What does winning really mean? Can a ‘win’ be bad for you? Can a loss be good for you? Deep questions I know!!
Research shows the brain benefits from fasting in terms of cognitive function, learning, memory, and alertness. Similarly, extended over-indulgence has the opposite effect.
Is it the same with Businesses? Can good times and growth be a risk? Can a famine provide benefits?
A wise man once told me a failed business in your 20s is worth more than any university degree. In his mind, there is a wisdom that comes from failed experiences, much deeper than an intellectual understanding. When he recruits new staff he always looks for the ‘scar tissue’, people that have failed or been part of failures. After a lot of thinking and reflection I came to agree with this view. My wife does not which has caused much debate in the Gavran lounge-room as we try to get aligned in our messaging to our teenage children.
Whether you agree with the statement or not, it is a fact that many success stories have risen from the ashes of previous failures. Going bust is almost a rite of passage for the business entrepreneur.
When is a win really a loss?
Charlie Sheen’s infamous ‘winning’ mantra shows that a winning feeling is not always a win. Sometimes the worst thing that could happen to a Business is success. Growth by its very nature creates inefficiencies. Businesses outgrow structures, systems/processes, cultural misfits sneak in and are not dealt with as we are too busy dealing with the growth. One of the better known stories along these lines is Kodak. The Kodak business model was dismantled by the digital camera, a piece of technology the Kodak team themselves developed but the Board could not bring themselves to a strategic pivot away from their hugely profitable core product. It was too much of a risk because they were ‘winning’.
When is a loss really a win?
The opposite applies as well. COVID-19 has ravaged many business models and I have lost count of the number of businesses that are bouncing back to be even stronger. There’s something about an external threat that forces action. The ‘waiting room’ of indecision is no longer an option.
Here are two examples:
- Reliable Food Distributors is a long-term client in the Food Distribution industry. The COVID hailstorm was like a Mike Tyson left hook and it sat them on their backside. The business had dropped to 1/3 of pre-COVID trading levels and things were looking very grim. Up steps the Reliable Foods leadership team who grabbed the broom and started sweeping. Out went inefficient processes and in came a more efficient and modern way of doing business. Reliable Foods is now exceeding pre-COVID trading levels with a higher margin. The business now looks at COVID as a gift.
- The Alchin Long Group is another long-term client and is the parent company of leading global hardware brands: Doric, Cowdroy, Colonial Castings, Azuma and Australian-based Lock & Roll. In 2004 the Business was brought to its knees by a catastrophic fire which destroyed everything. It would have been so easy to have thrown the towel in but that’s just not their way. The Business used this catastrophic event to fundamentally start again and reposition the business model from being a Manufacturer to a Warehouse/Logistics company. A wonderful ‘phoenix from the ashes’ story…..quite literally.
The key message is to not get too caught up in whatever cycle you are in – be it good times or tough times – because it is just a moment in time and you CAN create your own future no matter the carnage around you.