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Takedown

Remain Aggressive

Be fearful when others are greedy.  Be greedy when others are fearful."

- Warren Buffet

Every board meeting I’ve attended in the last several months has been dominated by discussions about preserving cash, getting to break-even and how crappy business will be in 2009.  I struggle with such discussions.  It’s not that I don’t believe that there’s a bumpy ride ahead for many companies or that talking about the situation can’t help, I just don’t agree with the conclusions that are often drawn from these talks.  The knee-jerk reaction is often to overcompensate, tightening down the business too much and in too many ways so it becomes ineffective and unable to move.

While I certainly believe in battening down the hatches when rough seas are ahead, I’m generally a glass-is-half-full kinda guy and I fully believe that successful companies move fast, always play offense, adapt quickly and continually innovate.  Yes, even when times are tough.  Contrary to several common VC themes these days, that means avoiding a defensive posture in terms of spending and headcount and to, instead, maintain a warily aggressive stance to your market and overall business.

"What?"  You say, "that’s insane.  I run the risk of running out of cash."  No, I’m not saying that companies shouldn’t examine cost-saving measures and reduce unnecessary headcount, but I am saying that you can’t save yourself to success.  Cutting deeply into muscle will not only be difficult to recover from later, but it will make you less competitive now, ultimately making it even harder for you to survive, let alone succeed.

If you’re not getting better, you’re getting worse."

- Bill Belichick

So, how does one reconcile the anal-retentive need to hoard cash and protect assets?  How does a CEO convince his/her board that being cautiously aggressive is a better path than cowering in the corner until the dark clouds of uncertainty blow over?  You do it by making sure you respond instead of react, you never panic (check out Brad Feld’s excellent post on The Difference Between Panic and Urgency), but mostly, you make sure that every move you make is calculated and thought through.  No randomness and little experimentation.  Simply put, it’s back to the basics.

To be aggressive, you need to be lighter on your feet – able to recognize the changes required and to implement them very quickly.  You need to be smarter, do more homework and move quickly.  The way to achieve this business momentum is by acquiring more customer and market intelligence than you used to have.  More real data gives you the opportunity to speed up while being on the path most likely to lead to success.  You have to assume that nothing is coming to you – people, business or new ideas – you have to aggressively go out and hunt down everything that will move your company forward.

It’s easy to get lost in the myriad of dire predictions about your market or even the overall worldwide economic situation.  Randomly cutting costs and waiting until the news gets better is hardly a solution, though.  Before you do anything, think.  Do you know everything you need to know to give you a fundamental advantage over your competition?  Do you know what you don’t know?  Do you have a plan for finding out?  Sure, you’re going to have to make a few guesses, but make them educated ones.

Only when you’ve gathered all the necessary knowledge and wisdom should you be making the appropriate cuts to projects and staff.  And, only then will you be ready to move forward aggressively.  Of course, keeping on top of your customers and your markets doesn’t end there.  The diligence you used to set yourself up must be continued during the implementation of your new plan.  The more you know and the more energy you put into making informed decisions – especially staying very close to your customers – the harder and faster you can drive sales.

Or, you can stick your head in the sand . . . there’s always that.

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  • http://www.internettechboston.com/ Matthew Mamet

    The silver lining of a down economy is that the Invisible Hand will wipe away those that are not strong enough to survive. To use an analogy from our youth, those that built their homes with sticks (Web 2.0 flash and buzz) find themselves crippled with panic and slashing costs left and right. Businesses that are built fundamentally strong and have a culture of metrics-based decision making will be able to surgical cut those programs or behaviors that are not providing enough value to the organization. Too many businesses since the first dot-com boom have continued to be run by gut instinct and not enough solid measurement. I’m all for staying aggressive, but advising some of these Boards and Founders to “keep moving forward” sometimes feels like advising them to drive without a map.

  • http://www.internettechboston.com Matthew Mamet

    The silver lining of a down economy is that the Invisible Hand will wipe away those that are not strong enough to survive. To use an analogy from our youth, those that built their homes with sticks (Web 2.0 flash and buzz) find themselves crippled with panic and slashing costs left and right. Businesses that are built fundamentally strong and have a culture of metrics-based decision making will be able to surgical cut those programs or behaviors that are not providing enough value to the organization. Too many businesses since the first dot-com boom have continued to be run by gut instinct and not enough solid measurement. I’m all for staying aggressive, but advising some of these Boards and Founders to “keep moving forward” sometimes feels like advising them to drive without a map.

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  • http://www.2-speed.com/ Will

    Matthew,

    I like your simile. Very appropriate. Hopefully, though, I don’t state or give guidance to blindly “keep moving forward” as you suggest. My goal was not to present a map to people but to lay out the process for each company to create their own map. Very basic concepts, of course, but ones that I see being ignored by many.

    If, for some reason, I’ve failed to communicate my core points, let me use this comment to be very clear. Know your market, customer, differentiation and sales process through and through. Gather information – both direct and tangentially. Only then can you possibly start making decisions about how to organize your company and move forward.

    With this new, relatively complete set of information and an organization structured around it, you can drive the company forward at the most aggressive rate possible.

    I think we’re in violent agreement :-)

  • http://www.2-speed.com Will

    Matthew,

    I like your simile. Very appropriate. Hopefully, though, I don’t state or give guidance to blindly “keep moving forward” as you suggest. My goal was not to present a map to people but to lay out the process for each company to create their own map. Very basic concepts, of course, but ones that I see being ignored by many.

    If, for some reason, I’ve failed to communicate my core points, let me use this comment to be very clear. Know your market, customer, differentiation and sales process through and through. Gather information – both direct and tangentially. Only then can you possibly start making decisions about how to organize your company and move forward.

    With this new, relatively complete set of information and an organization structured around it, you can drive the company forward at the most aggressive rate possible.

    I think we’re in violent agreement :-)

  • http://www.internettechboston.com/ Matthew Mamet

    Will,
    Yes, we are definitely in agreement. My comment was more meant to augment rather than contradict. I guess there’s also a big part of me that’s not feeling sorry for the flash and sizzle companies that are fizzling out now . . .

    In any event, I’m glad I discovered your blog today and look forward to reading more in the future.

    -
    Matthew Mamet
    http://www.InternetTechBoston.com
    http://www.Twitter.com/msmamet

  • http://www.internettechboston.com Matthew Mamet

    Will,
    Yes, we are definitely in agreement. My comment was more meant to augment rather than contradict. I guess there’s also a big part of me that’s not feeling sorry for the flash and sizzle companies that are fizzling out now . . .

    In any event, I’m glad I discovered your blog today and look forward to reading more in the future.

    -
    Matthew Mamet
    http://www.InternetTechBoston.com
    http://www.Twitter.com/msmamet

  • http://www.forimpact.org/ Nick Fellers

    Will – just found your blog via Feld. Great read.

    Thank you. I’m directing our readership (mostly nonprofits) to your post. It’s EVERY bit as applicable for nonprofit leaders – now is not a time to bury down in the sand. Too many nonprofits have gone from defense (normal posture) to hibernation. Now is the time to go for it – get on offense (engage more potential funders, get out of the office, tell the story, etc. etc. etc.).

  • http://www.forimpact.org Nick Fellers

    Will – just found your blog via Feld. Great read.

    Thank you. I’m directing our readership (mostly nonprofits) to your post. It’s EVERY bit as applicable for nonprofit leaders – now is not a time to bury down in the sand. Too many nonprofits have gone from defense (normal posture) to hibernation. Now is the time to go for it – get on offense (engage more potential funders, get out of the office, tell the story, etc. etc. etc.).

  • http://www.2-speed.com/ Will

    Nick,

    Glad I can be of some help. While I can’t claim any particular expertise wrt nonprofits, I can certainly see the similarity in this regard (in most, actually).

  • http://www.2-speed.com Will

    Nick,

    Glad I can be of some help. While I can’t claim any particular expertise wrt nonprofits, I can certainly see the similarity in this regard (in most, actually).

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