study). The result? I obtained my degree with flying colours of ‘Credits’ and ‘A’s’ in most subjects (with the exception of statistics).
The rest they say is history, as I’ve now spent my career in helping others be the best they can be.