Recessions Have an Upside

Recessions have an upside. No longer are dinner parties dominated by people telling you how, by the simple reason of staying alive they have miraculously increased the value of their house, the flats in the city centre and the little 'bolt hole' in France.

As this all unravels, we are bought face to face with what Nassim Nicholas Taleb describes in The Black Swan as a curious aspect of human psychology, namely that we attribute small regular gains as entirely down to our own acumen and catastrophic failures as the result of external forces. This can have a beneficial effect. When the economy is chugging along and any idiot can do well there is little desire to get to bottom of the organisation and get it functioning well. At the point of downturn, because the problems are not our fault, we can wipe the slate clean, put our shoulders to the wheel and pull the organisation up by its bootstraps (that's enough clichs, Ed). A fresh start.

There are basically two types of ways of coming up with a strategic approach. Either 'Outside In' or 'Inside Out'.

Outside In means looking at the market, understanding the pressures that you are under now and are likely to be under, thinking about how you fit your organisation into this competitive landscape. Here you can take advantage of technology that reduces the 'friction' of doing business with customers and suppliers, such as collaborative web technology.

Inside Out thinking requires you to look at your organisation's capabilities, what do you well and what could you do better with sharper internal organisation. Technology can be used here to boost the productivity of your managers significantly, and improve the handling of complex vertical processes that will keep competitors out.

Smart organisations, of course, do both. Either way recession is a chance to take over your weaker or over-exposed competitors. It is where Schumpeter's 'creative destruction' takes place and that allows you to take out the excessive capacity from the system. Often this is in the management layer where costs have built up. Your organisation, more agile better aligned is then well placed to take advantage of the good times when they return.

Chris Sands works for COA Solutions. COA Solutions is the largest supplier of business accounting software, business management and information systems to the UK mid-market service sector. Chris Sands is an industry leader in the field of business intelligence and corporate performance management.

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