In the ebb and flow of business cycles, leaders often find themselves at a critical crossroads during times of adversity: the choice between cutting back or cutting forward. This decision, while seemingly straightforward, carries profound implications not just for the immediate financial health of the organization, but also for its long-term trajectory and the well-being of its people.
The Dilemma: Short-Term Survival vs. Long-Term Vision
When revenues stagnate or decline and profits come under pressure, the instinctive reaction might be to cut back costs, often through workforce reductions. This ‘cutting back’ approach, while potentially offering a quick fix to balance sheets, can be a myopic solution, overlooking the long-term repercussions on employee morale, company culture, and future growth potential.
On the other hand, there’s the ‘cutting forward’ strategy. This approach involves looking beyond the immediate crisis to explore new possibilities and innovate, even in the face of shrinking revenues. It’s a bold move, one that requires a leap of faith into investing in the future, often at a time when every instinct screams to hold back.
The Risk of Waiting Too Long
The dilemma intensifies when leaders delay these decisions. Waiting too long can limit options drastically, leaving the business in a precarious state where neither cutting back nor forward offers a viable solution. The key is to anticipate and act, not react.
Surfing the Waves of Business Cycles
The art of leadership in tough times lies in the ability to ‘surf’ the business cycles. It’s about being proactive, anticipating challenges, and preparing for downturns even during the good times. This foresight allows leaders to strategically plan ‘cuts’ – not just in terms of cost reductions but also in carving out new paths for innovation and growth.
Cutting Forward: A Step into the Future
Cutting forward means investing in what’s next. It’s about exploring new markets, innovating products or services, and perhaps most importantly, investing in people. It’s a commitment to the belief that the future of the company is inherently tied to the future of its employees. This strategy may involve risks, but it’s also an opportunity to strengthen the organization’s foundation, diversify its capabilities, and build resilience.
The Balancing Act
The ideal approach often lies in a balance. While some level of cost optimization might be necessary, it should be complemented with equal, if not greater, emphasis on future-oriented strategies. This balance requires a deep understanding of the business, its market, and the potential impact of each decision on all stakeholders.
Conclusion: Leadership's True Test
Adversity doesn’t just challenge a business; it tests its leadership. The decision between cutting back and cutting forward is more than a financial or strategic choice; it’s a reflection of a leader’s vision, courage, and commitment to their people and the future.
By embracing foresight and cultivating agility, leaders can navigate through tough times, not just surviving but emerging stronger, with a team that’s ready to embrace the challenges and opportunities of the future.
Cutting Forward: The Story of the Mushroom Farm
The first time we learned about the power of Appreciative Inquiry (AI), or Positive Inquiry as we call it, was from a remarkable story by Australian consultant Jeremy Shrivens. It was a story about dealing with adversity most unusually and a testament to the potential of ‘cutting forward.’
This is part of that story:
The Mushroom Farm’s CEO, Allen, had agreed to get his people together one Saturday morning for an Appreciative Inquiry (AI) Summit. On the Monday morning before the Summit Allen called Jeremy in a panic. The supermarkets were locked in a price war, taking a toll on the growers. The price of Allen’s exquisite mushrooms had plummeted by 25% overnight, leaving him distraught. As they discussed the situation, Allen emphasized the importance of the upcoming Saturday’s Summit. He believed it was an opportunity to rally his team to take responsibility for cost reduction – hence, the topic would revolve around cost. Allen had reverted to a deficit mindset.
However, Jeremy reminded Allen that the AI Summit was designed to foster growth, not survival. An Affirmative Topic should focus on what enhances the vitality of human systems at their best and how to scale it to nurture innovation and growth. It was about engaging in generative conversations centered on abundance rather than deficit.
Jeremy asked Allen if he could pose a question: “Imagine it’s twenty years from now, and you’re sitting with your beloved grandchild on your lap. She looks up at you and asks, ‘Grandpa, I heard you did something incredible with your life, leaving behind a remarkable legacy in your business. What is it?’ You gaze down at her with a smile and respond, ‘Well, sweetheart, I spent my life cutting costs.'”
The phone fell silent, and then Allen spoke, “If that’s what I have to do for the rest of my life, I might as well quit the business now.” Jeremy pressed further, “Tell me, Allen, in your wildest dreams, have you ever imagined your mushrooms significantly impacting the world? What is that dream? What truly breaks your heart?”
Allen confided that he and his wife were deeply concerned about the rising levels of obesity among Australian children. They believed that encouraging kids to consume mushrooms could improve their well-being. Allen also acknowledged the potential business benefits of creating a new market, but his primary concern was the well-being of the children. He concluded, “This would be my real legacy.”
Six days later, on a chilly morning in the drying room at the Mushroom Farm in Sydney, Allen shared his vision for the future – the ‘why’ behind the Summit. He passionately spoke about the health of Australia’s young children, highlighting the supermarkets’ actions. Instead of focusing on cost and survival, he painted a vivid picture of a vision to reach an entire generation of youngsters with a message of healthy eating. Allen emphasized that he didn’t have all the answers but encouraged everyone in the room to collaborate and contribute to finding innovative solutions.”
The remarkable outcome of the Summit can only be described as miraculous: it unleashed an unprecedented wave of energy and creativity. This surge of enthusiasm and fresh ideas rendered the notion of “cost-cutting” obsolete. The lesson here is profound and illuminating: when an entire system comes together to honor its history and shared purpose, it forms an unshakable foundation. This foundation, in turn, releases a boundless wellspring of positive energy, encouraging individuals and the organization to dream audaciously and uncover hidden opportunities that would have otherwise remained concealed in the shadows.
Ultimately, what began as a crisis-driven meeting transformed into a catalyst for holistic transformation and growth. The Mushroom Farm Summit rekindled the spirit of innovation and ignited a sense of purpose that would continue to shape the organization’s future. It served as a potent reminder that in the face of adversity, embracing a whole-system approach and nurturing a collective vision can lead to extraordinary outcomes and pave the way for a future filled with boundless possibilities.
