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Rebound Strategy

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With the recession coming to an end, and business beginning an uptick, many organizations will find themselves at a disadvantage because they haven't kept up with innovative products, services, and delivery systems.
With the recession coming to an end, and business beginning an uptick, many organizations will find themselves at a disadvantage because they haven't kept up with innovative products, services, and delivery systems. Much of their intellectual property will have been erased with the layoffs of senior people. And new businesses may easily overtake established organizations who haven't kept up their innovation and employee training.
Duration: 8:48 Audio MP3
© 2010 St. Louis Community College
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Well, it seems that the Great Recession is over - or so they say. The fact is that much of the improvement we see is due to the innumerable stimulus packages offered to states and other public entities. Some businesses have been able to achieve a rebound of sorts, also due to government intervention. We have yet to see what will happen when the federal government decides it's time to stop adding to the national debt and begin paying it down. So we're still in uncertain times, and it's hard to predict when they'll end. And that's the good news!

The bad news is that the real estate market and the broad job market are both still depressed. Of course, no one can buy a house or any other big-ticket item, no matter how big a bargain it might be, without a job or a steady source of income. Employment is going to have to make some real upward moves before the rest of the economy begins to recover in earnest. When the economy finally does come around, and we begin to experience a real rebound in consumer and business spending, many organizations will be unable to take advantage of the rebound. Here are some reasons why:

  • Many organizations have offered buyouts to senior people, many of whom carry much of the organization's intellectual property in their heads. Company history and culture are important elements of the organization's success, and provide employees with behavioral norms and motivation to improve. Long-time employees take this information with them when they leave.
  • Senior leadership in many companies is aging, and many high level leaders are considering or actively planning retirement when the business (and investment) climate improves. If a company has not planned for this contingency and developed an active leadership pipeline, they could be left adrift in the next few years.
  • When times are tough, many organizations cut back on their training and new product development. The return on training investment is sometimes hard to identify, and R&D is expensive. This short-term approach to saving money can come back to bite the company in a sensitive part of its anatomy, especially if the new product pipeline is empty when business improves and employees' customer service and communication skills get rusty.
  • Some businesses choose to "just wait it out" and neglect to actively plan for the time when business improves. They think they can just pick up where they left off before the recession. The fact is that time and technology continue to march on, and without the ability to take advantage of new technology, some organizations will fail even when the overall business climate picks up.

We could go on, but rather than dwell on all the things that could go wrong, it's more effective to look ahead. The late Oren Harari, author of Break from the Pack: How to Compete in a Copycat Economy, emphasized the importance of not only trying to keep up with the competition, but to outstrip them and pull ahead of the pack. Harari offered these suggestions:

  • Build communication within the organization, eliminate silos, and make sure everyone is speaking the same language when it comes to planning and leadership.
  • Subsitute "strategic thinking" for "strategic planning," and involve as many people from the organization as possible, cutting through management levels.
  • Select and train talented employees and leaders, not to do a job, but to create value. The mark of an effective organization is that job descriptions are dynamic, not written in stone, and that new ideas should be encouraged and rewarded, not shot down.
  • Business talent should be liberated, not managed. The environment should be one of transparency and inclusion, with everyone being held responsible for continuous improvement in methods, systems, and value.

Unfortunately, Dr. Harari passed away in April, 2010 after a heroic battle with cancer. We are fortunate to have much of his work surviving him in written and video formats. If you'd like to learn more about Dr. Harari's work, send me an email at bschapiro@stlcc.edu, and I'll send you a link in reply.

Successful companies in the next 5-10 years will not necessarily be the ones with size and physical assets. Success in the next phase will mean having the knowledge, talent, foresight, innovation, speed, mobility, and agility to take on the human and technological challenges that lie ahead.

Who will these companies be? Well, if history is to repeat itself, we might take a look at what happened in 1989. The year 1989 was the beginning of another recession that was somewhat unusual, in that the unemployment effects were felt largely among white collar, middle management employees. This was the first time in the 20th century that a recession affected so many managers, as compared with front-line workers. It was the era of the flattening of organizations, and companies all around the world began cutting layers of management out of their organizational charts.

This left a lot of management talent out in the cold, many of whom were pretty angry and bitter. Many of them decided to get out of the corporate rat race, and started businesses of their own. It was relatively easy to do that, because the prices and physical dimensions of various pieces of office equipment, such as computers, fax machines, printers, etc. began to shrink. In those days, you could set up a home office for not much more than $2,000. And in 1994, when the Internet went public, things really began to take off. So this was the stimulus that led to the boom of the '90s, with thousands of small businesses getting started and generating millions of jobs over that period.

Nowadays, office equipment is even cheaper than it was in the early '90s, and the Internet has been a fact of life for us all for about 16 years. With the use of e-mail, Facebook, LinkedIn, and other cyber tools, new business startups are even easier than they were in the '90s. I am looking for another boom, which will begin any minute, as displaced workers and managers, not to mention all those millennial generation college graduates, begin to change the face of business all around the globe.

These new entrepreneurs will be innovative and agile, and if established brick and mortar businesses haven't been keeping up, the new guys will eat their lunch - big time.