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Posts Tagged ‘Recession’

Some  “recipes”
Although it is probably too late to use these “recipes”, better late than never:

1. Have a strategic plan (and their respective contingency plans) to balance between the strategy for the short and long term. You must know where you are and where is the organization and involve the whole team.
2. Focusing on the best customers. Quoting the book “The Loyalty Effect”, an increase in the retention of 5% increases in profitability between 40% and 95%. Using CRM tools can be very important.
3. Reduce costs strategically. It is important that this reduction is made with a clear vision in the long term and always valuing the perceived value by the customer. Costs “cutouts” are those that provide little value to the customer.
4. Act quickly but calmly.
5. Focusing on core business activities of the company
6. Loyalty to the best people.
7. Improving communication with employees, investors, customers, suppliers.

In this line, is also very interesting to read “Seven Rules for Leading in a Recession” with the peculiar style of Tom Peters.

Obviously, to exploit these opportunities, you should get into this situation with a well designed plan and enough money to run it.

Why do not more organizations take advantage of the opportunities offered recession?

Many times it is a problem of attitude and vision. Many managers and entrepreneurs associated with periods of recession as a punishment and assume that the organization should be along the lines of other companies.

Therefore begin to cut costs indiscriminately to “not lose too much” leading the organization to problematic situations in the long term. Thinking in the short term but can be a “natural” attitude is not the most appropriate. Jack Welch, famous former General Electric executive, says “managing an organization thinking about the short and long term is very complicated. Few companies are able to do it.”

Therefore, a key element is to address the recession as an opportunity and not as a punishment, preparing for when you get the positive cycle.

There are already many organizations that understand this. According to a Price Waterhouse Coopers study in Europe, CEOs have sought to preserve those important activities for the future of business: 84% claims to have cut its budget for R & D, 72% had not lowered its costs of expansion and 77% say they have closed factories or offices. 53% say they have opted to adjust the size of their companies downsizing and outsourcing those functions less important for the company.

It is obvious that in times of recession or crisis, most organizations worse results. But many are now important opportunities. The question is why are companies in times of recession worsen their performance while others improve? Are these turbulent times offer threats or opportunities?

In fact, now is a time when you begin to exit the tunnel (Greenspan says) at least in the United States and parts of Europe and some may ask: we have left / are missing a chance?

To cite an example of successful cases in times of recession, Bill Gates said in an interview in the period 1990-1993, Microsoft had grown by 50%.

Basically the opportunities in turbulent times come in four areas:

1. The competitors come into defensive positions making indiscriminate cuts they can lose customers, assets and talent
2. The decline in asset prices provide important opportunities for acquisitions. According to a Mercer study, this reduction is between 15% and 35%.
3. Moments are ideal for brand building because of the price reduction of advertising. In the recession of the 90s, Intel took the opportunity to make investments in new technology and launched the brand “Intel Inside”.
4. Benefit from reduced activity to build competitive advantages for the future. For example, in the recession of 90-91 years, Dell enhanced its telephone management and production system which has led to a leadership position.