Rule 5 in Making It In America: Don’t Panic
Remember how right after the Lehman Brothers fell into bankruptcy, companies started laying off people right and left? There was such an aura of fear that the economy would dive off the cliff. Banks were starting to fail, companies with a huge financial unit (GE for example) could not obtain short term loans, and politicians were wondering want to do. It was a very tense time. Regular companies began laying off people, so unemployment rose from 5% to a peak of 10%. But I wonder if all of those layoffs were necessary? Maybe some companies panicked and just laid off people as an advance precautionary move. Maybe they made the situation worse than need be.
"Most often, there's no need to panic. Things are rarely as dire or urgent as they seem, despite the breathless warnings of the panickers. And even if the whole world is going to hell, joining in the panic won't do you much good. It'll only make things worse." Making It In America, p. 132, hardcover.
I wonder if the Great Recession was made worse than it needed to be due to panicky behavior.
There is a chapter in Making It In America by John Bassett that talks about panic. As I understand it, businessmen are prone to panicking, especially when a competitor cuts prices, but the author urges to not succumb to panic thinking or going with the herd. Just because everybody is running off the cliff doesn't mean you should do the same.
Too many companies follow the herd. Have you heard about best practices? A lot of companies talk about how they adhere to best practices and how they are the best. Consultants spread the gospel of best practices. But best practices represent the minimum you need to do to just be mediocre; everyone else is doing best practices, too. So when a bunch of companies start laying of people, everyone else is driven to do the same because they think those companies know something that everyone else does not. Herd behavior overtakes businessmen.
Maybe the layoffs were the result of poor business decisions or execution? You need to evaluate the situation.
Here are some phrases the author offers as ways of inducing you into a panic:
- "People will think you don't know what you are doing."
- "Everybody else is doing it."
- "It's already getting harder to find."
- "This won't look good."
(Making It In America, pp. 135 - 136.)
There are others but you get the drift.
As usual, the author offers some rules to use to combat panic. I won't enumerate them; instead I will exhort you to buy the book. But I do want to point out his take on price competition. Seth Godin calls it diving to the lowest common denominator (or something like that). If you try to compete on price, there are a lot of people competing on price and that's a brutal existence. In America, you can't beat the Indians or Chinese. You need to look higher. John Bassett offers a perspective price: there are people who don't buy based on price alone. If you look at fashion or cars, you will find that there are some pricey items being bought.
"If people made decisions based only on price, everyone's bookcases would be boards on cinder blocks. We'd all store our sweaters in cardboard boxes picked up from the dumpster outside a liquor store...But fashion, design, service, quality, how quickly the product can be delivered - all those factors go into someone's decision about what to buy and where to buy it." (Making It In America, p. 138.)
Instead of competing on price, find your strengths and use it. What makes you distinctive? What makes you great? What is it that you can do that no one else can? We need to think beyond the lowest price.
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Other posts related to the book:
"First Post - Making It In America"
[By the way, I don't know why I no longer can change the link into a picture. I see the same HTML in the background so... Sometimes the rules change in WordPress, or maybe its the theme. It's irritating where I can do something in one post but not in another.]
