Are You Paranoid Enough?  As the economy shows signs of an upturn, it may be OK to breathe a slight sigh of relief. But only a slight one. This story from the past will illustrate why.
In 1983, with prime interest rates above 20 percent and unemployment rates approaching 11 percent, Jack Stack and a dozen colleagues saved their jobs by purchasing a small engine-remanufacturing factory from International Harvester. Thus was born Springfield ReManufacturing Corporation. It was a difficult birth.
"Our debt-to-equity ratio was 89:1," Stack—the company's CEO—told Inc.com. "Let me tell you, you're brain-dead in that situation. You're on life support. We had bank auditors ... camped outside our doors. If we'd had one little slip-up—if we'd been an hour late with a payment—they would have rushed in and closed us down, and 120 people would have been out on the street."
The nerve-wracking experience had a profound impact on the way Stack runs the business today, and he attributes the company's current success to an unusual philosophy grounded in paranoia.
"A lot of businesses put up a plan to satisfy their bankers or because they think it's what you're supposed to do," he noted. "But our culture is, 'Let's find out where our weaknesses and vulnerabilities are and then build something to offset them.'"
Because of its hyper-cautious approach—defined by well-measured diversification—Springfield ReManufacturing Corporation has managed to avoid the massive layoffs endured by less-paranoid firms in the current economy.
The moral of our story? Look forward with anticipation while never forgetting the past. Things could always dip again, you know. As Stack told Inc.com, "I'd say you're a fool if you know you're going to get whacked and don't do something about it."
The Po!nt: Stay hungry. As we pull out of this recession, couple that sigh of relief with a realistic game plan to protect you in the future come what may. Studying tactics like Stack's can help.
Source: Inc.com. Read the full article here.
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