Engaging StakeholdersSmall business owners can feel particularly pinched in a tough economy as every sale, and every invoice makes a huge difference to business survival. When things get tight, the initial reaction may be to cut costs by reducing staff, cutting hours or changing product quality. Yet these actions don't set a company up for success when the economy picks up, can harm current sales that are still available, and can be hard for a business owner to swallow.
Luckily, the companies profiled in a recent NYTimes article made other strategic choices – expansive choices that involved primarily engaging stakeholders and sharing information.
Tom Sesti, the founder of the first company profiled, Bandals, a small business in Rochester, MN was looking for ways to respond to increased costs for raw materials and manufacturing expenses. He was conceptually clear on what needed to be done and knew his business well enough to do the initial market analysis to narrow his choices. However, what was key to his strategic decision-making process was his willingness to engage and share information with others who also had a stake in the success of the business.
He spoke with his sales team and retail customers about the options he was considering, and their input helped him to choose to pursue two successful new strategies to help his business grow. While this might seem like a small part of the overall activity involved in pursuing success in a down market, these key activities are often what will make or break a brilliant opportunity.
Many entrepreneurs have a great understanding of their product because they are the ones who came up with the idea, developed the prototypes, tested and sold the first products. Yet moving into the broader market, finding new customers and sales opportunities, working with suppliers – all of these activities can require strategic knowledge and skill outside of your scope. So, what do you do?
You can try to learn everything and make the decisions yourself. Or you can respectfully engage employees - who have a stake in the success of the business – and share information with people in ways they can understand and use to participate in the discussion and influence the outcome. This key activity can provide a leader with the input he or she needs to make the best choice among options while faced with uncertainty.
The second business profiled, Odin, was founded in 2002 to exploit the opportunities that a new technology, RFID or radio frequency identification, could bring to the marketplace. In 2009 the company was being squeezed by the slow economy and their own long product sales cycle. Having already reduced overhead expenses by 15%, CEO Patrick Sweeney knew that further cuts would not help the company move forward. So he decided to look for other uses of his current product to try and expand his customer base.
It appears that success was achieved. And what did Sweeney do to insure that his strategy for moving through uncertainty – finding new uses for a current product – would be successful? He called together the top seven executives at his firm for a structured brainstorming session. They suggested, evaluated, debated and ultimately decided upon a small group of ideas to pursue.
The third company highlighted in the NYTimes article was Credit Sesame, a financial services firm that helps individuals to make smart decisions about loan terms and debt management. Founder Adrian Nazari has been through the ups and downs of the economic roller coaster during the past seven years with his initial business, Financial Crossing, reaching out to banks as their primary customers. With all of the changes in the banking industry during 2008 the business fell apart – yet Nazari knew that his product was sound and useful. So he tried to find a way through the uncertainty all around him to take advantage of opportunities he knew were out there.
And Nazari – just like Sesti and Sweeney – took steps to engage colleagues and share information. As the article says, he and his management team studied market research, surveyed consumers and discussed options. Nazari took responsibility and made significant strategic decisions – like changing the company’s target market from banks to individual consumers - yet others were engaged along the way and were given information that allowed them to participate and influence the outcome.
Credit Sesame is still gathering steam yet the initial evidence is that their move through this particular moment of uncertainty will be successful. They have 24 employees and a growing customer base. The continued financial uncertainty faced by consumers and interest in tools that provide credit management solutions shows that Credit Sesame has tapped into a ready and growing market.
All three of these stories are presented in the NYTimes article as small business success stories – and they certainly are that. In each case, these small businesses faced moments of uncertainty when the strategic decisions they needed to make could go either way – towards success or failure.
Become your own success story- read How to Engage Stakeholders for tips on increasing collaboration in the workplace.
Amy Lyman is co-founder of the Great Place to Work® and researcher/writer. Her current focus is on the key contributions of Trustworthy Leaders to the creation and support of successful groups and organizations.