Tuesday, February 24, 2009

Using the Financial Crisis as a Catalyst for Restructuring

I've been working on an op-ed piece which contrasts two potential responses to the current financial:

  1. Hunker down and work to "protect" jobs and current routines, or

  2. Use the crisis as an opportunity to shake things up and build for the future

Jim Collins made the case in a recent Fortune Magazine article (link). He cites Boeing and HP after World War II. During a general economic slump, the visionaries running these firms made big bets on the future. Bets that transformed their firms and set them up for decades of success.

Firms today face a similar dilemma. Do they follow the lead of the politicians -- pulling back, "protecting" jobs and buying American? That's the politically correct, but economically wrong, thing to do.

The reality is:

  1. The growth markets of the future are largely in developing countries. The World Bank projects that nearly half of global GDP growth over the next 25 years will occur in low-income countries.

  2. Today's economic slump is a rare opportunity in which top-notch resources (productive assets, people, brands) are available at deep discounts. Are rival firms letting top flight talent go? It's time to grab it. Are rivals pulling out of international markets of cutting back on brand building? Now is the time to fill the void.

There has never been a better time to look 5, 10, or 20 years out and make the investments that will set up your firm for success once things get back to normal.
Forward looking firms should use this opportunity to expand globally. If they don't, their rivals will. And the firms who hesitate will be left wondering "what happened?"

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