A Bright and Sunny Day: Preparing for the recovery, by Mark Chussil
It was a year ago that I wrote A Dark and Stormy Night. In March 2008 the Dow Jones Industrial Average was around 12,000, the NASDAQ was about 2,800, and the S&P500 circled 1,300. At the time those numbers were cause for concern. Now, late in March 2009, with the DJIA around 7,300, the NASDAQ near 1,500, and the S&P 500 at about 770, the March 2008 numbers look deliriously rich. How we would love to return to the bad old days.
A Dark and Stormy Night wasn’t about predicting the Dow, it wasn’t about putative lessons from the past, it wasn’t about technical analysis of fancy logarithmic ratios twice removed. It was about keeping a clear strategic head in a market downturn, especially when your competitors might be losing theirs.
In the year that has passed colossal sums have been lost. Stock markets have halved, reflecting a shift from overly giddy expectations to absurdly pessimistic expectations. (The giddiness and absurdities make more sense when we consider that the stock market has become less about reflecting the real prospects of companies than it is about making money in the stock market.)
No one knew a year ago what would happen in the year to come. There was no announcement that a genuine crisis had begun, no blinking red light that said “Go Ahead and Panic.” You could find predictions and pundits going in every direction known to Descartes and at every velocity known to Einstein.
Which pretty much describes today. No one knows now whether we’ve hit bottom or how long it will take to regain so-called stability, by which we mean our nostalgic, smoothed-out view of good/bad old days. There is no blinking green light that says “You Can Stop Panicking Now.”
That said, the non-apocalyptic among us generally agree that there will be a recovery. Just as we won’t ever be able to pinpoint when things started getting worse, we will never be able to pinpoint the date that things start(ed) getting better. Personally, I’m seeing positive hints not only in the market indices but also in the tenor of the news and investment advice. (NB: I’ve been wrong before.) Perhaps we’re even realizing that we may have vaporized 50% of our perceptions of wealth, as in the stock market, but not 50% of our actual wealth, as in the underlying value of industry.
The question is, as it always is, what’s a smart strategist to do in these turbulent times? (Saying “In these turbulent times” is customary but unnecessary. In over 30 years in the field of competitive strategy, I have never heard anyone ask what’s a smart strategist to do in these nice, calm times.)
What’s a smart strategist to do? First, and as we discussed in A Dark and Stormy Night, exactly this thing: Decide to think clearly and strategically. Today that means decide to contemplate the recovery. Decide to assess what’s changed and what hasn’t. Decide to put fear aside, even if only for a while; don’t worry, it’ll still be there if you want it back later. Decide to look for opportunity. In lieu of a blinking green light, decide what indicators you will use to launch your next moves. Decide to lead.
How’s a smart strategist to do what a smart strategist should do? Here are some ideas that ACS has applied to its own business as well as in our executive-education workshops and business war games.
- Brainstorming, but not just any brainstorming. First, think clearly and strategically about the questions you will ask brains to storm. How will we prosper in the recovery to come? How will we know when to act? How will we move ahead of our competitors? How has the crisis changed the game; that is, the market, our business, and our competitors?
- Brainstorm both sides: what could go wrong, not just what could go right.
- Separate assumptions from facts. Tough times sorely tempt us to jerk our knees. Fear makes us impressionable and susceptible. Just remember that a mighty big crowd fell into the crisis, while the few who said “it’s a bubble, folks,” and who acted accordingly, made money.
- Build your recovery and prosperity plans now even if you’re not ready to implement them. When the time comes — what if it’s sooner than you think? — you can act faster and more confidently than your competitors. Who knows, you might even discover moves you want to make right now.
- Get inside your competitors’ heads and your customers’ heads. Use business war-gaming, scenario planning, or your favorite technique that puts you in their shoes. (It’s different to be in their shoes than to predict them from your shoes. See page 3 of Learning Faster Than The Competition.)
Notice that none of those ideas involves terrifying capital outlays or irrevocable commitments. They merely require thinking and talking. Thinking and talking are bargains made for these turbulent times: they’re cheap and easy, and they buy you time and insight, the most precious of competitive advantages.
A year from now, more or less, when people notice that the green light has been blinking for a while, people will be writing stories about those prescient strategists who acted thoughtfully and decisively, the visionaries who found opportunity and led their companies to glory. Those stories will also mention the companies desperately scrambling to catch up. Those stories will be about decisions and actions begun now.
Update, 5 months later. The DJIA is over 9,500, the NASDAQ is over 2,000, the S&P 500 is over 1,000. And the Wall Street Journal describes some of those prescient, visionary, and scrambling companies in Slump Spurs Grab for Markets.