Put aside the myth of the ‘tamed’ business cycle. In the wake of the current economic downturn, managers must learn how to use the business cycle for competitive advantage.
In his 2004 MIT Sloan Management Review article “Principles of the Master Cyclist,” the author made the case for why companies need to learn how to integrate strategic business-cycle management into their tool kits. The article presented a set of principles that savvy managers can use in making tactical decisions (in areas such as inventory management, marketing and pricing) and strategic decisions (in areas such as capital expansion and mergers and acquisitions). At the time of publication, there was a growing perception that the business cycle had largely been “tamed” by the sophisticated application of discretionary fiscal and monetary policies. However, that myth has since been completely shattered–not just by the 2008-2009 recession but also by the U.S. Federal Reserve System’s role in formulating the economic policies that helped trigger the crash. In this current article, the author discusses the heightened importance of economic and financial market literacy and how smart forecasting can help companies manage the business cycle more effectively than their competitors.
The author highlights three major activities managers need to focus on: (1) developing and deploying
forecasting capabilities to anticipate movements and key turning points in the business cycle, (2)
applying well-timed business-cycle management strategies and tactics across the functional areas of the organization in a synergistic and integrative fashion, and (3) building an organization with a business cycle orientation, a facilitative structure and a supportive culture.
2 Comments On: Recession-Proofing Your Organization
The approach suggested in this article may be useful and practical for Very Large corporations. It is complex, academic and very labor intensive.
All issues and sulutions described in the above article could be covered by following a very simple process …. I call it “Innovationeering” – Continuously Engineering Innovations by Design!
All businesses – small, medium, large & very large – should get into “The Business of Innovations”. “The Business of Innovations” is driven by continuously creating “Knowledge Advantage” for your company. Knowledge created is made productive by discovering, evaluating and selecting Product, Process and Management Innovations.
It is not necessary to describe what Product and Process Innovations are. As for the Management Innovations, they include:
1. People side of the equation i.e. Compensation, Incentives, Rewards, Awards, Organization, Performance Definition and Evaluation, Education / Training, HR Policies, etc.
2. Clearly defining Vision and Strategies and creating buy-in through out the organization.
3. Having strategic thinking capabilities and capability to identify emerging “market waves and technology waves”.
4. Doing smart mergers, acquisitions, partnerships and alliances.
5. Creating substantial and sustainable competitive advantage.
6. Ability to identify and implement innovations.
7. Promoting and supporting “Innovation Culture”.
Being continuously in “The Business of Innovations” produces three major types of benefits:
1. Substantial and Sustainable Cost Advantage (no need to do cost cutting in a reactive mode).
2. Substantial and Sustainable RPM (Revenue, Profit and Market share) Growth in timely fashion.
3. Create “Strategic Security” for the business.
This process requires to instill “Innovation Culture” in the Enterprise by Senior Management including themselves! Continuously being in the “The Business of Innovations” – regard less of what products you make, what services you offer or what size business you are – produces substantial and sustainable RPM (Revenue, Profit, Market share) Growth. It will enable CEO’s and business owners create “Tactical Comfort and Strategic Security” for their businesses. Tactical comfort means achieving desired quarterly and annual objectives. Strategic Security means making sure the business remains in profitable business 5 to 10 years from now.
Simply put, this is what “Recession Proof” management cycle is all about. CEO’s, Business Owners, any lower level manager and all employees could understand this simple straight forward approach and the best of all, they will implement it and continuously practice it!! Please refer to our website http://www.innovationeering.com for more details.
Thank you.
Pradip (Peter) I. Bhatt
CEO, BGCi, Inc.
702-845-5462
bgciinc@yahoo.com
These are innovative ideas that businesses would do well to follow. To get ahead of the economic curve could strengthen companies in every aspect not only in recessions but growth cycles. Thanks for all the information.