Life after the recession

Posted at 12:30 PM on June 12, 2009 by Bob Collins (7 Comments)
Filed under: Economy

When the recession ends, how long will it take for U.S. businesses to recover from the way they survived it?

Lane Wallace of the Atlantic considers that question today:

A friend of mine who runs a management and innovation consulting business recently told me that almost all of his clients were responding to the recession by making drastic cuts in budgets and personnel, including innovation, R&D, product development and marketing efforts. "The problem with that," he said, "is that when the economy recovers, it's going to take them another two years to ramp up again. They won't even have the right personnel or teams in place anymore. They'll be way behind."

To explain risk vs. uncertainty, she uses the metaphor of a sailing race in a storm, in which the sailor who let out sails takes advantage not only of a favorable wind, but also of the sailors who trimmed their sails.

We forget that sometimes, in our canonization of the innovative heroes of America. Or ... maybe we don't forget it. Perhaps the reason we give such great lip service to taking innovative risks but don't, as a market whole, tend to follow suit ... especially in tough economic times ... is precisely because we understand quite clearly the risks involved. As the saying goes, "Nobody ever got fired for buying IBM." Playing it safe may not win the race, but it's less likely to end up with you going down in flames.

On the other hand, as the former CEO of Continental Airlines once said, if you're in the pizza business and you just keep cutting one topping after another, pretty soon, all you have is crust. And it's hard to sell crust.

I'm not asking you to reveal your company's secrets here, but what did your firm stop doing that was strategically important before the recession, but was deemed worthy of sacrifice once it started?

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Comments (7)

If this is what passes for intelligent business conversation these days, this recession will never end. How much did the CEO of Continental get paid again? And if you need a consultant to tell you how to manage and innovate, how did you get a job running a company?

Posted by Paul | June 12, 2009 2:24 PM

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We are focusing on the larger, higher margin clients. While management is paying lip service to taking advantage of an environment that may be impacting our competitors more than we are, it seems we are passing up business that would only be break-even now, but could be built into a profit center when the economy turns around & our customers have more money to spend. To put it differently, holding onto business that is only break even now (rather than profitable) is comparable to keeping our foot in the door, in order to be ready when the door fully opens. I think we're giving up some of that readiness & will have to fight for that business in the next year or two, rather than establishing rapport with the client now & being a preferred vendor when things turn around.

Posted by bsimon | June 12, 2009 3:22 PM

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Nice kind-of related article on Minnpost:

(edited to make URL hot. C'mon, folks, the instructions are right there!)

Posted by Paul | June 12, 2009 8:55 PM

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They talk about this a lot at my company. They cite it as the reason they are doing furloughs instead of layoffs, and the reason they are in fact still hiring workers (who are required to take furloughs...) It's sort of nice to hear them talk about it, because they sound as if they really believe the recession will end, and we'll be better positioned than our competitors when it does, because we'll still have complete teams.

Posted by Mary | June 13, 2009 8:05 AM

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//(edited to make URL hot. C'mon, folks, the instructions are right there!)

Right where?

Posted by Paul | June 13, 2009 8:54 AM

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Just underneath where it says Post a Comment. Instrx for bold, italic, and links.

Posted by Bob Collins | June 13, 2009 3:22 PM

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''Just underneath where it says Post a Comment. Instrx for bold, italic, and links.

+ Link: Link

Those are instructions?

Posted by Paul | June 13, 2009 4:11 PM

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