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Jeanne Liedtka

Jeanne Liedtka

Jeanne M. Liedtka is a faculty member at the University of Virginia's Darden School of Business and co-author of The Catalyst: How YOU Can Become an Extraordinary Growth Leader.

Learning From Goldman Sachs's "Catalysts"

Today's profit announcements from Goldman Sachs demonstrate that much of the advice we are getting about surviving today's economic meltdown was wrong. Advice like "hunker down, cut costs, batten down the hatches, play it safe and wait for the economy to turn around" encourages managers to take a pass on the tremendous opportunity that today's uncertainty holds.

Some managers, like those at Goldman, will come through these tough times ahead of the pack. And it won't be the ones waiting for a recovery to start somewhere "out there." The winners will figure out how to gain market share and new business while the wait-and-hope managers wring their hands. They'll do this by taking advantage of the present uncertainty, rather than hiding from it.

Which kind of manager would you rather be?

We know what these winners look like, and there's very little rocket science in the approach they take. My colleagues and I spent three years studying them and their practices. We call these leaders "catalysts" because they acted in situations where others waited, and they made things happen that wouldn't have happened without them. These catalysts taught us a set of lessons about what it takes to grow a business without a lot of capital or support from corporate, lessons that we think every manager in today's tough times ought to pay attention to.

Lesson 1: Stop looking up, and look in

The first thing they taught us was that you've got to start by looking to yourself for solutions. Put down the worry beads and get moving. Start by examining the repertoire of experiences and attitudes you bring to the situation. A manager's diversity of experiences determines, in many ways, the range of opportunities that he or she is able to see. If your repertoire is narrow, step one is to begin by broadening your horizons -- talking to people outside of your function and business, exposing yourself to new business models and ways of operating.

And go talk to a few customers about their pain points; you may be surprised to hear what they say. You don't need to search far and wide for some "out-there" idea on how to create better value for your current customers, the surest route to survival. The practice of talking to and listening to customers helps to grow ideas and deepen customer relationships at the same time.

Lesson 2: Get real

If you are like most managers in large organizations, you have been encouraged to sit in your office and analyze and plan new business strategies carefully on paper before you make a move based on the data you've got in hand. Think of yourself instead as a scientist -- and your new idea as a hypothesis that you need to test -- in the real world. Stop using old data and PowerPoint presentations to try and convince somebody to even let you try.

Start small. Big growth doesn't have to be about big risks, in good times or in bad. Consider how you'd act if you were spending your own money. You'd place some small bets in the marketplace and try to learn fast. You'd get a running start by using resources that you've already got. This is actually a lot safer than basing initiatives on detailed market research or predictions and assumptions about what customers and value chain partners will and won't do.

Lesson 3: Lose your B players

If your goal is forward movement, you cannot settle for B-team players when the environment is uncertain. There is a definite opportunity in today's tough times: Quality talent hasn't been this available in years. Now is the time to staff your business with the best players. At the same time, however, be careful. Slashing in an indiscriminate way to survive may eliminate some of your best growth leaders of tomorrow. A mistake here will be expensive to fix later.

Lesson 4: Make uncertainty an ally instead if an enemy

Managers who are succeeding in spite of, or maybe because of, today's uncertainty accept it as a fact of life. It's denial and anxiety that slows you down and creates blinders that block seeing new opportunities. Instead of fearing and avoiding uncertainty, look for ways to exploit it. It is where the opportunity lives. Channel your anxiety productively and let it motivate rather than paralyze you.

So keep your cool, build your repertoire, surround yourself with the right talent, and place some small bets. And stop expecting good things to come to those who wait.

By Jeanne Liedtka

 |  July 13, 2009; 1:10 PM ET
Category:  Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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This article was brought to my attention by a LinkIn announcement.

I guess the advice here is that you can succeed in any environment; which is apocryphal. Actually, you can succeed in any environment, if you have prepared yourself to act.

Everyone wants to be Bruce Lee, but few want to put in the hours of practice and preparation. Those who are already prepared will hardly be looking to a 700-word “how-to” blurb to show them the way.

But what really fired me up to respond was the comment Ms. Liedka makes about “B players”.

I assume that the working definition here of “B” player is anyone who is not an “A” player. Cute but it doesn’t help us get anywhere. In reality - in most organizations – many ”catalysts” are considered “B” players because they are doing already what Ms. Liedka suggests, and therefore don’t fit into the corporate culture. The world is full of creative problem-solvers who - as the result of poor leadership - end-up going somewhere else to be given the opportunity to succeed.

However, let us talk about individuals who are really “B” players - truly non-productive workers. How do they get that way? Again, the answer is: poor leadership.

The “B-level worker is often the consequence of B-level – or worse – leadership. A-level leadership has a tendency to produce more A-level leaders and A-level workers who will be ready to take-on A-level leadership roles when they are called upon to do so. All of which has a tendency to produce creative problem-solving.

The problem is one of lack of preparation and a lack of leadership. The solution is not a “how-to” bromide.

I will be posting this on LinkedIn, as well.


Mark Lefcowitz, CMBB, PMP, CLM
MCL & Associates, Inc.

Posted by: mlefcowitz | July 23, 2009 5:54 AM
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Goldman Sachs was more successful than its competitors because it played the government inside out side game better than anyone else. Rubin and Paulson treasury secretaries were former CEOs of Goldman Sachs and many of the people currently working for Timothy Geithner are from Goldman Sachs. Larry Summers had a lucrative consulting contract with Goldman Sachs. Much of the billions given to AIG was funneled to Goldman Sachs because they were counter parties to the Credit Default swaps that AIG issued. Most of the profits their claiming is just an accounting trick: they increased the valuation of their toxic assets and they can do that because the government injected billions of dollars into the financial system. Their success has more to do with government largess and almost nothing to do with the brilliant strategies of management

Posted by: mlang46 | July 21, 2009 1:37 PM
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Everyone will have their own take on what is needed to be successful. Ms. Liedtka's points are well taken, and of course one wants to be prudent when creating plans for action and work to extrapolate future scenarios. As an executive coach, I often see one extreme or the other-the action oriented catalysts tend to focus on results and may not review enough data, or the analytic types may get lost in the data, and hesitate to act. We can all benefit from learning from the strengths of both of these approaches, as well as integrating left and right brain approaches to problems. If we are open to learning from each other, instead of being polarized on one way of achieving success, that is where true growth and innovation thrive.

Suzanne Blake
Blake Coaching and Consulting
www.suzanneblake.com

Posted by: suzannecoach | July 16, 2009 3:44 PM
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Goldman Sachs' so-called success is fraught with political connections, conflict of interest, and the elimination of its competitors who, instead of being given bail-out bucks, were forced to go belly up or merge.

Posted by: ldubas | July 16, 2009 11:16 AM
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CAREFUL - The advice is reasonably sound but there are some significant mines in this field of approach that have been laid that must be exposed...

The HOW is critical.

"They acted in situations where others waited." HOW? Those that succeeded did it smartly, and many others crashed and burned.

"Try new ideas - by achieving management approval by making them small." Small or big simply reflects the degree of consequence. We want to minimize risk / better assure success, small or big. What if you could model, simulate, and partially validate your hypothesis by simulated "experiment" before asking management for an investment?

While modeling and simulation analytics of years past required heavy simplifying assumptions, today's analytical capabilities are critical tools to successfully achieve the ideals the author promotes.

Giancarlo Newsome
www.clockwork-solutions.com

Posted by: gnewsome1 | July 16, 2009 9:25 AM
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Companies have to get aggressive right now if they want to survive. Everyone on the planet is cutting back, and when it's all over (the recession), they'll find themselves starting from square one. There ARE people out there who are spending money and taking risks - the trick is that YOU have to spend money and take risks to find them.

Think about how you can get people to promote your business for free, or on commission. Think about how you can maintain quality but dramatically lower your costs. Think about how you can achieve sustainability WITHOUT growth. Doing these things requires being AGGRESSIVE.

Attack like a Spartan, be unrelenting. You'll be find.

Calvin Froedge - Success Architect
www.creativelogicmedia.com

Posted by: creativelogicmedia | July 16, 2009 7:51 AM
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Profitablity starts with good practices.

Is often rejected by Big Corporate mentality.

I can honestly say that when one goes to the CEO of a company,operations or regional level and submits a sound plan.
It makes people look bad.

With regards to customers,
"I need you where you are"

With regards in how to handle competition,
In order to effect change, one needs to exploit weakness.


Jay

Posted by: James210 | July 15, 2009 7:21 AM
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