The $1 question

One of the myriad problems that managing through a downturn presents for the CEO is that of focus. As one CEO friend describes the focus in his industry: "We're all like patients in a sick ward. None of us is doing well. So we make ourselves feel better by looking around and saying, `Well, I may be

The problem with patients in a sick ward, though, is that illness tends to make them focus on the details of existence -when meals will be served, how long until the next pill is dispensed-- rather than on the big picture, i.e. what to do with their lives after they recover. Focused on survival, they may, out of necessity, temporarily have to let go of those people and things that make a hardship worth surviving.

The same process happens to corporations and to their CEOs during a downturn. With revenues sagging and red ink pumping through the bottom line, CEOs suddenly need to be everywhere and involved in everything: expense-cutting meetings, decisions on downsizing, new product development projects. The CEO's participation in these survival strategies is vital, not only for his or her actual contribution but also for the message his or her presence sends: Business is not at all as usual right now. Everyone-from mahogany row to the shipping dock-needs to pitch in to make this organization survive.

The problem, of course, is that with the CEO focused on day-to-day operations and cost-cutting, nobody is thinking about the big picture, as in where this company will be 10 years from now, or what the other patients in the sick ward might be planning. Part of the art of being a CEO is knowing when to involve yourself with survival strategies and at what level. But an even more important skill is knowing when to stop.

For most companies and most CEOs, that time is now.

One of the best questions in helping to focus CEOs is this one, used by some large companies to determine when and where their chief executives and boards should get involved: Is this a $1-pershare earnings question, i.e., will this decision or strategy add or subtract at least $1 per share in earnings over the long term? If it is, the CEO needs to lead it. If it isn't, the CEO ought to delegate and go find another question or decision that will make a dollar of difference.

The beauty of the $1 hurdle is that it pushes CEOs away from those issues that may provide quick, satisfying, one-time results-closing a branch, orchestrating a downsizing-- and into a more fundamental set of questions such as: Does our company have the right structure? Do we have a recruiting, incentive and talent management program that will attract the best and brightest? Do we fund and manage innovation and product development efficiently? Are we reinventing customer value beyond the product or service itself?

Most important of all, where will you find the next $1?

John Brandt

President & Editorial Director