Many dream and work to make an idea or business become successful. We have the freedom to succeed and a desire to achieve, and yet the voices of fear and hesitation, which are natural during tough times, pierce the mind and challenge one’s belief that advancement is possible.
Maneuvering through crisis is an art, one which requires confidence, experience and vision. All of us tend to have less confidence in times of crisis, which is part of human nature. At the same time, however, if you go with the consensus and choose to travel down Mainstream Road, then you are, what is known as a “me too” thinker. And consequently, your chances of advancing or breaking through the proverbial glass ceiling would be limited at best.
During challenging times we feel we lack visibility. And, a lack of visibility is generally followed by a lack of confidence, which in turn lends itself to short term thinking as well as a low risk, short vision.
The reality is, however, that business history is rich with companies that made crisis work to their advantage. They coupled a vision with action to break through previous barriers and garner success. Prime examples of this are Toyota, Beijing North Star, Virgin Atlantic and Ryanair Airways as well as Alibaba and Taboa.
Let’s begin with Toyota. It was during the 1973 oil crisis when Toyota expanded to the US and began its journey to become the largest Japanese based automotive companies in terms of sales, net worth and profits. How did they pull it off? At the time, US automobile companies manufactured inexpensive, low quality, small vehicles. Inexpensive was deemed synonymous with less quality by the Americans, as the auto companies sought to cut production costs by limiting the features of the small cars and consequently keep the selling price low. Japanese customers, however, had a long-standing tradition of demanding small but high quality, fuel-efficient but reasonably priced cars. The oil crisis opened the US market to what the Japanese were already enjoying and stimulated an American taste for the same. Toyota seized the opportunity.
Beijing North Star (588), a listed company in Hong Kong Stock Exchange, is engaged in property investment and development. During the SARS period in 2003, many of the property companies in China suffered a great deal due to the dramatic drop in sales volume and rental rates. However the group’s turnover in 2003 increased by 32.1% and their profit, after tax, also increased by 121% in comparison to that in 2002.They had taken the opportunity to restructure both in terms of tangible and intangible assets by buying new properties. The aim was to increase their competitive advantage in the future.
The airline industry provides another good example. Virgin Atlantic and Ryanair Airways are creative and flexible airlines, both which survived and even grew stronger following the airline crisis of the early 1990s. This was an era when many established airlines went bankrupt. Virgin and Ryanair proactively responded to the situation and changed their offerings: Virgin introduced a very unique style of design and an array of special services; and, Ryanair adopted a low cost fund strategy. Both demonstrated that creative, non-conformist and independent thinking entrepreneurs are better able to weather a global economic crisis than their traditional and mostly conservative counterparts, who are often times fearful of change.
Two more examples of companies that successfully created opportunity during crisis time are Alibaba and Taboa; both knew how to leverage the SARS crisis to improve and expand an on-line business, by offering a free trade, risk free on-lone trading opportunity.
You would be surprised how much respect you will earn for truly believing in yourself, your business and your ideas in hard times. This respect will culminate in the unexpected, such as support from former rivals, media recognition and pure good energy around you. After all, everyone wants to align themselves with a winner.
During a crisis, businesses generally react in one of four possible ways:
React Negatively
Companies which need aggressive growth to sustain their business model in the long term tend to react negatively to crisis . It is in times of recession that the weaknesses in their system and the flaws in their strategy are exposed. The need to pull back creates a freefall. The large investment banks on Wall Street offer a classic real time example of this. Their non-sustainable on going leveraging strategy is now killing them.
React Neutrally
Some companies tend to react neutrally in times of economic crisis. They simply wait for the fury to subside; and, as they wait, they consequently discontinue investing or expanding, and limit expenditures, in all ways possible, small and large. This group has the basic ability to survive a down turn.
React by adjusting
The third category involves companies that react to an economic crisis by adjusting or modifying their existing system. They take the opportunity of a crisis to cut back and cut costs, but in such a way as to make themselves stronger and more efficient in the long term.
Sony offers a prime example. Sony recently let go a large number of workers. They restructured themselves internally in order to come out of the existing economic crisis leaner than they had been in the past.
Act Rather than React: Proactive Initiatives
The final category includes companies that act rather than react, or more simply put, adopt a proactive policy in place of a reactive one. Proactive companies are those that view economic crisis as an opportunity rather than something to fear. They capitalize on the existing situation to expand to other locations and to beat or even overtake rivals. However, a company must have the available resources to exercise this option successfully. Companies in this category usually had strategically built up their resources during the “good” years, have access to them during a crisis, are entrepreneurial in nature, and in many ways too, tend towards aggressive activity.
The Current Economic Crisis and China’s “Proactive” Initiatives
The current economic crisis is deeper and certainly longer than any of us have experienced in life. However, it could be argued that the deeper it becomes, the more changes will be accrued; and, the more changes that are adopted in market regulation in terms of competition, the more opportunities will appear and become available to the entrepreneur.
In the past China’s financial crises were short lived, such as the 1998 regional financial crisis and the SARS crisis. The existing world economic crisis however, which has impacted all, including China, will result in many more changes and shifts. Nevertheless, in China, rather than gloom, there is a feeling that now is the time to get rich.
In China on the macro level, even with the current world economic environment, there is great support for entrepreneurs. In some ways China is now to the United States what the United States was to Europe in the 19th century: the world's biggest new market in terms of consumption and production and the place where the standard of living is rising most quickly. Firms in China have the chance to become the leaders in every sector of the global economy. Most importantly, China is a hotbed of business creation. China has about 12 million businesses, twice as many as the United States. These firms have access to labor at less than 10 percent of the cost of the same in the United States. This includes not only low-skill workers but also three times as many graduating engineers a year who hold the equivalent of a bachelor's degree at a US university. This is just one more reason to believe in entrepreneurial actions, and especially in China.
Personally I have a great deal of experience managing entrepreneurs and businesses during times of crisis. In the last ten years alone, I have gone through three crises: the high tech bubble burst in 2000, the major Israel security crisis in 2002/2003 and the current economic one. In each case I have used the skills I acquired as a pilot in the Israeli air force. What does this mean exactly? Well, pilots are trained to deal with the unknown and with surprises. They are taught to manage risk and in battle to act not according to the expected but the unexpected. These various components are very similar to those encountered in a business crisis.
For example, in 2002, during the Iraq War, I went against the trend and founded a seed stage chain of incubators. While it was thought to be the worst timing – it was just after the hi-tech collapse, NASDAQ had dropped by 65% and war was in the streets of Israel- entrepreneurs were desperate for funding to make their ideas come true, but were without an investor to fund these dreams. The sector seemed hopeless, and yet, the underlining thinking, from an investor’s perspective, was gain access to a platform like a private incubator and in turn get the best deals and the best terms. Not surprisingly, the strongest and most creative companies in which Infinity has invested were founded at that time. To further demonstrate the success that can be achieved when swimming against stream, I started Infinity’s China partnership right after the SARS crisis. Due to this strategic timing, I found myself pleasantly alone in the field. Fast forward a decade later and Infinity now operates two Israeli-Chinese funds with nine companies, $300M under management, and offices in three, soon to be four, major Chinese cities.
Back to the Basics
Allow me to offer another flying analogy. For me the current situation feels like flying my plane in bad weather. The clouds block your visibility; the thunderstorms are frightening; and, sudden lighting blurs your vision. In business today we are facing the collapse of financial institutions, a drop in demand, and dark, pessimistic economic outlooks – bad weather indeed. So, what should one do while flying in bad weather? The short answer: focus on the technical data (the instruments) and concurrently, on the radar. Both help the pilot in identifying the long range possibilities. Ignore the short term noise and plan with the long term in mind. Based on the data and the radar, do your best to choose a direction that will put you on course towards the sunshine, proceed at the proper speed and fly into the light.
The formula is similar with entrepreneurship. Activate your internal radar to identify the location of a future target, full with light. Ignore the clouds, all the while knowing that they exist, and act, step by step, looking for the path that will lead you to the sunshine. Once the location of the light has been determined, you will discover how crystal clear your foresight will become and in turn, gain the confidence to begin to proactively and effectively reach your goal.
Now is your time to act. Good luck! | 
