Riding the Headwinds of Business
Ever run or cycled into a headwind? You have to work a lot harder to make the same progress that normally comes a lot more easily. Conversely, running or riding with the wind at your back is a glorious feeling.
On a recent ride, I had plenty of opportunity to consider how headwinds and tailwinds apply to business as I tried to distract myself from all the huffing and puffing I was doing just to maintain a decent speed. Here’s what I came up with:
The prevailing “winds” of business can make a huge difference in the amount of effort a company has to exert to be successful. Market shifts like the emergence of a new technology or the discovery of a new raw material create a tailwind which companies can use to their advantage (e.g., You Tube enjoyed a rapid ascent thanks to the democratization of video-recording capabilities) — or a company’s foundation can be threatened by a headwind like when Kodak found itself blown away by how digital imaging transformed the use, value, and meaning of cameras and picture-taking.
Consumer trends also create head- and tailwinds. Demographic shifts like the growing aging market have fueled the success of Oil of Olay’s Regenerist skincare products, while attitudinal changes like the growing concern for the environment drove (pardon the pun) Hummer out of business.
Developments in channels and distribution function like winds as well – shopping malls and mobile payment providers are operating in head- and tailwinds respectively. Political environments speed and slow businesses as the impact of recent changes in taxation, regulation, and healthcare demonstrates.
Although a generous wind at your back doesn’t guarantee success, business is generally better when the winds are working in your favor. Entrepreneurs would be wise to ascertain the prevailing winds of the market before developing their business model and plan. And established players need to maintain enough nimbleness to navigate the changing winds in their business environment.
But it’s not always possible to go with the flow – and sometimes there’s more to gain from zagging when others zig. Fritz Maytag didn’t allow his microbrewery, Anchor Brewing, to get caught up in the category’s popularity whirlwind of the 1990’s, and so the label continues to enjoy a strong reputation and high price premium today. At a time when most e-commerce companies are using a drop-ship model to offset inventory risks in a volatile economy, Zappos has engendered remarkable customer loyalty in part because chooses to face the headwind and manage its distribution in order to control the customer experience.
So the point is not to avoid headwinds – but rather, to be aware of the head- and tailwinds impacting your business and to develop your strategies and run your operations accordingly.
If you’re determined to tackle a headwind, some lessons from my running and cycling experiences apply:
– go slow and be deliberate – When it comes to headwinds, B.F.I., an abbreviation for Brute Force and Ignorance which I’ve heard the Army uses, is not the way to go. I’ve learned the hard way that trying to blast through a headwind when working out rarely works. The same goes for business.
Pace yourself and prepare for a long, hard haul. You’ll want to dole out expenditures slowly, set interim goals which keep you on track toward your ultimate objective, and double-up on efforts to boost morale. And you’ll want to ensure every step you take moves you closer to your goal, which requires careful analysis and planning. Accenture Institute for High Performance researchers report that conservative financial management and a bias toward profitable internal growth over acquisitions enabled companies to successfully face the headwinds of the early 1990’s recession.
– remove detractions and distractions – When I cycle into the wind, I zip up my jersey and crouch down a bit in order to lessen the mass for the wind to catch. I also keep my focus on the road and don’t look around as much, so that I can channel all my energy to the ride.
In the same way, businesses should cut – or at least delay — activities and programs which aren’t core to the mission. You’ll want to focus all resources on the task at hand and eliminate the things (bureaucratic processes, stale partnerships, and perhaps even cultural norms) which are slowing you down. Unfortunately in some cases this might mean cutting jobs. Kodak has emerged from a potential demise in part by slashing its workforce from 60,000 in 1982 to around 7,000 today.
I believe running and cycling also hold some valuable lessons for operating in tailwinds:
– don’t become overconfident – I can’t tell you how many times I’ve unknowingly run with a tailwind and chalked up my speedy time and great feeling to my training, only to turn around to head home and get woken up from my delusion by the strong headwind.
When your company experiences success, it may be tempting to attribute your progress to having the smarts that your competitors don’t, or to running a more efficient operation, or to having superior leadership. While all of these may be true, it’s likely that the winds of business have also been working in your favor.
You need to keep your corporate ego in check and not become overconfident. Taking favorable market conditions for granted can blind you from the need to develop new strategies and capabilities. So far Apple has been riding a great wave – I hope the recent antenna-gate isn’t evidence of dangerous arrogance.
– conserve some resources. Taking advantage of a tailwind makes sense. When I’m running with one, I pick up my pace knowing I can go farther and faster than normal. And I enjoy it, for sure. But I always conserve some energy, even if I’m not on an out-and-back route and worried about facing a headwind on my way back.
I never know when I’ll need an extra boost to get around a detour – or if a yellow light is going to necessitate a last-minute sprint across a large intersection – or even if another runner comes up on my heels and my competitive spirit kicks in. Likewise, companies should always be prepared for surprise detours, deadlines, and competitive attacks. Andy Grove’s famous motto “Only the paranoid survive” definitely applies here.