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Downturn strategies

No one really knows whether or when the current economic slide will turn around. My own view is that this is an inflection point, a serious break from the past, a wake-up call from old illusions.

For well-managed companies, this downturn offers the chance to re-examine fundamental value propositions and develop new strategies. Here are seven key strategies not just to survive, but to thrive, in the current business environment:

Developing a positive mindset is crucial. It’s important to keep asking, “What’s the opportunity?” as opposed to, “How am I going to survive?” If you keep your eyes focussed on opportunity, you can see it and create it. Remain agile; be poised to grow. You can not only ride out shaky economic times, but emerge stronger and more successful.

In the current financial downturn, the falling tide has lowered all boats, and the stock of all the automation majors had declined to less than 50 per cent of recent levels in the USA. Lasting effects are hard to predict, but clearly there will be some fallout. As revenues continue to decline, consider what happens: the bean-counters’ cutback formulas result from simple spread-sheet calculations. Managers are told, “Your budget must be cut by X per cent.” Few managers eliminate themselves, and so the next level in the hierarchy reviews and implements the cuts themselves for further down the line.

It takes a decisive marketing-orientated business leader to stop a steady decline. Accountants (bean counters) cannot do it. They simply track the decline with spreadsheets and matching cutbacks.

Meantime, what’s happening at the top? The Honeywell weblog reports (not directly confirmed, but not denied) that CEO Dave Cote’s 2008 compensation was US$5 million, “up nearly 55 per cent from 2007”. Someone then started an informal poll: “Will Dave Cote forego a pay increase in 2009?” When the recovery comes, as it inevitably will, expect significant changes in the automation business. Many major players will not weather the storm. There will be no bailouts, just buyouts. Acquired companies will provide acquirers with opportunities for consolidations (and cost-cutting eliminations) with an expanded customer base.

For positive individuals at levels below top management, I have simple advice: Don’t wait to be riffed, laid-off or whatever the expression. Look for good, complementary partners, and start your own company. This is a GOOD time to DO something different.

Jim Pinto

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