Pinto's Prose: Post-recession Planning

Dec. 1, 2009
After more than a year of worldwide recession, there are glimmers of growth on the horizon. 
Although there’s no real consensus that the worst is over, automation companies should be developing forward-thinking strategies. Business is always cyclical, and organizations that look ahead to opportunities that follow a downturn will have a competitive advantage when the upturn arrives.As much as during a downturn, many businesses fail on the upswing out of recession. Some may have survived by cutting back employment, outsourcing and leaning on suppliers for extended credit. When business improves, the slack in the system tightens up, and there’s often no room for growth. The walking wounded will be left behind.Survival strategies are not success strategies. Companies that keep struggling and hoping to get back to “normal” are going to be surprised that the next normal is not like the old normal. For companies with old products selling to mature markets, the past years may have seemed like a recession. For those with new products developed for global markets, it could be a renaissance.The paradox is that some companies risk their chance of survival and longer-term prosperity by losing people who would have been star performers in the post recession growth stage. Companies with good, trained teams have the best chance of survival, and expansion after the worst is over. Good people keep quality high, fast-moving market information up to date, and existing as well as new customers delighted. Companies that prosper in the years after a recession will be those that kept their best people during the hard times, and made sure they were trained to take advantage of new opportunities.Expansions make it easier for everyone to look like a star, which leads poor managers to believe that somehow, everyone just got better. Those that mistake upturn success for good performance often find themselves with a lineup of C players when the next downturn arrives. The best companies are as rigorous in evaluating people during good times as bad.Downturns are only a small part of the economic cycle, but these are the times when market leadership shifts. Managing intelligently during the next expansion will be much more than a chance to rise in competitive rankings. When the next expansion starts, it’s time to make sure not only that you grow and succeed, but also that you position your business to win in the inevitable next recession. Survival threatenedToday’s markets are changing rapidly and demand sensitive market tracking with agile technology response. A company’s very survival may be threatened by under-performing and over-priced “new” offerings based on myopic marketing. This demands swift decision-making to abandon old “new” products and plans.The good news is that there will be lots of new business opportunities in the upturn. The bad news is that those competitors who survive will be leaner, meaner and tougher when they fight for market share in new opportunities. The longer and deeper the recession, the more likely that customers will adjust their attitudes and behaviors permanently, and the competitive landscape will have changed. The winners will require top talent, clear market intelligence, impeccable quality and fast response to the challenges.U.S. and European manufacturers must take a long, hard look at their offshore strategies, and do a better job of understanding and quantifying all of the risks associated with outsourcing production. Some of the best offshore facilities should remain, to provide local knowledge and perspectives. Production and outsourcing relationships should remain close to core markets. The offshore sources that survive will have an increased focus on value-added innovation and on producing for growing local markets.Be ready for the upturn when it comes. This will increase your chances to have some fun and make some money…again.Jim Pinto is an industry analyst and commentator, writer, technology futurist and angel investor. You can e-mail him at: [email protected]. Or review his prognostications and predictions on his Web site:

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