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Tough times for demand new strategies.

Every culture has within its oral traditions some sort of "ghoulies and ghosties and things that go bump in the night." The stress management experts call these gremlins "that which gives us a nameless sense of dread"--the real or imagined circumstances which make us doubt ourselves, create fear and, in general, tie ourselves up in knots. And so it is with tough times in the business world--most recently the recession. It's easy in adverse times to find ourselves caught up in a series of knee-jerk reactions rather than to engage in some rational planning and prioritizing which will help us through the crisis.

John Reddish, a consultant who assists businesses caught up in economic crises, has written an article giving us solid advice for what to do and what not to do when the downward spiral looms overhead.

"Power costs are up, collections are slow. This recession is eating us alive," the manager said. "My cooperative is really hurting." "What are you doing to cope?" I asked.

The manager said he had cut advertising and reduced overhead where possible. Expenditures were put on hold or were made subject to extra approval and there were some layoffs. Employees were asked to share in benefit costs. Load management was being shouted from the rooftops. REA funding had never been so difficult.

The co-op was, indeed, hurting. He asked what more he could do, short of filing bankruptcy, and noted that many companies across the country were doing similar things under the circumstances. I told him many of these strategies only accelerate an organization's decline and that there are better ways to cope, but they require considerable thought and analysis.


Be realistic about the recession. Recessions are periods of adjustment during which a slowdown in sales leads to a slowdown in payments which leads to cash flow problems which, in turn, lead to the decline of weaker companies and industries. That's simple enough, but so what.

Your system has a useful purpose in the community. You are essential, but you have to be responsive to the community, as well. Given your reason for being, how can you weather this recession, or any crisis better? Start with basics.


In some rural electrics, managers and their boards often neglect problems, perhaps hoping they will go away, until a crisis occurs. A variation on this theme is the system in which the manager and board are philosophically opposed on an issue. In such cases, a problem that might have been remedied by early intervention has exploded, leaving only pieces to retrieve and put back together. Boards must insist that managers provide them with timely notice of impending problems while they are still manageable. Managers, on the other hand, must insist that boards act on their concerns/proposals promptly. Both must commit to airing differences, resolving issues and establishing clear policies for the co-op to follow.

In some circumstances a member advisory committee can be a useful tool in keeping the manager abreast of concerns throughout the co-op and community. While such committees have no legal standing, they can provide an early warning system for the system's leadership (manager and board).


Too many organizations, even in the best of times, are not actively competing; they go along with the pack, mimicking others and getting by. In tough times, they find it harder to compete. Three strategies we can employ to do better than the other guy are:


Companies are discovering "more of the same" marketing and cutting back strategies only mean more disappointment, frantic financial management and continuing losses. They are finding alternative strategies for survival. What, for example, can you do in your trading area to become more competitive, more bottom line oriented? What additional services can you offer? What services can be unbundled? Are all operations subject to periodic quality review?


Every customer looks at a vendor relationship from the perspective, "What's in this for me!" And rightly so. After some time in business, however, many organizations tend to take on a life of their own with boards and employees alike settling into a comfortable rut. There has never been a better time to re-think some important things, such as: Who are your members, your customers, and your prospects? Who haven't you included? Who have you ignored?


Can the customer count on your organization to be a problem solver? Are you a critical part of the customer's team? Team members tend to stay around longer and are nurtured accordingly. If a large commercial or agricultural customer is thinking of going off line, what is your strategy for retention, cooperation?

Find Your Critical Mass. Every business has a natural "critical mass", a balance of sales and operating expenses that enables the organization to provide its service. Cutting back beyond this critical mass is like crippling yourself before a race.

Don't Give the Farm Away. For too many companies, resistance to a sale leads to, "We can give you a better price." While regulated power rates are not at issue in this example, many systems have developed other selling opportunities for which price should not be the only consideration. Lower prices mean lower, or no, profits. Consider the real cost of each sale to the co-op. Ask if selling at, or below, cost is good or bad business.

Your Business Isn't a Charity. The only way to make the business grow and become a member of your customer's (member's) team is to charge a fair price, make a reasonable profit and keep the organization healthy.

In short, believe in and nurture your cooperative and its value to the members, solve problems before they become crises, look at each day with new eyes accepting that only some lessons can be learned from yesterday, recognize uncertainty and rapid change as a given in current and future markets and commit to value selling as a way of life.

John Reddish is president of Advent Management Associates, Limited, based in West Chester, Pennsylvania. He holds a bachelor's degree in communications from Fordham University and a master's degree in administration from West Chester University. Prior to founding Advent, he served as vice president of the Presidents' Association (PA) of the American Management Association. He has also been affiliated with the New York State Nurses Association, IBM Corporation, Edison Electric Institute and the Civil Service Employees Association.
COPYRIGHT 1991 National Rural Electric Cooperative Association
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Reddish, John J.
Publication:Management Quarterly
Date:Sep 22, 1991
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