Author: Geoff Colvin
Publisher: Portfolio, 2009
ISBN-13: 978-1591842965, 192 pages
The 2008 recession and its lingering aftermath have undoubtedly transformed the global economy. All aspects of business have changed, including consumer attitudes, competition, employee relations, the role of government, and customers’ saving and spending behaviors. Yet with all these shifts, few companies have consciously adapted to new business realities. Business journalist Geoff Colvin writes that the recession presents some intrepid managers with a rare opportunity to reinvent themselves and their businesses. He proposes 10 strategies that firms of all sizes can use to compete in the post-recession world. Unfortunately, some of his role models for those strategies haven’t held up as well as he anticipated – his book appeared in mid-2009, before all the dust of the financial crisis had settled. Nonetheless, getAbstract recommends his 10 sensible prescriptions to leaders who want a makeover for themselves and their enterprises.
Great challenges – and opportunities – ahead
The 2008 recession, the longest since the Great Depression, has given managers worldwide many chances to demonstrate their capabilities. But, due to inertia and recession-related troubles, too many company leaders fail to recognize and act on this opportunity. They don’t see that every crisis eventually ends and that, when it does, they must be ready to react and succeed in a new environment.
Recessions allow new leaders to emerge and make them acquire fresh skills. Tough times teach hard lessons and force people to face rare, novel situations. Since leadership traits are learned, and not innate, you should push yourself into unfamiliar areas, so you can learn to become a stronger manager and a resilient leader. You can’t take advantage of the opportunities the economic downturn offers unless you recognize what changes are afoot.
Companies can use 10 strategies to make the most of bad times:
1. “Reset priorities”
Facing facts about what’s changed in your business, your industry and your environment is the first step toward assessing your new priorities. Many firms avoid the reality of what’s happening right in front of them: In December 2008, in the thick of the financial crisis, a survey of struggling companies showed that few were proactively shoring up their cash reserves. An inability to admit past miscalculations, a sense of immobility due to a lack of information and just plain shock keep firms stuck in the past. Start gauging your new realities by using six parameters:
“Financial strength”– Judge your ability to raise capital and maintain liquidity.
“Competitive advantage”– Are you vying with new rivals? Have you lost your lead?
“Government intervention”– Assess how new regulations will affect your business.
“The state of your customers”– What if your clients cut back or can’t get credit?
“Your reputation”– How you handle a crisis speaks volumes to customers and peers.
“Your risks”– List the changes in known risks and reflect on the inconceivable.
2. “Protect your most valuable asset”
During the 2008 recession, many managers had the same knee-jerk reaction: When business slows, fire staff. That’s a mistake, because your employees matter more now than ever to the success of your firm. In prior downturns, when the economy was based on manufacturing, machinery and capital assets were the critical factors of production, and workers were more expendable. In contrast, today’s knowledge-based economy depends on employee skill and talent, so people are your key assets…