PROFITING IN UNCERTAIN TIMES.

'You can't jump half a ditch.' The challenges of uncertain times cry out for bold decision-making and strong leadership, coupled with clarity, confidence and commitment.

Are your business plans as ambitious as they were 12 months ago? Or have you cut back as you make decisions for an uncertain economy? As leaders confront issues that will reshape their business in 2002 and beyond, some are decidedly playing not to lose. Others are embracing change as an opportunity to build momentum and enter next year stronger than ever. What about your plans? Should you keep charging, or pull in your horns?

Inaction -- deciding to do nothing -- is often the worst decision of all. "Routine is the enemy of creative thinking," wrote the chairman emeritus of Neiman-Marcus in The Viewpoints of Stanley Marcus. "Creativity, in its best sense, relates to doing something in a new way. It may even be reclaiming something old and doing it anew from a fresh vantage point. It may be a bold jump into an uncharted path that reveals no obvious ending."

Marcus' words sound as relevant today as in 1992. He wrote, "Our current economic recession calls for solutions that are bold and innovative. It hungers for those who are prepared to look foolish as they propose new ideas and concepts." Put another way: thinking creatively is where success takes root.

Facing the Challenges

What does it take to face the challenges of an uncertain market? There are many proven strategies for jumpstarting mature businesses, capitalizing on market downturns and turning what may at first appear to be an imminent disaster into an unqualified success. The common denominator among winning companies is the willingness of leaders to pursue truth and, oftentimes, to risk looking foolish for challenging conventional wisdom. Possibility Thinking, is a process of answering a deceptively simple question in specific, concrete terms. Here's one: "If anything were possible, and there were no constraints, what would you want to celebrate one year from today?"

However you answer, your ability to meet those goals in uncertain times lies in these four simple truths:

1. You can't save your way to prosperity.

2. Value is in the eye of the beholder.

3. You can't jump half a ditch.

4. Activity without results is meaningless.

1. You can't save your way to prosperity.

While continued sales declines often necessitate cutting expenses and prices, the real question to ask is: "What investments must we fund to enhance our competitive advantage?" The urge to cut rather than fund growth engines is huge, yet cutting back -- by definition -- will not help your business grow. The hard-hit technology industry offers two different approaches. Most have responded to the soft market by cutting employees, discounting products and services and trimming investment spending. Only a few, like Apple, IBM, Intel and Oracle are, in the words of one securities analyst, "taking the steps necessary to help define the future." The difference in approaches, you may think, is size, cash flow, balance sheet, customer base or product mix. Not true. "Economic results are earned only by leadership, not competence," wrote Peter Drucker in Managing for Results.

As Steve Jobs, co-founder and chief executive of Apple Computer Inc., noted in a New York Times interview after the company's second-quarter earnings home run, "We had a lot of innovation this quarter, and our customers responded favorably." Commenting on the company's performance, another securities analyst said the strong financial result "shows that Apple dances to its own tune. If it has good products, it doesn't matter what the PC market does." Innovation - investing in your business, not cost-cutting -- unlocks a company's value.

2. Value is in the eye of the beholder.

Market leadership is defined by your customers. Using historical performance -- sales reports, balance sheets and productivity ratings - to predict future success is not the entire answer, since most of a company s value is tied to its future performance, Achieving optimal performance requires a plan and the commitment to execute on the plan.

In his 1980 landmark book, Competitive Strategy, Harvard Business School Professor Michael Porter outlined three "generic strategic approaches to outperforming other firms in an industry: overall cost leadership, differentiation and focus," Leaders wed their vision to a bold, yet practical, strategy. For any strategy to be successful, companies must understand the value of what they're selling. "The buyer rarely buys what the seller thinks he's selling," Drucker says. Research helps shape strategy and determine the value of your company's products.

A recent study by McKinsey & Co. makes myths of the dot-coin rules. Not surprisingly, winning companies practice simple, solid, proven business basics that include: a clear value proposition and market potential; a sound economic model; at least one meaningful point of competitive advantage; the ability to execute consistently; and flexibility and innovation in response to customers.

What's your competitive advantage? What's your strategy for unleashing it? What type of return on investment should you expect? Is the ROI sustainable? If you don't have a solid, current handle on these questions, market research can provide some answers. And, although you might believe market research is expensive -- the most expensive is no research,

3. You can't jump half a ditch.

In uncertain times, there's a tendency to hedge bets and to fall victim to what PepsiCo Vice Chairman Roger Enrico calls the "tyranny of incrementalism." Yet history shows that times of uncertainty demand breakthroughs -- and the leadership to implement them. This is not a new notion. Prussian General Karl von Clausewitz' 1832 book, On War, is as much a strategic perspective on competition as it is a military manual. "Many assume that half efforts can be effective -- a small jump is easier than a large one. But no one wishing to cross a wide ditch would cross half of it first," the general writes. Uncertain times cry out for strong leadership coupled with clarity, confidence and commitment.

As many retailers are cutting back on advertising spending, Alan Questrom, chief executive of J.C. Penney Co., announced this summer plans to commit an additional $100 million for the fourth quarter. While financial results are yet to be determined, Questrom was brought in (from Federated, then Barney's) to rescue the company. His initiatives thus far have had the effect of rallying the troops, and Penney's share price is up.

4. Activity without results is meaningless.

A bold strategy is only as good as its implementation. In tough times, performance matters more than ever. Leaders at Microsoft still run the company like a start-up, where everyone is focused on the bottom line. People no longer needed, are fired. Managers not capable of doing the work of the people who report to them, are re-assigned. Problems are met with solutions, not excuses. And everything is measured by success -- not by activity. Microsoft's recently announced technology breakthroughs prove its results-oriented culture is generating new levels of success.

Few executives enjoy economic uncertainty. On the other hand, rising tides not only lift all boats, they can cover up a lot of debris. So, use the downturn as an opportunity to recalibrate. Re-examine your priorities; scrutinize your go-to-market strategy; take a fresh look at your people, processes and programs; listen to your customers and suppliers; communicate consistently and regularly - both inside and outside your organization. Measure outcomes, not merely activity.

When you take these steps, you can expect your organization to emerge from the period of economic uncertainty stronger than ever. And, if you practice these methods during good times, your business is bound to grow even healthier. Think again about what you want to celebrate one year from today. Then ask: "Is your organization aligned for performance to get you there? "Will the uncertainties of the economy hold you back or inspire you toward greater success?"

Greg Bustin is president of Bustin & Co., a Dallas-based business consulting firm specializing in helping leaders of change-impacted companies become more successful. He can he reached at [e-mail].