A quick review of recent news headlines reveals a business environment with clear challenges and hidden opportunities. In the industry in which I have spent much of my career, energy, commodity prices have fallen precipitously, especially oil prices. On the wider scene, international growth is slowing; political uncertainty exists in many places including Latin America, Europe, and the Middle East; and the United States is in the middle of a presidential election campaign that is peculiar and unsettling.
This environment presents challenges for many energy companies and opportunities for others. For now, let’s focus on those companies that find themselves adversely affected by these events. If your company is faced with falling revenues, inflexible cost structures, or liquidity constraints, a clear, concise, executable plan is required to survive.
Lewis Carroll, famous as the author of Alice in Wonderland, observed “if you don’t know where you are going, any road will take you there.” Yogi Berra pointed out that “you’ve got to be very careful if you don’t know where you are going, because you might not get there.” Their point is clear: success requires that you know both where you are going and how you plan to get there.
With that general guide in mind, here is a four-part template for navigating through difficult times, whether in the energy industry or other sectors.
Clear Goals and Objectives
In times of crisis, the goal is often just to get to the other side – of the commodity cycle, the incident, the shortage, etc. However, it is important to strike a careful balance. A crisis is not the time to map out grand strategies, but you can’t only focus on today’s fire.
The first step in navigating difficult times is to take a step back and understand how your immediate problems fit into a broader context. Don’t worry about grand strategies, but do focus on how you can best position yourself to deal with the forces that are affecting your business today. Identify what will be critical for success once you get past the crisis. This exercise should help you identify the key things to address now with the confidence that you are not doing long-term damage to your future.
Once you have placed yourself in the proper context, it is time to focus on the near-term, and specifically how to change what you are doing in a way that will have the biggest positive impact. For example, your focus could be on revenue or margin expansion, or cost reduction or changes to cost structure, or changes to your balance sheet or liquidity position. It’s likely that your plan will involve all three of these elements.
With a clear understanding of the key areas for near-term focus, develop actionable goals that can be understood by your organization, your customers, and your investors and creditors. Cold-eyed honesty is an absolute requirement. Be sure the people who are developing these goals and objectives are up to the task. This point leads to the second element of the template.
Get the Right People in the Right Places
Times of crisis can be very disruptive to an organization. New challenges require new skills and new approaches as well seasoned experience. Getting the right people in the right places is essential to success. It is also an enormously difficult task. Past loyalty or effort is not always the skill set needed to move through the crisis. Sometimes specific knowledge is critical, but sometimes attitude and ability to operate in uncertainty are more important.
This is not the place to go into detail about how you get the right people in the right place, but it is absolutely essential that you do – no matter how painful. The right people in the right positions will facilitate goal-setting, communication, and execution, while the wrong people in the wrong places will make everything more difficult.
Clear, Consistent, and Constant Communications
All through the process effective communication is essential. It is key to clearly articulate how things are changing and why.
The way you communicate your goals and objectives, or your progress, may differ depending on the audience. But it is critical that communications be clear (the appropriate message for each audience), consistent (both across different stakeholders and from one update to the next), and constant. If communication is done right, it will create an effective feedback loop that will allow you to quickly react to problems. You might not get all of your goals and objectives exactly right the first time. Making adjustments is okay.
Relentless Focus on Execution
Focus on execution is key. Once you have set you near-term goals and objectives, every executive, manager, and employee must be keenly focused on executing the plan. Leaders must be relentless in their focus.
Of course, don’t forget to celebrate successes along the way. It may be a long slog, but part of the relentless focus on execution is to acknowledge and celebrate the progress you are making.
This four-part template is not a linear process that is to be executed with the precision of an engineering schedule. The real world is much too messy for that. But it provides an approach and proven techniques to help lead your company through challenging times.
About the Author
Lynn Lednicky is an experienced leader with a track record of success in the energy industry.As President and Founder of Lednicky Enterprises, he has provided expert advice to the energy, utility, and infrastructure sectors. His engagements have included M&A support, operational and financial restructuring, renewable energy, project development and financing and advising on production and use of natural gas as a domestic transportation fuel. Click here to learn more about Lynn or contact him. Connect with Lynn on LinkedIn
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