Surviving a downturn is difficult, but white rabbits, mirrors and elves can all help
After a period of economic uncertainty, it is easy for managers to become disorientated: decisions become difficult and new constraints close in, making it difficult to see the wood for the trees. Yet out of the bleakest moments, the best strategies can emerge like white rabbits produced from black hats.

Below is the six-point plan I encourage my clients to adopt to survive during hard times.

  • Mirror, mirror Don't be afraid to look hard at the reflection and face up to yourselves. No management team will find the solution if it is afraid to talk about the problems. What keeps the sales director awake at night? What peripheral task is occupying 80% of the finance function's time? A facilitated workshop removes the formality of a boardroom environment and encourages "joined up" management, where the same group of people examine the business' performance from every angle. For example, at one client the boss discouraged his team from taking responsibility for their actions, leaving it to him. We successfully developed an "exchange of commitments" strategy, whereby they would take ownership if he would have a less hand-on role.

  • Thinking inside the box Having faced the problems, it is time to acknowledge the constraints. When times are good, it is easy to go mad, forget how hard things may have been and spend, spend, spend. But in leaner times we must learn to go back to basics, and recognise the boundaries of what we can do or afford. We had a client who was obsessed with predicting the future: instead, we encouraged him to learn to respond to the future by becoming more flexible. It is called "the art of the possible". When you are in a box, don't try fighting your way out of it. Put up some pictures and call it home.

  • Know your chickens Writing a plan is easy. They teach you how to do it at business school. Translating the plan into action is a little more tricky. If you have limited resources, you're not going to be able to compete on the same level as the big boys – a more realistic approach is required. There's an old Italian phrase: "Conosco i miei polli" – "I know my chickens".

    The cleverest part of managing in a downturn is to identify actions that will ease the constraints, and do them first

    The same need for honesty about resources extends to your people's abilities. If your management team is stretched beyond what it is able to do, you're going to come across problems. Put a brave face on it and stop trying to do everything: enjoy being good at laying eggs and start selling omelette. Oh, and by the way – if your chickens aren't hatched, don't count them.

  • The Elves and the Shoemaker As a minimum your company needs to do A, B and C. Yet all the constraints – lack of money, poor systems, lack of training – have been identified and there is no way of doing it without throwing money at the constraints. Now is the moment to prioritise.

    The shoemaker in the Grimm fairytale had only enough leather for one pair of shoes. He was visited by elves, who laboriously crafted a beautiful pair, which was sold at a good price. The shoemaker bought leather for two pairs of shoes out of the profits; leather for four pairs out of the profits of two, and so on. The point is, the cleverest part of managing in a downturn is to identify the actions that will ease the constraints, and do them first. Start by doing a split of the strategic plan into short-, medium- and long-term priorities, and then stick to it.

  • Measure for measure's sake No matter how inaccurate or hotly debated the results may be, we strongly advise our clients to set up a system for measuring the outcome of each strategic action. People behave differently when their performance is calibrated. It is a bonus if the numbers are reliable enough to allow fine tuning to the strategic plan. For example, we set up a cash-receipt monitoring system for a client whose staff had never previously been monitored. After a few weeks of hostility, the teams started trying to improve on the previous week.

    • Postscript

    Alexis Widdowson is a director in corporate finance at financial consultant Ernst & Young. She can be contacted on 020-7951 3845.