Summary: When you are about ready to take your last breath is when you make the biggest strides.
In today’s USA Today there was an article about the US airline industry. For the first month in 25 consecutive months, the industry actually increased the total number of workers on a year-over-year basis. It went on to say that there was no indication that the industry would return to pre-9/11 levels in the foreseeable future. The reason given was,
“The increased use of automation will keep staffing at levels lower than in 2000.”
It’s not that there are fewer miles being flown – it is that the industry has increased its efficiency. This, of course, would have happened naturally anyway. Increased competition from discount carriers and rising fuel prices would have driven the industry to adopt cost cutting measures anywhere it could. However, the crisis event of 9/11 accelerated everything. Airlines instantly went close to or into bankruptcy. They had to make immediate changes for survival rather than evolutionary changes in order to maximize shareholder value.
Unfortunately, we have first hand experience in changes driven by crisis. We started Speck Design, one of our portfolio companies, in 1996. In hindsight, for the first 6 years, business development was easy. We had no sales discipline and all business was inbound. The phone just kept ringing. By 2001, about 85% of our business was for networking companies in Silicon Valley. It was great business to have but then the dot.com bubble burst and the valley shut down seemingly overnight. The phone stopped ringing. We went through the denial phase and then moved rapidly to acceptance. We started doing anything we could to keep the doors open. While we were in the midst of the turmoil, it was unclear if we were going to emerge out the other end. And, even if we did, we didn’t know what the other side would look like.
Six years later we are stronger than ever before. We have a dedicated sales force, a much more diversified client base and we track predictive metrics that keeps our eye on the financial ball. Would we have instituted any of this without the crisis? Probably. But I strongly believe that the crisis accelerated the growth of our sophistication far beyond our previous trajectory.
Whatever doesn’t kill you makes you stronger.