August 09, 2011
The CEO Playbook for this Crisis
CEOs of multinational corporations are in a stronger position than three years ago. Balance sheets are strong, and productivity has increased. This crisis presents an opportunity to go on the offensive for CEOs who are in a position of strength. Here’s the playbook I’d run:
- Reassure everyone that your company is in great shape. CEOs needs to maximize their visibility to ensure employees, supplier, customers, and community that their strategy is intact. Write an email, go on TV, post a series of Tweets, and show up to let the troops know that the company’s strategy makes sense — particularly in this tumultuous economy.
- Buy your stock back. Your stock is likely cheaper than it has been all year. Buying back your stock puts excess cash on the balance sheet to work, it shows the market how you really feel about your growth prospects, and it oftentimes provides a floor for your stock.
- Expand in emerging markets. There is growth abroad — and not just in China. The current financial panic will likely accelerate the rise of new markets. Every CEO should be doing a quarterly global review of marketshare and growth. Now is the time to double down on bets that are playing out well in Asia, Latin America, and the Middle East.
- Initiate cost savings and productivity improvements. The best CEOs are always looking for efficiency increases alongside revenue growth. Even if that means trimming up employment in the US, companies must be lean and agile to sail through roiling seas. Growth isn’t coming to the USA anytime soon, so CEOs must have an appropriate cost structure.
- Do cash acquisitions. This is an opportunity to put cash to work. As competitors’ stock prices decline, look for opportunities to acquires businesses or assets in cash. Inflation seems almost certain in mid-term. Your cash may be the most valuable in this window that it’s ever been.
This is a great time to get out from behind the desk, get into the market — both telling your story and seeking new opportunities. Great leaders and great companies find opportunity in times of crisis.