Some useful insigths from the book are summarised below:
1) "More than education, more than experience, more than training, a person's level of resilience will determine who succeeds and who fails" (The book starts on resilience which is an important characteristic if a company were to survive through a downturn. A downturn will present opportunities to resilient companies as it will weed out other weaker competitors and when the economy recovers, it is the resilient companies that stand to benefit)
2) Three fundamental characteristics seem to set resilient people and companies apart from others. One or two of these qualities make it possible to bounce back from hardship, but true resilience requires all three.
a) The first characteristic is the capacity to accept and face down reality. In looking hard at reality, we prepare ourselves to act in ways that allow us to endure and survive hardships: We train ourselves how to survive before we ever have to do so.
b) Second, resilient people and organizations possess an ability to find meaning in some aspects of life. And values are just as important as meaning; value systems at resilient companies change very little over the long haul and are used as scaffolding in times of trouble.
c) The third building block of resilience is the ability to improvise. Within an arena of personal capabilities or company rules, the ability to solve problems without the usual or obvious tools is a great strength.
3) ...... resilient people have very sober and down-to-earth views of those parts of reality that matter for survival.
4) The fact is, when we truly stare down reality, we prepare ourselves to act in ways that allow us to endure and survive extraordinary hardship. We train ourselves how to survive before the fact. (The ability to stare down reality is in some ways related to managing expectations. I believe a company should know the harsh reality of competition and that it is a jungle out there. You have to be the best or otherwise, competition will eats you up. At the end of the day, it is all about supply and demand. Again, it is a balancing act. Too much of doomsday scenario will sap morale. One way for a company is to set certain criteria for reward. For example, minimum percentage of bonus based on a target of how much profit a company made for the year and also how much staff contributed to that profit. That way, staff would know what to expect and also what is expected of them in order to get that desired bonus. If we leave it to staff imagination, it may overshoot or undershoot catastrophically. For Malaysians, the closest example that I can think of is our public university admission. People are frustrated because it seems that even the brightest student can't earn a place in our university for his choice of studies. If the selection criteria is transparent, the frustration can be managed as the students' expectations can be managed and for all we know, it may be simply there are better students out there and all these conspiracy theories are only our own imagination. Hahaha! Similarly, maybe there are conspiracies by the management to squeeze staff dry or maybe it is only our imagination. Hahaha!)
5) ..... resilient people devise constructs about their suffering to create some sort of meaning for themselves and others.
6) Since finding meaning in one's environment is such an important aspect of resilience, it should come as no surprise that the most successful organizations and people possess strong value systems.
7) Values, positive or negative, are actually more important for organizational resilience than having resilient people on the payroll.
8) The third building block of resilience is the ability to make do with whatever is at hand.
9) ..... rules and regulations that make some companies appear less creative may actually make them more resilient in times of real turbulence.
10) Resilient people and companies face reality with staunchness, make meaning of hardship instead of crying out in despair, and improvise solutions from thin air. Others do not.
11) (On smart executives): they prepare for the worst while focusing their companies on what they do best.
12) Failing to plan for the worst is a much bigger mistake than upsetting the troops in the short term, because once an industry is in the middle of a downturn, it is almost impossible for companies to come up with inventive solutions (Good point right? Just spare some time during good times to plan for not-so-good time which every company will have to go through inevitably)
13) Successful downturn managers avoid diversification and concentrate as many resources as possible on playing to win on their main field of competition (It needs clarity of mind for a manager to know his own strength and not be confused by other distractions. Studying history, all empires eventually fall because of either the rulers or their successors have become too comfortable on their own success or their ego has become too inflated that they think that they can conquer the whole world)
14) Far better to plan ahead and stay focused on what you know you can do, not on what you hope to do better than established players in other markets.
15) Costs do have to be carefully managed, but the key is consistency. A company shouldn't act one way in good times and another way in bad times. Otherwise, employees, suppliers, and other business partners will lose confidence in the company, and morale, cooperation, and productivity will all decline.
16) Companies such as Southwest Airlines, Harley-Davidson, and FedEx have no-layoff policies. As a result, their employees dig in during tough times rather than shop for new jobs. (I feel this is the right approach. Companies expect committed employees, so companies should be committed to their employees as well. Besides, anybody who has ever gone through the painful experience of being laid off or withnessed their colleagues being laid off knew how demoralising that can be. Again, there is a caveat. You also do not want to create a too comfortable environment like public service and ends up with a lot of dead woods).
17) Companies that successfully navigate huge waves tend to look bad news in the eye and institutionalize an approach to detecting storms. Rather than hedge their bets through diversification, they place a big bet on their core businesses and spend to gain market share. They manage costs relentlessly during good times and bad. They maintain a long-term view and strive to earn the loyalty of employees, suppliers, and customers. Coming out of the downturn, they maintain momentum in their businesses to stay ahead of the competition they've already surpassed.
18) (On root causes of growth stalling): Nearly half of all root causes fall into one of four categories: premium-position captivity, innovation management breakdown, premature core abandonment, and talent bench shortfall.
19) Premium-position captivity: the inability of a firm to respond effectively to new, low-cost competitive challenges or to a significant shift in customer valuation of product features (A company needs to constantly review its work processes and whether it has grown to be inefficient and not only resorts to restructuring when there are serious problems).
20) Innovation management breakdown: some chronic problem in managing the internal business processes for updating existing products and services and creating new ones.
21) Talent bench shortfall: a lack of leaders and staff with skills and capabilities required for strategy execution.
22) Internal skill gaps are often self-inflicted wounds, the unintended consequence of promote-from-within policies that have been too strictly applied. Such policies, often most fervent in organizations with strong cultures, can accelerate growth in the heady early days of executing a successful business model. But when the external environment presents novel challenges, or competition intensifies, these policies may be a severe drag on progress.
23) Few companies formally monitor the balance in the executive team between company lifers and newer hires who offer fresh perspectives and approaches.
24) And management development programs all too often focus on replicating the skill sets of the current leadership, rather than on developing the novel skills and perspectives that tomorrow's leaders will need to overcome evolving challenges.
25) ..... analysis of company growth rates and senior leaders' backgrounds suggests that the sweet spot for external talent is somewhere between 10% and 30% of senior management (This is a good target for company CEOs. In addition, CEOs and also EMPLOYEES should remember points 21 to 25. CEOs have important responsibility of communicating this point to employees so that existing employees are not over-zealous in protecting their beloved company. Future leaders from within the company should have enough confidence to accept outsiders who brings value to their organization. Management should also inculcate a culture where it is easier for an outsiders who brings quality to fit in to the organization rather than being isolated and eventually forced to leave).
26) Organizational pathologies - secrecy, blame, isolation, avoidance, passivity, and feelings of helplessness - arise during a difficult time for the company and reinforce one another in such a way that the company enters a kind of death spiral. Reversing that downward trend requires deliberate efforts by the CEO to address each of the pathologies.
27) ...... the first task of turnaround leaders is to open channels of communication - starting at the top.
28) Turnaround leaders must move people toward respect; when colleagues respect one another's abilities, they are more likely to collaborate in shaping a better future.
29) To pull a company out of a death spiral, the CEO needs to encourage people to take initiative and feel that they can make a difference - which is hard to achieve when an organization is in slash-and-burn mode. (In my opinion, this is one of the most challenging task of a CEO. Well, CEOs are highly paid to do the difficult task anyway. My point is that the CEO must be convincing and sincere and it is even more important that the employees believe him/her. It is very difficult to gauge the actual response as most of the time employees may just nod in agreement but actually doesn't buy the idea. For me, in an ideal world, the CEO should be in the front line fighting with his soldiers and earn their trust and respect - just like in war movies).
30) ...... strategy goes nowhere unless it begins with the customer.
31) Leadership economics is a hallmark of almost every great strategy; when we see a situation in which the rich get richer, this is the phenomenon at work. (This statement means that in whatever a company (or an individual) does, the aim should always be towards No. 1. Whether as the No. 1 firm in your industry, the top gangster, etc. - to be No. 1 is the ultimate aim as the rewards will be disproportionately higher between the No. 1 and the rest).
32) Three archetypes of leadership:
a) Entrepreneurs are often ahead of their time, not necessarily bound by the context in which they live. They frequently overcome seemingly insurmountable obstacles and challenges to persevere in finding or launching something new.
b) Managers are skilled at reading and exploiting the context of their times. Through a deep understanding of the landscape in which they operate, they shape and grow businesses.
c) Leaders confront change and identify latent potential in businesses that others consider stagnant, mature, declining, or moribund. Where some see failure and demise, this breed of executive sees kernels of possibility and hope.
(Does your company have each of the above leaders?)
33) Eric Schmidt: A company can survive losing a lot of people, but if it loses its smart people, it's done for. (Do you know who is the smart people in your company?)
34) Eric Schmidt (on keeping employees): ..... you need some kind of early warning system so that you always have a chance to get to people before they're out the door.
35) To win the hearts and minds of your key employees, you have to communicate directly and physically with them.
To be honest, after finishing the book, my initial thought was that this book is only average. But after writing down some of the key insights, I found that I actually did learn something from it. You won't feel like you are ready to take on the world after reading this book but I guess it is probably got to do with the title and not the quality of the articles. This serves as a good lesson to me. I should train myself to be exposed to less encouraging subjects and get wider perspective. For example, you will notice books on people's success are usually more popular. While, it is good to stay positive but we must avoid getting the wrong true picture of achieving success, i.e. IT NEEDS A LOT OF HARD WORK!
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