Recession Proofing Your Business: Part 1

Is there a secret to so-called “recession-proofing” in business? Can you still improve performance, products, and productivity when the going gets tough?

The answer to both these questions is a resounding yes…if you know how to build a world-class culture. The process is straightforward, and any company would do well to follow its lessons.

Many companies plan and then rely on forecasted orders. In a downturn demand becomes unstable and unpredictable, and so the very key to our survival seems outside our control. This is an opportunity to take a lesson from the service industry, in which many businesses have to reinvent themselves every few years. Truth be told, some people and companies not only weather recessions but also flourish in them. Here’s how you can count yourself among those who thrive.

Identify and Understand Your Tribes

The key to recession proofing your company is to identify the basic building block of companies–it isn’t leaders, or departments, or divisions. It’s a naturally occurring group we call a “tribe”— between 20 and 150 people. In any corporation there may be a leadership tribe, a management tribe, a research and development tribe, and a line tribe.

Companies that survive and flourish in a recession have to become smart, and fast. Quickly develop new ideas—for changes in processes, exploring new markets, revising products, and how to partner with your supply chain in new ways. Remember that companies are only as smart as their tribes. Although tribes form in your company without your effort—only 22% are strong enough to survive and thrive the predicted economic downturn. In our landmark study of 24,000 people across multiple industries over ten years, only 22 percent of corporate tribes show the hallmarks of being recession proof. No matter what happens in the economy, they will find a way to thrive.

To get to this stage, however, a leader must have a clear understanding of the tribes “stages”—of all the tribal cultures—and see which one runs the show in his company. You can do this just by observing the social groups that exist in your company, and listen to the way they talk. Is it “life stinks” (Stage One), “my life stinks” (Stage Two), “I’m great” (Stage Three), “we’re great” (Stage Four) or “life is great” (Stage Five)? The 48% of workplace tribes in the U.S. operate in Stage Three. This is where the theme is “I’m great, and you’re not.” In this culture, knowledge is power, and so people hoard it, from client contacts to gossip. People at this stage have to win, and winning is personal. They’ll out-work, think, and maneuver their competitors. The mood that results is a collection of “lone warriors,” wanting help and support and being disappointed that others don’t have their ambition or skill. Stage 3 tribes wont survive the recession, only Stage 4 tribes will.

To move your tribe to Stage 4, identify your tribe’s leverage points and use those to help your tribe transition to the next immediate stage. For example, tribal leaders intervene in Stage Three by identifying people’s individual values and then seeing which cut across the tribe. Point out the values that unite people, and then construct initiatives that bring these values to life. This is key to moving such a tribe to Stage Four, which is where a company gains that recession-proof vest.